Buy Nyc Real Estate

NYC Apartment Rentals- Security Deposits

2009-12-30T22:34:00.000-05:00

It is darn near impossible to rent a unit in New York City without a landlord collecting a security deposit. The security deposit is an amount collected by the landlord, typically a month’s rent, only to be used or reimbursed after the lease’s termination to cover any excess damages and unpaid rent. It must be kept in a separate account and landlord of buildings with 6 units or more are required to keep this in an interest bearing account. The security deposit is due at lease signing,

Even though one month of security deposit is somewhat of an industry standard, some landlords require a two-month or three month deposit. There is no limit on the amount of security deposit a landlord may ask for in New York State. It is a means of leverage, so if your situation is a bit complicated (e.g. self employed or commission based) you should be prepared to shell out some additional security deposit.

What is Net Effective? In the NYC Real Estate Rental Market

2009-12-28T21:29:00.000-05:00

The net effective is an advertising technique used in the Real Estate to draw more attention to an advertised unit. You will most likely see a small asterisk (*) next to the price indicating that the amount advertised is not the actual monthly rental amount.

What is Net Effective?

Net Effective is essentially the amount being paid out to the landlord as rent after all rent concessions. Usually, this only incorporates any period the landlord offers as free rent. I have seen landlords offer anywhere from two weeks to 3 months of free rent. The actual monthly rent is multiplied by the actual months the tenant will be responsible for paying and the twelve months of the year.

Example:

Large No Fee 2 Bedroom in Tribeca only $2500*

The actual price for the unit is $3,000 per month plus 2 free months of rent. The calculation is simple

$3,000 Monthly Rent X 10 Months of Rent to Pay= $30,000

$30,000 Yearly Rent / 12 Months in a Year= $2,500

The example above illustrates a $500 discrepancy only to emphasize the potential difference. An apartment could be listed at $1833.33 but actually be $2,000 with only 1 free month or it could be listed at $1925 but actually be $2100 with 2 free months on a 2 year lease.

All concessions are conditional and vary in length of time. Most “free rent” is cashed in (point of time where tenant does not pay rent) towards the end of the lease term. Most landlords do not allow accept the net effective rent as a monthly payment and you will have to pay the actual rent throughout the entire lease term. In any case, ask your agent.

Qualifying for a Mortgage or a Rental Unit in NYC

2009-12-20T20:45:00.001-05:00

Qualifying for a rental unit or a mortgage in New York City is quite similar. Both require the client to earn a minimum income in order to qualify and to be credit worthy.

Where do these requirement come from?

It comes from something called “debt-to-income” ratio. The debt-to-income ratio is the gross income relative to debt. It calculates your ability to pay based upon your pre-tax earnings. It is the backbone to the credit market and also used to calculate your credit score.

If you are planning to rent or buy in New York City, you should keep in mind that at the current moment (December 2009) you should have no more than 30% of your annual income allocated to housing (non-utilities) expenses. Basically it is 3-to-1 ratio between the household's gross income and the actual housing cost. The total debt owed is broken up between monthly obligations.

Mortgage issuers are much more strict than landlords in Manhattan. Landlords typically ask “40 times the annual rent” as a household minimum income and usually are bit more flexible with the relative debt, providing that it is not too far out of the range. To obtain a mortgage in today’s market, you pretty much have to be practically debt free. Lenders calculate monthly mortgage payment and monthly maintenance fee, if any, as your housing expense.

As a rule of thumb, keep your debt low and search for units well under your 30% of your income.

To calculate your own debt to income ratio, please click here

How to find the best Real Estate deal in New York City!!!

2009-12-17T11:06:00.000-05:00

If you are looking for a deal In New York City, please keep this age-old adage in mind, “location is everything.” The difference of even a mere city block could affect the rent/sale price by up to 15%. The keyword being “could” because there are exceptions. In Manhattan, different neighborhoods can fall into the same price range and neighborhoods just outside of Manhattan could be priced at about the same to a neighborhood within Manhattan.

At this point in time (December of 2009) you could find a 2 bedroom for $2,000 in Astoria, Park Slope, Riverdale, Inwood, Washington Heights, All of Harlem, Upper West Side, Upper East Side, Midtown and so forth. There are striking differences between the apartments and cannot really be compared

So if you are looking for the best deal available there are FIVE major factors to consider.

1) Proximity

Time is probably life’s most finite resource. Public transportation in New York is fast and reliable, usually providing individuals with several alternative routes. It is the most important factor to consider when renting/buying in New York City. Whether it is school, work, recreation or any other reason, having the right proximity is important.

Be prepared to ask yourself: How much time will it take you to get there? How will you use that time? How long do you see yourself having to make this commute?

2) Convenience

No one wants to work any harder than they should. Even if you have selected a couple of locations that have great proximity to where you need to go, it does not always necessarily mean that it is the most convenient.

You may work on the Upper West Side but; have friends, family, favorite hang out spots or some other leisure activity on the Upper East Side. One can always find a way to push oneself to get where one is obligated to go, but if you rent in a location to far away from friends, family and activities that you like doing over time, you will stop doing them. Eventually, you will make excuses because you find it inconvenient, yet your obligations will still need to be fulfilled.

Again ask yourself: How close is it to my gym? If I have to go out to do laundry how close is the nearest Laundromat? If you have a car, how is parking? Where is the nearest supermarket?

It is important to find a place that gets you where you need to go, but convenient enough to keep where you want to be. You should not find yourself sacrificing too much to find a great deal.

3) Capital

In New York as in everywhere else in the world, cash is king. Concessions can be made in light of short term/long term goals. In a Real Estate free market, like New York, you are bound to find prices differences within any given area.

So ask yourself these 3 questions:

a. How much can you afford to spend on rent?
b. Where do you want to be in about 5 years?
c. Honestly, how much can you afford to spend on rent?
d. If you are renting, wouldn’t you want to own someday?

If you are successful, then by all means- please indulge. If you still feel that you have a bit more to climb and want to get there then you need to reconsider your some options.

Food for thought:

A three bedroom apartment split between 3 people is usually cheaper than a 2 bedroom split between 2 people which in turn is cheaper than 1 person renting a 1 bedroom or studio in a given area. There is strength in numbers.

4) Amenities

In truth, most luxury buildings offer the best deals in New York City. The majority of these building offer their units with no broker’s fee and/or offer free rent. It is not so much cost, but more value orientated savings.

Luxury is best suited for individuals who need to make every single minute count. Amenities such as laundry inside of the building, multiple elevators, doorman to receive packages, indoor gyms, indoor cafes or restaurants, city or river views for entertaining and so forth. Living in a Luxury building usually eases some of the stress off everyday life and it makes the things that you may want to do a bit easier. In fact, most luxury buildings are located within the dense commercial areas where professional roam.

Amenities are a luxury. A luxury you usually pay for by paying more rent. You can typically find a great price just by simply giving up the doorman, view and indoor gym. You can give up the elevator and/or the laundry. The more primitive you go, the bigger the savings. Or if you readjust your target location you could afford some additional amenities by moving to a different area

5) Research

As far as locating a rental or sales deal, just about all of the listings are available online. In New York City, there are literally thousands of websites that you can use to find that deal but I think you are probably better off with starting with these 3 main sources:

a. NewYork.Craigslist.Org- Probably the most comprehensive tool for the prospective renter. Literally thousand of advertisements that only represent a small portion of what is actually available. Not everything is advertised. Some apartments just move too fast and some of the best deals never get advertised because the first person, who sees it, takes it. Some good sale listings too.

b. NYTimes.com-Probably offers one of the better Manhattan Sales listings database. The NYC Sales market moves at crawl compared to the rental market. New listings appear daily.

c. Direct Brokers Websites- Not everyone, has every listing. The large brokerage houses usually have fully interactive websites that allow you to look through their database of over a thousand active listings. To name a few of the top firms in New York, Citi-Habitats, Corcoran, Halstead, and Pari Passu Realty (where I work) all have user friendly websites that will give you great search tools and useful information.

You should have a very general Idea of your ideal unit before you start looking. The more you research the better the likelihood of finding your ideal unit. As biased as it may sound, real estate agents greatly help the process along. An active agent can call out standard prices and detailed information about a particular area. So when researching online, it is also good to identify a few brokers that can provide helpful and useful information.

As a precaution, the New York City rental market is fast paced and exciting. There are TONS of deals that come up and disappear in a blink of an eye. Landlords on average do not hold apartments. Expect landlords not to hold a “ready for move in” apartment for more than 3 weeks. In New York, looking no more than 4 weeks before your expected move in date is ideal. Having a real estate agent(s) in the process, makes things go smoother.

The New York City Sales market moves at a fraction of the speed of the rental market. New listings go up daily while others go into contract daily. Visit as many “Open Houses” as you possibly can. Locate a buyer’s agent (Real Estate Agent) that will work with you and help you find exactly what you are looking and can put in offers to the seller on your behalf.

If you can follow these steps, I am sure that you shouldn’t have a problem finding a great deal in New York City. Keep in mind that what may seem like a deal to you, may or may not be a deal to someone else. Deals are in the eyes of the beholders. Behold what you need and what you want and find your deal.

Best of Luck!

How to find a cheap apartment in New York City?

2009-12-12T20:43:00.000-05:00

All throughout New York City, both rental and sale units, are priced differently. You could have two 1 bedroom on the Upper West Side for rent; one at $1850 and the other at $2400.

Which unit is cheaper?

One must keep in mind that the word "cheap" can refer to either the word Price or Cost. So to help us out here are a couple of definitions from good old from Webster Online

Price- The amount of money needed to purchase something

Cost- The total spent for goods or services including money and time and labor

AND just to make things a bit clearer let’s look at the definition of the word VALUE

Value- The quality (positive or negative) that renders something desirable or valuable

You really need to see the whole picture in order to make a determination. Typically, there will be striking differences between both apartments. To properly answer the “Which unit is cheaper?” question be prepared to ask yourself some of the following questions

Is the unit a walk-up? If so, how many floors?

Is there a laundry within the building?

Does that the size work for you? (Maybe it is too big or too small)

Does the lighting work for you?

Is the building well kept?

How is that part of the neighborhood?

Are there enough closets?

Are there enough outlets?

What is included with the rent? Most apartments include Heat and Hot Water but does this one?

How will my commute be?

Where is the nearest supermarket, gym, and coffee shop?

You really do get what you pay for so really think things throughly. There IS a reason why one place is so much cheaper than the other. Once you got that covered, you can decide which unit provides you the best value for your buck. It is something that is specific to the person. This concept holds true basically anywhere you go in New York City or any other major city in the US. It also applies to sales, but there are a few more things to consider-but that is another blog.

Qualifying for an Apartment Rental in NYC

2009-12-09T21:20:00.000-05:00

In New York City, qualifying for an apartment can be tough. Besides the rigorous application process and the extensive list of required documentation, you also have to meet the landlord’s criteria. This differs from landlord to landlord. As a rule of thumb, they are looking for a minimum steady income and good credit.

Most landlords have an “at least 40 times the monthly rent” as a gross annual income requirement. This minimum can be met by one or more applicants. For example, on a monthly rent of $2,000 the minimum income required would be $80,000 a year. Mathematically speaking, it equivocates to roughly about 30% of an applicant(s) income. This income should come from some steady source

Credit requirements are a bit different in Real Estate terms. No Credit is completely "ok" with some landlords. If you have open accounts but have never been late or maybe just once or twice AND have relatively low debt you are credit worthy. Good credit is good. Great credit is great. Everything else, that does not fall into the above categories is considered bad credit and you will not be able to rent an apartment without a guarantor.

In cases, where applicant(s) have trouble meeting certain requirements, a guarantor is sought. Guarantor(s) personally guarantee the landlord that the rent will be paid no matter what. Some companies allow multiple guarantors while other only allow one. Usually, guarantors are required to make twice the applicants minimum (e.g. 80 x $2,000= $160,000), must have good/great credit and of course, must be able to provide all of the paperwork necessary to the landlord.

Being a Guarantor for an Apartment Rental In NYC

2009-12-07T12:57:00.004-05:00

A guarantor personally guarantees a landlord payment of rent in the
event the leaseholder fails to pay. Guarantors usually are required to
make at least twice the minimum income required for the unit and have
good to excellent credit. An ideal Guarantor would reside in the
tristate area but landlords are fairly flexible providing that it is a
U.S guarantor. Some companies allow multiple guarantors while other
only allow one.

There will be a lengthy application to complete (same as the
applicant) with all required documentation. The name of the guarantor
will appear somewhere on the lease, and will have to sign a rider or
the actual lease stating their responsibility. An actual appearance to
the lease signing may even be required

Guarantors are most commonly used with college students who do not

meet income requirements, age requirements (18 years of age to sign a legal document) and/or lack of credit. Although anyone could

use a guarantor, it is at the landlord’s discretion to accept an
applicant. In either case, landlords ask that either applicant(s) pay
several months of rent up front or they acquire the aid of a guarantor
or both. Most guarantors tend to be parents or businesses.

I believe the biggest complaint about being a guarantor is completing
the application. The paperwork required is extensive but required
mostly as a verification of identity. Rarely do landlords ever make
exceptions and require the bulk of the required paperwork. It is used
for verification purposes and to prove solvency

What is the standard Broker’s Fee in New York City?

2009-12-05T23:36:00.002-05:00

Technically, there is no such thing. It is illegal for Brokers to get together to standardize fees and so forth BUT to a certain extent there is some sort of industry standard. Up until the beginning of 2009, I would probably say that the standard broker’s fee for renting an apartment in NYC was anywhere from 12% to 15% of the annual rent and for sales 5% to 6% of the actual sale price. Commercial is just a whole other story.

Now (December of 2009) broker’s fees are just a bit less. Probably tethering in the range of 1 month of rent to 12% of the annual rent. In rentals, there are a lot of landlords willing to pay the broker’s fee for you

Rental Cost- $2,000

15% Broker Fee= $3600 ($2,000 x 12 =$24,000 x 0.15= $3600)
14% Broker Fee= $3360 ($2,000 x 12 =$24,000 x 0.14= $3360)
13% Broker Fee= $3120 ($2,000 x 12 =$24,000 x 0.13= $3120)
12% Broker Fee= $2880 ($2,000 x 12 =$24,000 x 0.12= $2880)
11% Broker Fee= $2640 ($2,000 x 12= $24,000 x 0.11= $2640)
10% Broker Fee= $2400 ($2,000 x 12 =$24,000 x 0.10= $2440)
09% Broker Fee= $2160 ($2,000 x 12= $24,000 x 0.09= $2160)
1 Month Fee= $2,000

Broker fees in the sales market remain almost unchanged. The seller will most likely pay the broker’s fee.

Sale Price - $400,000

6% Fee = $24,000 (6% of $400k)
5% Fee = $20,000 (5% of $400k)
4% Fee= $16,000 (4% of $400k)

More often than not, there is some wiggle room in any broker's fee. Just keep in mind that "wiggle room" should be fair and realistic.

What does OP (Owner Pays) mean?

2009-12-03T01:22:00.004-05:00

Every profession has its own lingo and the Real Estate is no different. Sometime you will see the term “OP” (meaning Owner Pays) written on apartment listing, this is meant for the agent or broker. It means that the landlord is willing to compensate the agent or broker a fee for filling their vacancy.

So when you are showed an apartment that is “no fee” by a licensed Real Estate agent, the landlord is paying their fee. Not all landlords pay an agent/broker a fee. The landlords that do pay the broker’s fee are selective with the agent/brokers that they work with. Some may pay the broker’s fee to one brokerage firm or a handful and not to others. Others may actually charge the agent or broker a fee to rent the apartment.

Then of course, there are few in NYC who will pay any broker a fee to rent their vacancies. It is with these landlords that you will most likely see the term “OP” posted somewhere on the listing. Whatever the circumstance may be, if you get to see the term “OP” it will typically mean “No Fee” to you.

Renting in NYC-The Application Process

2009-12-01T16:13:00.000-05:00

Searching for a rental apartment in New York City can be frustrating. After you have found the right apartment, you still need to worry about completing the application. On average, the application can take as long as a whole week to compile. I have seen people lose apartments all the time because someone else’s application beats out their application. By the time they find the next best thing, usually things go smoothly because their application is fully prepared.

To make sure that you don’t settle for second best, here is a very general outline of what you will need to have prepared for a standard application. Some landlords require more than others but I have added all requirements that I have seen more than once at its most extreme. The bolded items are the most common

Rental Application & Application Fee (Anywhere from $25 to $250 per person). Usually much more than just a credit check. Includes Housing Court History of New York and some other states

Recent Paycheck Stubs- On average it is usually the last 3 stubs but I have seen request for up to 3 months worth of pay stubs.

Employment Letter- Most recent employment letter should include position, salary and how it is paid out (weekly, bi-weekly or monthly)

Bank Statements- Copies of all of your bank statement typically only the very first page. This is used for verification purposes and you should expect to have at least the most recent 3 available. Bank statements should have name, address and account number listed on the statement

W2 and/or 1099- It should be attached to your tax return and if you keep everything in order then it should be no problem. Standard is just the previous year’s but I have seen as much as a 3 year requirement.

Tax Return- First and last page and will coincide with the W2 and/or 1099 requirements.

Valid Government or State Issued Photo ID

Copy of Social Security Card

Copies of Utility Bills (Current Bill)

Copy of canceled rent checks (Usually last 3)

Landlord Reference Letter- Stating the unit and the time you occupied, and that you were a great tenant

Personal Financial Statement

Birth Certificates fro Children under the age of 18

Valid Passport

Reference Letters

Of course there are always exceptions to rules and for the most part management companies are willing to work with what you can provide. If you are serious about your search, you should have everything together and be ready to apply as soon as you see the “right” unit.