For 70%, What Happens When Rental Income = $0?
70% of multifamily building owners in New York City are not the 'fat cats' that many people think of when looking at the Super Tall apartment buildings now dotting the NYC skyline!
70% are considered 'small' owning one or two buildings, with under 50 units.
And then we have an owner like one of today's guests who came here from Britain and owns one rental unit on Staten Island. And, were it not for her incredible fortitude and work ethic, she would have lost that property.
Our two guests...
Meet Emily Barlow: A landlord of one unit with a tenant who did not pay rent and refused to vacate the property since 2019. Emily worked 100 hours a week to fulfill her obligations on the right side of the equation below and fought for eviction in a court system that tends to be very tenant-friendly.
Meet Ann Korchak: Ann is also the owner of a multifamily building in Manhattan that has been affected by the overall political, legislative, court, and Covid mandates enacted by NYC and NYS. Ann is also the President of SPONY, the Small Property Owners of New York which is an advocacy group with about 600 members.
The Simple Multifamily Formula
Rent - Expenses = Net Operating Income (NOI)
Mortgage
Insurance
Utilities
Taxes
Maintenance
So what happens to landlords like Emily when the rent becomes $0 and yet the expenses still need to be paid or else the building could be lost?
Certainly, during Covid some help was available for some through programs like ERAP (Emergency Rental Assistance Program), but in many ways, she was on her own.
Owner Headwinds
Legislative: Laws that seem benign and good for tenants may ultimately work in reverse if building conditions are allowed to decline. One law that comes to mind is the NYS 2019 Housing Stability & Tenant Protect Act which put serious restrictions on owners vis a vis rent increases and benefits for doing renovations on apartments and common spaces. Another, for buildings greater than 25,000 sq. ft., is NYC Local Law 97. Good Cause Eviction being bandied about in Albany is another piece of legislation that would be detrimental for owners (Do You Ever Wonder spoke with Alexander Lycoyannis about Good Cause Eviction here https://youtu.be/1qlQwRabW54?si=2mbs1VHpkOQe2dN8).
Political: For politicians in New York State and New York City who will typically pander to one side or the other in a conflict/dispute, there are many more tenants than there are landlords giving some clue to which side of the argument they will be on.
COVID-19: Rent/eviction moratoriums were necessary for some, but for the landlords their bills (see above) still had to be paid!
Courts: Actually trying to evict whether during Covid or at any other time, the courts tend to be very tenant-friendly.
Have your own story to tell? Let us know at mhaltman@hallmarkabstractllc.com.
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