A couple stories out of New York City to show you the ultimate insanity of rent control / rent stabilization laws.
First up, a rent-stabilized apartment up for sale on the Upper West Side.
There’s nothing wrong with the spacious, bright apartment at 328 West 86th Street. So why is it priced at $549,000, barely half what it’s worth?
You can buy it, but you can’t move in.
The current occupants have a rent-controlled lease, and they can stay put for as long as they pay the bill. Which means a ghoulish calculation: “You pretty much have to wait for them to pass away, which could take five years or 30,” says listing agent Ray Kiswani of Bellmarc Realty.
The absurdity of the situation?
The rent is currently limited to $1,080 a month.
The co-op fee is $1,900 a month.
Again, the co-op fee is $1,900. Meaning, if you bought this as an investment, and you paid all cash for the property, you’d still be in the hole $820, each month.
This is obviously an extremely unusual situation, unlikely to be found anytime or anywhere else.
(What would happen if you decided to buy this as an owner-occupied unit, is another question. I assume you would be able to kick out your tenants and move-in. This is pretty much the law, even in NYC. This encourages owner-occupancy over renting, which can be seen as a good thing. Not, of course, if you’re renting.)
This involves a couple who live on the East Side of Manhattan.
Mr. Schechter and Mr. Barimo have lived in their rent-stabilized apartment for 11 years and pay less than $2,000 a month, but they have been residents in the building since 1968 and put just as much work into their previous apartment.
The couple estimates they’ve invested $30,000 into renovations to their apartment (again, this is an apartment, not a condo).
Fair enough, right? It’s good that middle class people can still afford to live in New York City, one of the most expensive cities in the world.
This couple has tried to make their apartment their own, to make it feel homey.
“The world is so abrasive out there, I want to be able to leave the streets and be surrounded by things that are handcrafted and beautiful,” Mr. Schechter said. “This is an oasis for us.”
In fact, the world is so abrasive that the couple has needed to take solace elsewhere.
Mr. Barimo said that over the years, they have had opportunities to buy other apartments but opted instead for a country house in upstate New York. Mr. Barimo is a television producer …
Perfect! I hope their second home has plenty of closets where they can stack all their money.
More: Sinking Your Money Into a Rental – By Vivian S Toy, The New York Times