During my twenty-five years living in New York, I have only brought two men home to meet my family in Winnetka, Illinois. During the 1999 visit, I told my mother that I intended to move in with the guy, but never ended up moving in with him. And during the 2013 visit, I told my mother I intended to marry the guy, but never ended up marrying him. The two men were strikingly different but both times her response was the exact same:
“I’ll support you no matter what you do, but you are NEVER giving up that apartment!”
For the last twenty-two years, I have witnessed one real estate focused drama after another from the safety of my rent-stabilized perch in Murray Hill. My cheap rent has enabled me to travel the world, party like a madman through the late nineties and early aughts, reinvent myself career-wise at the age of fifty and avoid the financial sword of Damocles hanging over those paying market-rate rent that is subject to any increase the landlord can get away with. So when the guy from 2013 told me in 2014 that moving in together would entail a change of residence on MY part, his pronouncement logged in at #3 on my list of reasons to break up with him (just behind his allegiance to the Landmark Forum and his obsession with his ex-wife). Not only would my mother resent him forever, but it just didn’t make sense to give up privacy AND pay substantially more rent.
“NYC Rent Stabilized” is one of the most popular Google searches in this town. So if that’s what brought you to the York24.com blog, welcome! I’m happy to have you! And your search has no doubt turned up a slew of articles making the distinction between “Rent Controlled” and “Rent Stabilized.” One of the better pieces I’d like to point you to was recently written by Emily Nonko (@EmilyNonko) of Curbed New York: “New York Apartment Guide: Rent Control vs. Rent Stabilization…Everything You Need to Know About Rent Control in New York City”
Emily does a great job providing the lay of the land to those willing to do the work to secure lower rent. And let me tell you, a penny saved is NOT a penny earned. It’s more like 1.4 pennies earned because the government doesn’t tax you on money you were smart enough, and in my case lucky enough, not to spend. Friends of mine with kids have been driven out of Manhattan. Others living in emerging hot areas like the Meatpacking District have had their rents literally triple. And one friend actually gave up his $975.00 rent-stabilized one bedroom in Gramercy Park to buy a condo under construction for $615k on the Upper East Side, only to lose his job in the 2008 crash and sell the place at a $120k loss three months after he moved in. Needless to say, his comfy little bargain in Gramercy was NOT waiting for him with open arms.
But if you ask any of my friends, the biggest rent stabilization tragedy of all time comes at the hands of our friend Alec*. For more than fifteen years, Alec and his two-bedroom rent stabilized piece of heaven on the Upper West Side served as the social hub for all his friends and the starting line for literally hundreds of attractive women doing the morning walk of shame. Two bedrooms, huge living room and a yard out back. Alec never disclosed the exact rent but in 2004 we all remember him complaining that he was now paying “four digit rent!” Then in 2010, Alec met and quickly married Abby*. Etiquette dictates that you congratulate the groom and give best wishes to the bride. But in this case everyone familiar with the Alec’s real estate situation just shamelessly lauded Abby with praise for hitting the NYC rent lottery and asked her how soon she’d be able get her name on the lease. Almost everybody advised her to get the utilities in her name immediately so that if Alec tragically died, it would be easier to prove residence. But Alec’s new wife seemed oblivious to this prize of a residence that more than a few women had conspired to establish legal access to. Abby’s lack of gratitude for her new home was surprising enough, but when we learned that she actually wanted Alec to GIVE UP the apartment because of “all the ghosts of girlfriend past” we were truly shocked. Nobody was more horrified than my mother: “Who CARES how many women he slept with in that apartment? For such a great apartment that cheap she should just be happy that all those girls aren’t still hanging around the place!!!” But Alec was in love. And Abby was one very determined jealous woman. Last we heard they were living in Long Island City with Abby complaining that is was “just impossible” to save enough money to buy something while paying their “insane rent” and Alec complaining that he was only getting laid “once a month…at best.”
So clearly, my advice for HOLDING on to a rent-stabilized apartment can be summed up in a thirteen character hash tag, #dontEVERmove. But how do you FIND these elusive treasures that basically give you the same financial boost as one of those meager trust funds typically bestowed upon heirs to once-great family dynasties ravaged by alcoholism?
Well, as my father as always told me, “There’s no such thing as a free lunch.” Landlords holding the keys to these gems that they legally have to sell for much less than market rate aren’t going to waste a SINGLE second of their precious time facilitating a sale. Why would they? If you had a vintage Rolls Royce that you could only sell for ten grand, would YOU waste any time selling it when there were agents who could do all the legwork of advertising its availability, showing it and facilitating the extensive application and sales paperwork? Heck no!
Fees vary with each apartment and there is no such thing as a “standard” commission in New York State, but the lion’s share of rent-stabilized unicorns tend to come with a fee that is equal to 15% of the total first year rent. So if you scored a two-bedroom for two thousand (it can be done), the first year’s rent would be $24k and the broker commission — that you would include with the numerous cashier’s checks brought to the lease signing — would be for $3,600. That comes to $300 a month for the first year and by year two it’s paid off completely. If you stay in your place for twenty-two years like I’ve done, that comes to $13.60 per month. Renters love “NO FEE” apartments because they don’t realize it’s just a marketing term. There are people in this world who are selfless, giving and generous enough to work for free, but those people NEVER become landlords and real estate agents in New York City. It takes work to fill an apartment and that work is worth money. With “NO FEE” apartments, the landlord pays a fee to the agent who brings the tenant to the unit, and they usually recoup the loss by jacking up the rent. So it stands to reason that no landlord would EVER pay to rent a true bargain that is well below market rate. In New York City, the best deals are listed exclusively with Licensed Real Estate Salespersons (like myself) and the only way to see them is to work with another Licensed Real Estate Salesperson who can get the listing agent to show up and open the door so you can see it before it’s snatched up. And then of course hold your hand as you provide the MOUNTAIN of paperwork that proves you’re not a potential delinquent nightmare.
Is this self-serving advice? Absolutely! But it’s self-serving advice from someone who has been smart enough to serve himself well in this market. So maybe, just maybe, I could impart some further wisdom that could save you some serious cash in the short-term and long-term. But if you want to work with someone who has first-hand experience paying too much rent in this town, I hear my friend Alec is getting his real estate license so he can pick up some extra bucks on the weekends and get himself out of debt.
So if you’re willing to increase your upfront moving costs in order to reap financial rewards for years to come, give me a call. But just promise me this: whoever steals your heart, no matter how great they are, just make sure to establish up front that you and your amazingly cheap apartment are a package deal!
*Names changed to protect the innocent and stupid.
Peter Hanrahan Holmberg
Licensed Real Estate Salesperson
KELLER WILLIAMS NYC