NYC: renting a sponsored unit in a co-op
March 11, 2017 6:32 PM
My partner and I are in the unenviable position of being pushed out of our apartment in Queens and are now looking for a new place. We found one in a co-op building that we really like, but I'm really nervous about renting a non-stabilized apartment. What do I need to be prepared for?
My partner and I currently hold a rent-stabilized lease for a junior four in a building in central Queens. However, we were taken by surprise when we got our latest lease renewal. It turns out that (as we should have better understood) we were getting what's called a preferential rent. The landlord rented it to us at under-market rate, but are now rescinding the concession they'd granted us, to the tune of almost $600 more a month.
We can't afford that, so we're looking in the same neighborhood, but now for a one bedroom. We had hoped that we could find a rent-stabilized apartment - without the preferential rate - and have found a few, but they've all been pretty unexciting and a little too small and nowhere we feel we'd want to stay for very long.
Today we saw an apartment that we really adored and felt like it could be home - but the catch is that the apartment is a sponsored unit in a co-op building, so it wouldn't be rent-stabilized. The unit is owned by the management company who managed the building before it went co-op, so we would be directly renting from them, not subletting from the owner of an individual unit.
So we would have the security that it's not a time-limited sublet, but I'm definitely wary of a non-stabilized lease. Does anyone have the experience of renting in these circumstances? I know that they wouldn't be restricted by the rent stabilization guidelines, but is there any hope that there would be some kind of stability in general? Or would we basically be putting ourselves in the position of the rent being raised so high that we'd be looking again within a year? I know it would be legal for them to do that, but is it likely? I keep hoping that it would be in their best interest to keep good tenants who pay on time and don't make waves, and they wouldn't want to have a revolving door in their rental units, but this is such an unfamiliar situation to me that I don't know what to realistically expect. (I should mention that I have an anxiety disorder that is making it very difficult for me to assess our risks accurately or calmly.)
To put it into context, we're looking for a 1-bedroom around 700 square feet for no more than $1600 in central Queens (between Briarwood and Rego Park), if that is useful information to have.
Thanks in advance for any input - apartment hunting in NYC isn't easy even when you WANT to move!
My partner and I currently hold a rent-stabilized lease for a junior four in a building in central Queens. However, we were taken by surprise when we got our latest lease renewal. It turns out that (as we should have better understood) we were getting what's called a preferential rent. The landlord rented it to us at under-market rate, but are now rescinding the concession they'd granted us, to the tune of almost $600 more a month.
We can't afford that, so we're looking in the same neighborhood, but now for a one bedroom. We had hoped that we could find a rent-stabilized apartment - without the preferential rate - and have found a few, but they've all been pretty unexciting and a little too small and nowhere we feel we'd want to stay for very long.
Today we saw an apartment that we really adored and felt like it could be home - but the catch is that the apartment is a sponsored unit in a co-op building, so it wouldn't be rent-stabilized. The unit is owned by the management company who managed the building before it went co-op, so we would be directly renting from them, not subletting from the owner of an individual unit.
So we would have the security that it's not a time-limited sublet, but I'm definitely wary of a non-stabilized lease. Does anyone have the experience of renting in these circumstances? I know that they wouldn't be restricted by the rent stabilization guidelines, but is there any hope that there would be some kind of stability in general? Or would we basically be putting ourselves in the position of the rent being raised so high that we'd be looking again within a year? I know it would be legal for them to do that, but is it likely? I keep hoping that it would be in their best interest to keep good tenants who pay on time and don't make waves, and they wouldn't want to have a revolving door in their rental units, but this is such an unfamiliar situation to me that I don't know what to realistically expect. (I should mention that I have an anxiety disorder that is making it very difficult for me to assess our risks accurately or calmly.)
To put it into context, we're looking for a 1-bedroom around 700 square feet for no more than $1600 in central Queens (between Briarwood and Rego Park), if that is useful information to have.
Thanks in advance for any input - apartment hunting in NYC isn't easy even when you WANT to move!
I don't know the NYC rental market very well, so the following is extrapolation from a similarly competitive rental market (SF Bay Area).
A non-stabilized lease is not necessarily doomed, BUT I would be wary of renting from a management company if you ever want your rent to be below market rate. A professional management company, in a hot rental market, knows exactly how long it will take them to fill a vacant unit at market rate, so they have no incentive to keep good tenants.
In contrast, renting from an individual--even if that individual owns the entire complex, as has been the case for my last two apartments--tends to be more stable. I've never had a rent increase in the past 3 years, even while paying slightly below market rent the entire time. Whereas my colleague, who lives in a huge managed complex, once moved apartments from one building to another in the same complex because the management was offering a new-move-in discount and refused to extend it to existing tenants.
posted by serelliya at 7:18 PM on March 11, 2017
A non-stabilized lease is not necessarily doomed, BUT I would be wary of renting from a management company if you ever want your rent to be below market rate. A professional management company, in a hot rental market, knows exactly how long it will take them to fill a vacant unit at market rate, so they have no incentive to keep good tenants.
In contrast, renting from an individual--even if that individual owns the entire complex, as has been the case for my last two apartments--tends to be more stable. I've never had a rent increase in the past 3 years, even while paying slightly below market rent the entire time. Whereas my colleague, who lives in a huge managed complex, once moved apartments from one building to another in the same complex because the management was offering a new-move-in discount and refused to extend it to existing tenants.
posted by serelliya at 7:18 PM on March 11, 2017
serelliya, renting from an individual landlord is extremely rare in NYC. Not unheard of - I've done it - but the vast majority of rental stock in New York is managed by management companies, you pretty much only rent from an individual landlord if you're doing something like renting an apartment in a two or three apartment brownstone where the owner lives in one of them. Though yes, if you can swing it it's generally way better than dealing neither a company.
As far as a sponsee unit in a co-op, I've done it. I lived there for a year, and then the owner decided that he wanted to sell the place so he hiked the rent 25% as a sort of soft eviction. (Joke was on them, the apartment was then vacant for another ten months before he could find a buyer, but that was cold comfort when I had to move). I wish I had better news, but I really would be wary about this situation. You can go for a two year lease so you'll at least have the rent locked in for two full years, but that's about the best you can hope for.
posted by Itaxpica at 8:22 PM on March 11, 2017
As far as a sponsee unit in a co-op, I've done it. I lived there for a year, and then the owner decided that he wanted to sell the place so he hiked the rent 25% as a sort of soft eviction. (Joke was on them, the apartment was then vacant for another ten months before he could find a buyer, but that was cold comfort when I had to move). I wish I had better news, but I really would be wary about this situation. You can go for a two year lease so you'll at least have the rent locked in for two full years, but that's about the best you can hope for.
posted by Itaxpica at 8:22 PM on March 11, 2017
Yes, get your apartment's rent history to make sure they're not screwing with you. Shenanigans abound.
As for the rest, well...about half of NYC's rental market is not rent-regulated, and probably a much higher percentage of the stock on the market at any given moment, as rent-regulated apartments turn over much more slowly. I'm not sure why you're approaching it as some kind of highly unusual situation--is your current place the only place you've ever lived in NYC? Most people do manage. Yes, you are vulnerable to greater increases, and, no, for the most part, landlords are quite confident they can replace you from month to month so they tend to put very little premium on stability. But--with the exception of the really big complexes, like Avalon, whom I do seriously suspect of doing this, because their business model is built on high turnover--they're mostly not running scams to sucker you in with a lower rent one year and then bleed you the next. They want the most they can get in any given year, and they'll ask for it. It's generally believed that the rental market is cooling off, but that's at a macro level.
The nice thing about sponsor units is that they tend not to have the sublease restrictions that generally apply in co-ops, but you should make sure of that before you move in, so you don't end up getting bounced in two years because of the by-laws.
I don't know if there are more individual landlords in Queens, but there sure aren't in Manhattan. The idea of one's unregulated rent not going up in three years is highly humorful, whatever borough you're in, and I wouldn't build any hopes on it.
posted by praemunire at 8:42 PM on March 11, 2017
As for the rest, well...about half of NYC's rental market is not rent-regulated, and probably a much higher percentage of the stock on the market at any given moment, as rent-regulated apartments turn over much more slowly. I'm not sure why you're approaching it as some kind of highly unusual situation--is your current place the only place you've ever lived in NYC? Most people do manage. Yes, you are vulnerable to greater increases, and, no, for the most part, landlords are quite confident they can replace you from month to month so they tend to put very little premium on stability. But--with the exception of the really big complexes, like Avalon, whom I do seriously suspect of doing this, because their business model is built on high turnover--they're mostly not running scams to sucker you in with a lower rent one year and then bleed you the next. They want the most they can get in any given year, and they'll ask for it. It's generally believed that the rental market is cooling off, but that's at a macro level.
The nice thing about sponsor units is that they tend not to have the sublease restrictions that generally apply in co-ops, but you should make sure of that before you move in, so you don't end up getting bounced in two years because of the by-laws.
I don't know if there are more individual landlords in Queens, but there sure aren't in Manhattan. The idea of one's unregulated rent not going up in three years is highly humorful, whatever borough you're in, and I wouldn't build any hopes on it.
posted by praemunire at 8:42 PM on March 11, 2017
I originally wanted to live in a stablized apartment when I moved to NYC three years ago, but now I'm not so sure. I was in a shared stabilized apartment for 2.5 years, and the time, energy, and extreme stress of tenancy in a stabilized unit has made me think twice. The landlord of my former share is now known as the "Madoff" of landlords and faces 25 years in jail for his eviction and harassment tactics. You'd think that would be a good thing, but even facing 20 felony convictions hasn't stopped him. One of his other buildings has just been served a vacate notice, and the Red Cross had to go in and help tenants get out fast. This is thanks to the landlord's "renovations."
Everyone I know who lives/has lived in a stabilized unit has spent a good part of their tenacy at war, which is to say of the dozen or so stabilized tenants I've met nearly all have been to court at least once. NYC is the only place I've ever lived where I've heard first-hand stories of landlords trying to off tenants and tenants trying to off landlords. For a long time, I kept thinking but if this one intervened or that one ... but now ... it just seems like there's too much money in NYC real estate and that's what corrupts everything in these parts.
As for where to live, for all that, prices have been going down in both Manhattan and Brooklyn recently, and Central Brooklyn has overbuilt, which will keep prices lower there, for some time to come. Northern Manhattan can also be significantly cheaper. I don't know about Queens but if you persevere I expect you'll find something or other that suits given the conditions here. I did, and although it's not ideal, and it's not cheap, the rate has a history of being stable. I know others who did, too, with the caveat that nearly everyone I know lives on the edges of Manhattan, rather than centrally, but if you're Queens-based, you're already okay with that. Good luck!
posted by Violet Blue at 8:59 PM on March 11, 2017
Everyone I know who lives/has lived in a stabilized unit has spent a good part of their tenacy at war, which is to say of the dozen or so stabilized tenants I've met nearly all have been to court at least once. NYC is the only place I've ever lived where I've heard first-hand stories of landlords trying to off tenants and tenants trying to off landlords. For a long time, I kept thinking but if this one intervened or that one ... but now ... it just seems like there's too much money in NYC real estate and that's what corrupts everything in these parts.
As for where to live, for all that, prices have been going down in both Manhattan and Brooklyn recently, and Central Brooklyn has overbuilt, which will keep prices lower there, for some time to come. Northern Manhattan can also be significantly cheaper. I don't know about Queens but if you persevere I expect you'll find something or other that suits given the conditions here. I did, and although it's not ideal, and it's not cheap, the rate has a history of being stable. I know others who did, too, with the caveat that nearly everyone I know lives on the edges of Manhattan, rather than centrally, but if you're Queens-based, you're already okay with that. Good luck!
posted by Violet Blue at 8:59 PM on March 11, 2017
It seems worth noting that if you're paying $600 less than the "legal" (i.e. regulated) rent, you effectively weren't rent stabilised to begin with, at least in terms of how much rent you're paying. There are other benefits to stabilisation, like guaranteed renewals, the option of a two year lease, etc., but I wouldn't be focused so much on worrying about rent increases because you won't actually be moving into a more vulnerable position than you were already in.
(I'm in the same boat of paying way less than the legal rent. I'm almost certainly going to be the last rent stabilised tenant, too, so there's some incentive to push me out. I'm basically crossing my fingers and hoping that the fact the legal rent is way above market for this neighborhood removes a good chunk of that incentive.)
posted by hoyland at 6:07 AM on March 12, 2017
(I'm in the same boat of paying way less than the legal rent. I'm almost certainly going to be the last rent stabilised tenant, too, so there's some incentive to push me out. I'm basically crossing my fingers and hoping that the fact the legal rent is way above market for this neighborhood removes a good chunk of that incentive.)
posted by hoyland at 6:07 AM on March 12, 2017
I have rented a sponsored unit in a co-op (similar setup). It was basically great for a few years until they decided to sell the unit, and then we had no choice but to move out, because the sale coincided with the end of our lease. It was a good situation for 4 years, though, and I would not hesitate to rent a similar apartment again.
posted by ocherdraco at 7:42 AM on March 12, 2017
posted by ocherdraco at 7:42 AM on March 12, 2017
One of the things I liked about it, FYI, was that I knew the management company and the co-op board had to maintain their relationship, so neither one could be particularly terrible to us, because we could then go to the other.
posted by ocherdraco at 7:44 AM on March 12, 2017
posted by ocherdraco at 7:44 AM on March 12, 2017
Thanks for all the advice!
We went to DHCR and they confirmed that the landlord is indeed charging the legal rent - they said for our particular unit, it was lousy that they were forcing us out, but that it was unfortunately completely legal. We've also found out that about six other families in our building have been forced out as well. At this point we don't even want to stay in this building anymore - they've been awful landlords from the start. (A few months ago they tried to evict us because they claimed we hadn't paid rent for months, when I had proof they'd cashed our checks. We had just cleared that up when we got the lease renewal.)
The frustrating thing is that I've lived in NYC for 20 years and have never had any problem finding a rent stabilized apartment directly through the management company. I've never even paid a broker's fee in two decades of renting here. So this has been a rude awakening! I'm still very up in the air about this rental but this is food for thought. Thanks!
posted by Neely O'Hara at 9:18 AM on March 12, 2017
We went to DHCR and they confirmed that the landlord is indeed charging the legal rent - they said for our particular unit, it was lousy that they were forcing us out, but that it was unfortunately completely legal. We've also found out that about six other families in our building have been forced out as well. At this point we don't even want to stay in this building anymore - they've been awful landlords from the start. (A few months ago they tried to evict us because they claimed we hadn't paid rent for months, when I had proof they'd cashed our checks. We had just cleared that up when we got the lease renewal.)
The frustrating thing is that I've lived in NYC for 20 years and have never had any problem finding a rent stabilized apartment directly through the management company. I've never even paid a broker's fee in two decades of renting here. So this has been a rude awakening! I'm still very up in the air about this rental but this is food for thought. Thanks!
posted by Neely O'Hara at 9:18 AM on March 12, 2017
This thread is closed to new comments.
This page has useful info:
http://metcouncilonhousing.org/help_and_answers/preferential_rents#answer03
The basics: 1. Are you sure your preferential rent is for your lease term, not your tenancy? 2. Is the rent your landlord is trying to charge the rent they have officially on file? And 3. Is the official rent overinflated, based on the rental history?
posted by foodmapper at 7:17 PM on March 11, 2017