Thank you very much for your response. it is encouraging to note that 4 units in NYC are not necessarily rent stabilized. I have been looking at those for some time now. I reason that since 5 units (commercial properties), have a higher standard when it comes to obtaining financing, I could come down one unit to 4-units, and thus stand a better chance of finding financing at 95% LTV. I plan to do a couple 4 units before I graduate to the higher units etc. I plan to do this in Brooklyn. What do you think about this ? I figure 4 units ought to be better than 2 units since both can be financed at 95 % LTV.
So since you have looked at many 4 units, is there anything you found out about those that I need to be aware of ? Let me know.
On another note, let me say that I have read a great many of your posts, and I find that you are very knowledgeable about RE in general, and NYC RE in particular. I must commend you for having the grace to share your knowledge with this community. I can imagine that it took you years, much effort and pain to acquire this knowledge. Again, thanks for the magnanimity in sharing, and showing us newbies the way.
For this, and with permission from all the other worthy contributors, I hereby propose that you be granted a CREONLINE honorary Ph.D (Real Estate Investing). You certainly are deserving of it.
I am a prospective first time home buyer. I am thinking of buying a 4-unit building in NYC. I plan to live in one unit, and rent the other units out.
Will I be subject to rent stabilisation laws if i own and rent out a 4-unit property ? What will it really mean to me as a landlord ? Are there any things I need to know about owning a 4-unit building in NYC ? is better to just avoid it altogether and probably go for a 2 family…Someone give me some directions please
Re: first time home buyer 4-Units - Posted by Frank Chin
Posted by Frank Chin on July 27, 2003 at 09:22:17:
Hi Casper:
Rent stabilization applies to 6 units and up, with these exceptions.
1 -If you had a tenant who’s been in a rental unit since WWII - they’re under RENT CONTROL
2- Or living in the unit during the transition from Rent control in the 1970’s
3- Or a descendent of the above who qualified to take over. But the laws was changed a few years ago not allowign descendents of these to take over.
4- Or some builders of larger apartment buildings took a subsidy to build the building, and agreed to rent stabilization. But most builders of 5 units these days avoid this.
I looked at many many 4 families, and I can say 99.99% are not rent stabilzied.
But some REI made a killing buying units with such tenants and just waiting for the tenant to move to a nursing home, or die. This is because the buyer demands a big discount to take on the task of waiting.
BTW, I started in REI with a 3-family in NYC, and lived in one of the units. Then I moved on to buy a two family and lived in one unit, keeping the 3 family. Great way to start.
My brother in law bought a 3 family with a rent control tenant in San Francisco with a discount, waited 14 years, and sold it with a discount. But still, the building nearly tripled in value.
In fact, a looked at rent stabilized 6 and 8 units thru the years, and the average rents went from 350/unit/month 20 years ago, to over $700/unit/month 2 years ago - and the building prices still doubled.
I wouldn’t worry about rent stabilization in 4-units. Just ask.