Quick observations on looking for an NYC rental apartment
The NYC rental market is a deeply broken market. Things like rent control, high switching costs, and crazy tenant protection laws (that horribly hurt good tenants) cause mind bending distortions and completely disrupt the normal supply/demand balance.
If you are new to this market, get ready to learn some new rules.
UPDATE 9/18/2020:
Much of the advice in this article is out the window with the impact that the pandemic has had on NYC rentals. It is now very much a renters market, especially for family sized apartments. My rent dropped >20% when I renewed in August and some of my neighbors saw even bigger reductions. There are buildings on my block with only one or two tenants left. Bigger buildings are offering many months free to new tenants, and brokers fees seem to be all but gone on StreetEasy.
StreetEasy.com is the only game in town – by far.
It is amazing both how good StreetEasy is and how bad the others like RentHop, Zumper, and even the NYTIMES are. I never once saw a place on another site that was not also on StreetEasy – except for “phantom” places that were not real.
Besides having the most complete and most accurate listings, StreetEasy also has a great user interface. You can draw your own custom search perimeter rather than going with pre-canned neighborhoods.
They somehow also have compiled floor-plans for almost every apartment in NYC, which is super helpful when browsing places.
Pretty much the only thing I would add to the StreetEasy interface would be a searchable field for floor number (I am a heights sissy). Otherwise it is perfect.
The NYTIMES website on the other hand is almost unusable. Photos take forever to load, searches are a PITA, and the site is just generally frustrating. How could they get this so wrong?
Brokers intentionally list “phantom” apartments to generate leads
- You see an apartment that looks really good and it is not on StreetEasy and doesn’t have details like exact address,
- You try to schedule an appointment to see it
- You likely get something like either…
“Give me your contact number so we can discuss…”
…or…
“This apartment is no longer available, but I have other similar ones I can show you.”
They will then try to show you apartments that are already on StreetEasy so they can get a commission.
There are some amazingly well run buildings in NYC – especially some of the newer “communities”
Big companies like Equity and Durst have really figured out that making tenants happy is a good way to make money. I’ve lived in apartments where the landlord and tenants hated each other and acted accordingly… and it sucks.
These new buildings have amenities that tenants actually want and use like co-working spaces and game rooms and private parks. It is amazing. Look at this crazy place…
It is like living on a cruise ship – almost literally. I talked to a lot of people in elevators in these buildings and they confirm that these places are not just a show, they really are that nice to live in.
These buildings also usually have internal leasing offices instead of using brokers so they are no fee, which can make a huge difference because….
Brokers charge 15% of the annual rent as a fee
How is this still possible? I’ve seen a couple apartments where the broker literally took a couple photos, put up the listing on StreetEasy, had an open house for a couple of hours, and then collected a multi-thousand $ fee.
There must be something going on here that I do not understand. Why would a landlord ever let this happen? Don’t they realize that this directly translates into a lower return for them because a tenant that has to pay a 15% will have that much less money to be able to spend on rent?
Some apartments are under-priced and (unsurprisingly) those go shockingly quickly
I saw an apartment on Friday and by the time I texted the broker on Monday to say that I would happily pay anything they wanted… it was gone. If you see one of these, be prepared to act on the spot. Do not be tempted to negotiate, because you are not dealing with a rational actor on the other side (or at least you do not have any insight into their values and motivations since they clearly are not trying to maximize return).
There must be something going on here that I do not understand. Why would a landlord accept a massively lower return in order to save a very low opportunity cost? In the above case, the apartment was not even available for more than a month, so there was almost no chance that they would have to carry a vacancy. Waiting another day or two potentially could have increased their annual return by $10’s of thousands of dollars.
Interestingly, these unicorns seem to always have the 15% brokers as above. Hmmm….
Rent control
In my last apartment, my next door neighbor was paying $60 a month rent for an apartment that was probably been worth $2,500 month. The guy upstairs from me was paying about 1/10th what his apartment was worth and that was a NICE apartment. Batshit crazy stuff like this happens in NYC, especially in neighborhoods with old buildings like UWS, UES, Chelsea, and the village.
Unless you move in with your grandma or marry someone who did, then you can not have a rent controlled apartment. They are completely inaccessible to the market. In my neighborhood this represents about 1/2 of all the housing stock. Think about the effects on a market of removing 50% of the supply side. Yep, it is that crazy.
And I now this sounds crazy, but you probably would not want a rent control apartment anyway because…
RENT CONTROL DESTROYS LIVES
There is an actuarial cash value to a rent control apartment, and it ranges from hundreds of thousands to many millions of dollars depending on the apartment and when you plan on dying. Winning $2,000,000 would always make you better off, right?
Nope. Rent control is a prison sentence. I’ve seen case after case of people in my neighborhood who have had their lives ruined by it. People who never had kids because their apartment would not have been big enough. People who did not marry their true love because neither was willing to give up their apartment. People who never took that teaching position at the midwest university and have seen their careers stagnate since. People who never moved back to Helsinki and now will die far away from family support systems. If you spend enough time talking to a rent control lottery winner, chances are you will hear about all the opportunities forgone to stay where they are (in living quarters and in life). Turns out that having an unimaginably cheap and stable apartment in NYC does not make you happy, it makes you trapped.
Living in a rent control building
Eventually rent control tenants die, and if they did not plan ahead then those apartments end up on the market at market rates. But do not be fooled, these are not normal apartments. The distortions of rent control leave a lasting imprint on the apartments it touches. Landlords who own rent control apartments culturally see tenants as the enemy. They are structurally set up to make tenants want to leave, and they seem unable to break these habits even for market rate tenants.
My last landlord was like this. I was paying more rent on my apartment than the entire rest of the building combined, yet they went out of their way to make me want to leave. They could not help it. The general rule for making decisions is “if something is good for the tenant, then it is bad for us.” It is a crazy bizarro world to live in, and I would recommend staying out of it if you can. Oh the stories I could tell….
Lots of apartments on on all of the sites are no longer available
When you first start looking, you might be overly optimistic when you see how many great apartments are available. Do not be fooled – many of these apartments are no longer available.
There does not seem to be any incentive for listers (especially brokers) to remove an apartment after it is listed, even on StreetEasy (the others are so much worse).
Interestingly, the bigger, newer, well run buildings break this mold. Today I filled out an application for an apartment at one of these buildings at 430PM and by 7PM it was showing as “IN CONTRACT” on StreetEasy. So professional.
Many apartments are listed more than a month before they will be available
Many landlords list an apartment the moment they know that the current tenant will not be renewing their lease, so you should start looking at least 2 months before you plan on moving.
If you want to move in the fall, try to start looking in early to mid summer
Because some apartments are listed 2+ months before they are available, you really want to start looking earlier than seems reasonable. This will also give you time to get a feel for what the range of places are in the areas where you are looking so you will be confident to jump on the right place when you finally find it.
Winter is the dead zone
It is amazing how few apartments come available for rent after October. This is good since it means that you will have almost no competition, but it also means you will have a very limited selection to choose from.
If you are planning on moving in the winter, you might actually want to consider moving earlier than you planned. I know this sounds crazy, but the difference available listings between July and November is shocking, and looking in November you might be forced to settle for a place that you don’t like and will be sad.
NYC is loud
If you are like me and you really care about quiet, then you have to work hard to find the right place. Some of the new, well managed buildings have a “30-day out” clause in the lease, which I think is amazingly valuable since you can move if you end up above, below, or next to someone loud. Otherwise you will be very sad. Try really hard to spend some serious hours in your prospective new apartment before signing the lease, and also try hard to talk to the people who lived there before you. If you hear any noise that would bother you, or if the previous people give even slightly equivocal answers to the question “Is it quiet?” then think long and hard before signing that lease!
I came up with a tedious, yet successful system up to circumvent the (nearly inescapable) brokers fee. I wanted a downtown loft, so I searched Craigslist temp/sublets with keyword loft. I then emailed every single listing I liked and asked if they were subletting with the intent to return, or if they were subletting out the remainder of their lease (you’d be surprised how many are doing exactly this).
If they answer yes to the latter, then you follow up with “how about we just go directly to the landlord/management company and I’ll just sign a new lease with them, and you’ll be off the hook. If they say yes, viola, if they say no then you can still sublet with the knowledge that the lease will be up for renewal, and you are in a very good position to sign that lease.
This worked twice for me, very nice apartments, no fee. Probably 500 emails, so you have to REALLY not want to pay that fee, and I didn’t.
I ended up taking over the lease for my last apartment after asking my neighbor why he was carrying a couch down the stairs! :)
I would only add that I would try to assume the previous tenant’s lease rather than starting a new one. This gives you a (potentially much) shorter term, which can be great if the apartment ends up not working out – and you will be in basically the same position to renew at the end of the term, just with much more information after having lived in the apartment. The only gotcha here is to make sure you are not on the hook for the previous tenant’s damage so try to get that reset by doing a walk though with the landlord when you take possession.
Wow. Interesting to see the dangers of rent control, particularly the ‘financial prison’, I knew people in those situations NY 10 years ago.
Ho Chi Minh City has the same problem with fake listings. I used fake listings to negotiate down real ones, but I din’t know if it helped. I guess not so much in NY when 50% of the supply is locked up in rent control.
More confirmation that winter is no time to be looking for an apartment in NYC…
https://wpdotjoshdotcom.files.wordpress.com/2019/06/screen-shot-2019-06-04-at-3.13.27-pm-bd56be.png
https://streeteasy.com/blog/when-renter-demand-is-highest/?utm_source=marketing_emails&utm_medium=email&utm_campaign=190617_Marketing_Email_PeakRents&utm_content=herobutton
I intentionally looked in the Winter… low demand means low prices. Less to look at, but it’s still NYC after all.
This winter is seems to be a very good strategy in Manhattan. I think a lot of new developments are all coming online right now, so more supply than I’ve seen in a long time.
“rent-stabilized tenants are more likely to be unemployed compared with tenants in private market-rate units. These effects are particularly salient among white and high-skilled tenants.”
https://marginalrevolution.com/marginalrevolution/2019/11/rent-control-is-also-not-great-for-labor-market-outcomes.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29
So this happened….
https://ny.curbed.com/2020/2/6/21125413/new-york-rent-laws-broker-fees-real-estate
As someone who has paid a lot of brokers fees and deeply resented doing so, you might be surprised to hear that I am almost positive that this is a bad thing. It is based on a silly idea that if you prohibit these fees, that brokers and landlords will just say “Oh well, I guess now we will be happy to take 15% less for for renting an apartment.” Of course, for market rate apartments, the gross rent+fee was always less than or equal to how much the tenant was willing to pay to get the apartment – or else the tenant would not have taken the apartment. To think that passing a law like these will suddenly make all market rate apartments in NYC worth that much less to tenants is absurd. So either the tenents are going to continue to pay the same totally (or more) in a different and less efficient way or something will happen to actually make those apartments be worth less (if you lived in NYC in the 90’s you know how that looks).
Between this and the recent rent control changes, if I was a landlord right now I would be actively working on making my apartments vacant. Maybe turn them into stores or offices or anything but residential rental apartments.
I predict soon people will notice this and say “wait! that’s not what we wanted!” and try to then to force landlords to make/keep their apartments in the system which will again have the opposite effect as intended.
You can not cure cancer by making cancer illegal. You can not make housing affordable by making a rule “housing must be affordable”. it just does not work like that.
Good explanation here…
https://economics21.org/banning-broker-fees-new-york-city-housing
…although I’d argue that for rentals the REBNY screwed themselves by restricting access to MLS (RLS in NYC). StreetEasy seized the opportunity and did a better job than REBNY ever could so now is the dominant and
Are you a tenant or do you own a flat and want to earn some money with it? Why do you care that somebody upstairs pays 1/10th of the market price? I doubt that that small rent is a problem for the owner.
I am a tenant.
Because it distorts the market in destructive ways.
Why do you think this?
“Because it distorts the market in destructive ways.”
In what ways? What is the destruction?
“Why do you think this?”
Just a hunch, because the rent regulation is probably not that harsh. And even if, they are not entitled get “passive income” from owning some form of housing.
Saddest of all is that rent control destroys lives. I gave examples in the article, and have heard many more since it was written (just heard another today).
Rent control also clearly destroys housing stock value. When returns are fixed (and often fixed negative) there is no incentive to invest – or even to maintain. Landlords must try to minimize expenses because there is only downside to making tenants happier. This is massively distorting and destructive.
…and one that just irks me is the wat rent control destroys resources. When I look out my back window in January I see a sea of air conditioner window units covered in snow. Because rent control regulates the indoor temperatures that landlords are required to maintain, and tenants are explicitly non-subject to the costs of maintaining those temps, why would a tenant ever expend the cost of the 5 minutes of effort it would take to remove the air conditioner when the landlord pays for the hundreds of dollars of of fuel oil that wastes? ANd while this particular example kills me, it is really just a single case of a whole class of problems like this that you get when you break the voluntary connection between a person providing a service and a person consuming it.
I can only speak for NYC where I live, and here it is very harsh. As mentioned, it is common to have one person paying $65 and another paying $2500 for essentially the same apartment. It is also harsh to talk to an older person who is all alone because all of their friends moved to Florida a decade ago (in part for lower housing costs) but they had to stay because they could not afford to lose their rent controlled apartment. See the harsh irony here?
Being a landlord (rent control or market rate) in NYC is not a passive activity. I think you greatly underestimate how much work it is.
This is also a problem in legislature of course. If people are that unaware of energy costs than that is a indeed problem. However, not removing your AC does not mean that regulations increasing rents would be the best solution. I guess you are concerned about problems in your neighbourhood, so I apologise for my uninformed post, since I do not live there.
They are aware, they just have no incentive to do the right thing – so they don’t. In fact, because it is made non-voluntary, the landlord/tenant relationship always ends up being adversarial and zero-sum so the tenants go out of their way to create costs for the landlord out of spite even when this also creates costs for society.
It is not about raising rents, it is about dictating what must be provided and at what price. In non-rent controlled apartments, the landlord
wants tenants to be happy so they will stay, and tenants want to get the best apartment for the best price they can. This always ends up with both parties finding solutions that make each better off. Where I live now, (1) I pay for the heat so I have strong incentives to remove the AC units, and (2) the landlord offers to come every fall and remove the units for me. In practice, when you see AC units in windows in NYC in winter it almost always that building is rent regulated. Looking out my window now, I see something even more interesting – several buildings with ACs still in the windows on the upper floors but not the lower floors. Can you guess why? In brownstones in my neighborhood often the owner lives on the lower floors.