How To Find An Affordable Apartment In NYC

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How To Find An Affordable Apartment In NYC 

In a city infamous for high rents, finding a great deal on an apartment may be as elusive as finding a pearl inside an oyster. But there are some great deals out there IF you know where to look. Over the next few weeks we will share tips on how to uncover them in our series How To Find an Affordable Apartment in NYC.   

We think that the best way to kick off the series is with New York's most prevalent and infamous form of below market housing, the highly coveted rent stabilized apartment.  Many of us have a story of a friend, cousin or acquaintance who found the deal of the century – the $500 studio or $1,200 two bedroom. But are these stories real? Well maybe. Nearly half of all the rental apartments in New York City are rent stabilized. That's about 987,000 rental units. Quite a number. But just who is getting those deals and how did they come by them?  

Amazing Stories of Affordable Apartments in NYC

Many stories about rent stabilized apartments involve some of the rich and famous – or infamous. Remember Mia Farrow? The actress' name has been in the tabloids for many things, but New Yorkers probably remember her most for her deal at The Langham on Central Park West. She paid just $2,900 a month for the rent stabilized 11-room unit that was featured in the movie Hannah and Her Sisters.

 The Langham

Farrow isn't the only star to score a cheap apartment. Nora Ephron, the writer of Sleepless in Seattle and When Harry Met Sally, paid only $2,000 per month for an 8-room rent stabilized apartment in The Apthorp on the Upper West Side.

But Cindi Lauper got an even sweeter deal for her apartment at The Apthorp. When she learned the building was previously rent stabilized, she took the landlord to court to restore the status. The '80s pop star succeeded in getting her rent reduced from $3,750 to $989 per month! Kind of gives new meaning to her hit song" Money Changes Everything."

 The Apthorp

High profile New York politicians have also benefited from New York's rent stabilization regime. Congressman Charles Rangel once rented four rent stabilized apartments in the luxury Lenox Terrace complex. He and his wife lived in three adjoining units. The fourth was used as his campaign office, for which he paid just $630 per month. Similar units in the building were renting for $1,700.  When caught, he agreed to pay a $23,000 fine to the Federal Election Commission. Quite ironic for someone claiming to be an advocate of affordable housing. 

Lenox Terrace

And then there is former NYC Mayor Koch. During his twelve years as Mayor, he was able to keep his rent controlled apartment – for which he paid $475.49 per month back in 1989 – even though he was living in Gracie Mansion (rent stabilization rules require the unit be your primary residence). 

Rents You Will Not Believe 

Rent stabilization is not just for the rich and famous. Everyday people have also realized amazing deals.  Last year the New York Post reported about a man who moved to Manhattan from Italy in the 1940s. He was paying only $55.01 per month for the SoHo one-bedroom in which he grew up.   His young wife stands to inherit it. Another 87-year-old man has been paying $71.23 for his one bedroom since 1967! He was considering marrying his 47-year-old former lover so the lover could inherit the apartment. 

Going to Extreme Lengths 

Some people will do just about anything to stay in a rent stabilized apartment. Recently the Daily News revealed that shareholders of a Brooklyn co-op sued a city Department of Education employee claiming she continued to pay her aunt's $287.55 per month rent for three years after the aunt's death! The shareholder made excuses whenever the landlord asked to access the unit, which is located in a sought after building just steps from Prospect Park.

 Vanderbilt Co-Op

How to Find These Affordable Rent Stabilized Apartments in NYC 

So just how do you get these great deals? To be honest – it isn't easy. The competition is fierce, especially since the rent stabilized rates on average are about $1,245 a month cheaper than market rate. Further, rent stabilized landlords are even more selective than market rate landlords since by law they may not accept more than a one month security deposit. Unfortunately, most vacant rent stabilized apartments are at market rate because of the yearly increases or because they are situated in new developments where the rent stabilization is a result of developer tax breaks.

Your best shot of nabbing one of these gems is to move in with a relative and gain succession rights to the apartment. The inheriting party must be a spouse, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law, or daughter-in-law of the lease holder. That is why the niece in the Prospect Park story was not a legal successor.

Nicholas DeTommaso adopted companion Pamela Becker weeks before he died, giving her dibs on his dirt-cheap Queens apartment 

As the New York Post reported today,  if you lack the proper relation, you can always marry, or be adopted by, the leaseholder of a rent stabilized apartment.   However, you must then live with that relative for two years prior, unless you are a senior citizen or disabled, wherein the time period is reduced to one year. Therefore, the 62 year old woman in the New York Post story, who was adopted by an 85 year old man shortly before his death, will likely not be able to inherit her "father's" apartment.   

Other than succession there is luck and the help of a good broker!

The Mayor and His Rent Controlled One Bedroom

BY GREG HARDEN

Following the death of Mayor Koch, I came across this tidbit in the Real Deal’s “By the Numbers” column.

$475.49 – Monthly rent that the late Mayor Ed Koch paid for his rent-controlled Washington Place apartment when he left office in 1989.

Apparently Hizzoner clung to his cozy, under market rent controlled one bedroom (with a terrace!) for the duration of his twelve year mayorality.  

Mayor Koch’s rent stabilized apartment at 14 Washington Place in the 1980s and today. 
          I wonder if the landlord got an MCI increase for the kitchen upgrade.

While Mayor Koch, upon leaving office, upgraded to a 1300 SF 2BR rental with a larger terrace at 2 Fifth Avenue, he should never have been afforded the choice in the first place. 

Regulated tenants must maintain their apartments as a primary residence.  In case of temporary relocation, they may sublease for two years out of a four year period. Since Mayor Koch lived at Gracie Mansion for all 12 years he served as mayor, his landlord could have evicted him. While the rental market in 1989 may not reached today’s levels, I am sure Mayor Koch’s apartment could have fetched much more than $500 per month.  

As in the case of Representative Charles Rangel leasing no less than four rent stabilized apartments in one building, Mayor Koch’s landlord sacrificed a little rent to win the favor, or avoid the opprobrium, of a powerful politician.

Politicians like Koch and Rangel portray themselves as advocates of affordable housing.  However, the hoarding of rent stabilized apartments diminishes the housing supply, increases housing costs and hurts the constituents they claim to champion.   At least this is one issue that MayorBloomberg won’t be dealing with when his term expires in a year.

 

A Manhattan Co-Op Hyperinflates Babysitting Coupons

BY GREG HARDEN

In this video, Austrian economist Peter Schiff cites the experience of a Manhattan co-op that issued coupons as a means for sharing baby-sitting services.

While excoriating Paul Krugman, Peter humorously demonstrates that printing money creates inflation and bubbles rather than wealth or prosperity.

The collapse of the babysitting market in the co-op provides an insightful parallel to the housing bubble and may portend future troubles for the U.S. and world economies.

This is a must watch!



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J-51 Tax Abatement Stuy Town Ruling Sets Unfavorable Precedent for Landlords, Casts Cloud Upon Real Estate Market

Earlier this month, a New York appeals court ruled that free-market tenants at Stuyvesant Town and Peter Cooper Village may be entitled to rent rebates in excess of $215 million as compensation for illegal rent overcharges.

Stuyvesant Town

In 2007, the tenants filed a class action lawsuit against the building's owners Tishman Speyer Properties as well as the previous landlord Metropolitan Life. The suit alleged that Tishman illegally de-regulated rent-stabilized apartments while receiving a J-51 tax abatement.

The J-51 tax abatement program provides partial property tax exemptions to landlords who make certain renovations to their buildings. The Stuyvesant Town tenants claim that the landlords illegally deregulated more than 3,000 apartments in the complex while receiving more than $25 million in J-51 benefits. The New York State rent stabilization law provides for treble damages for any illegal overcharge.

Smelling blood in the water, tenants at other complexes have filed similar lawsuits. The plaintiffs range from Lenox Terrace in Harlem (home to Gov. Paterson and Rep. Charles Rangel), to Chelsea's luxury rental complex London Terrace and Clermont York Associates on the Upper East Side.

London Terrace

Uncertainty over calculating potential liabilities and even future rent rolls makes it almost impossible for any J-51 beneficiary to refinance or sell. Even investors in the five bond offerings for Tishman's $3 billion mortgage could share in the responsibility to pay back tenants.

While I have no sympathy for the likes of Tishman-Speyer, I am also turned off by well-off tenants and their lawyers trolling for free money. The plaintiffs in these actions are individuals who freely entered into market-rate leases. They should not realize windfall due to a judge’s arguable interpretation of the rent-stabilization statute.

If the landlords were wrong to destabilize, let the fines be paid to the City, perhaps earmarked for affordable housing programs.

Marion Hedges

Prudential Douglas-Elliman agent Marion Salmon Hedges was critically injured last weekend when she was hit in the head by a shopping cart tossed over a fourth story pedestrian bridge as she was shopping at the East Harlem Target/Costco mall with her 13 year old son, Dayton.

In addition to being a great mom and real estate agent, Marion is also very giving of her time and energy to a number of worthwhile causes. She is the rock of her family. As a friend of the Hedges-Salmon family, I would like to extend our thoughts and prayers to Marion and wish her a speedy, successful recovery.

The Brick Presbyterian Church has established a fund to help provide Marion with crucial assistance in her rehabilitation and recovery.

Checks can be made payable to The Brick Church. Please write "Marion Hedges" in the memo line and mail to:

Laila Marie Al-Askari
Director of Administration and Finance

The Brick Presbyterian Church
62 East 92nd Street
New York, NY 10128

Phone: 212 289-4400 x257Fax: 212 996-7078
lal-askari@brickchurch

Breaking Down Co-Op Budgets

By Greg Harden

As we discussed in an earlier blog post, co-op maintenance charges in New York City can be expensive, causing many owners to wonder just where their money is going.

Many shareholders believe that trimming discretionary spending could result in significant savings and hold the line on increases. Unfortunately, about 90% of a co-op’s budget consists of fixed costs, with the largest portions allocated to real estate taxes and interest payments on the underlying mortgage.

Just take a look at a pie chart for one 40-unit non-doorman co-op with a live-in super.

Note that these budget items deal only with daily operating costs. Major repairs and capital improvements are typically paid from a co-op’s reserve fund, which a Board can replenish with an assessment.

The principal driver behind rising maintenance has been property tax increases. For the above building, the annual tax bill has increased over 45% in recent years from about $110,000 to over $160,000.

While co-op boards can retain an attorney to challenge their tax assessments, the savings realized are usually minimal.

Heating and water costs are also increasing. According to the New York City Department of Environmental Protection, water and sewer rates will increase 7.5% for 2012. Oil and natural gas prices, according to the U.S. Energy Information Administration, are also expected to climb steadily.

In addition to tax and operating cost increases, co-op buildings are also seeing revenue dry up. Buildings with commercial tenants are feeling the pinch of these economic times with losses of tenants and requests for rent reductions. If a building relied on flip taxes, it is likely struggling from the lower sale volume.

Some Boards have searched for alternative revenue sources. Converting extra basement space into rentable storage lockers is one popular method. A few years ago, one enterprising 17 story condominium on Queens Boulevard allowed risqué billboard advertisements to cover two of its facades. While the advertisements were illegal, and had to be removed, the revenue far exceeded the fines.

Fascinating Color Photos of Manahttan from 1941-42

These pictures of Manhattan from 1941 and 1942, and published last week in Britain's Daily Mail, offer a fascinating take on life in the Big Apple 70 years ago.

You can view more of these here