My First Two Years as an Owner-Occupied Multifamily Property Landlord in NYC
In March 2015, I bought a 2-family home in the Morris Park section of the Bronx, NYC. I was excited beyond words. I was able to purchase and own a piece of property which in theory could not be beat: appreciate in value each year, tax incentives, and I build up equity as time passes. It made so much sense when compared to just paying rent, which was paying someone else’s mortgage.
What no one told me was all the “other” expenses that came along with owning a multifamily home. The heat had to always be at least 68 degrees Fahrenheit half the year or tenants would call 311 and get me fined (gas to keep the house warm cost me $850/month because of the poor insulation). If trash and recycles are sorted out incorrectly you get hit with a $100 (up to $300) fine from the sanitation department each time. Maintenance was averaging $300-$500 per month because I was useless in solving any house-related issues (never having done any maintenance myself before). Water bill was averaging $300/month. Electricity was $250/month. I got Terminix termite protection plan after a termite scare that averaged out to $150/month and also a pest control plan at $70/month. I even signed up for Homeserve after a while for basic house issues which came out to $65/month (a real life saver). The internet, phone, TV plan came out to $30/month because I worked for Cablevision that time, which owned Optimum. It didn’t help that the house needed some fixing and I spent $22,000 to fix up the first floor apartment and basement.
The year 2015 was a very tough learning experience. I spent much more than I should have because I failed to understand all that was required of being a homeowner and also having tenants. One of the tenants used to work with me in Cablevision and asked me about the spare apartment I had in my house. We arranged a lease and he moved in on June 1st, 2015. Then in November of 2015 things started going bad. The tenants started having guests over which were a mixture of family and friends. Those family and friends started staying weeks, then close to a month. I made it clear to the tenants that the lease doesn’t allow so many extra people living there (10+ more people!). Long story short they started paying rent late and then January 2016 was the last time they paid rent ($1,800/month). I tried to reason with them but they refused to pay the rent, to kick out the extra people, and also refused to leave the apartment.
The tenants started to have fights which damaged the property, parties, smoking marijuana inside the home and in front of the house, and getting into altercations with my neighbors. The neighbors complained continuously to me and after all the disrespect, I decided to hire a lawyer to start the eviction proceedings. My girlfriend at the time had less patience than me. Instead of supporting me and giving me strength to keep my anger inwards, she started provoking them. I knew this plan of actions would prolong housing court eviction process (especially since one of the squatters had children). It was a very tough time and everything in my soul wanted me to knock out and beat these deadbeat tenants to a pulp. I even found out one of the squatters was a BackPage prostitute (one that had two children) with random men and groups of men coming in and out of the apartment. While this all occurred, I called police officers repeatedly, sometime for 3-6 hours straight, and cops never came. When they did come, they came 5+ hours later when the issue was clearly gone (usually at 4am, surprised the issue was gone at 4am when I have been calling since 9pm the previous day?).
My eviction case was dismissed by the VERY biased Bronx Housing Court Judge last minute because of a technicality, all because I would not let the illegal tenants stay 90 days extra (they are not even on the lease). They missed their court date twice, and on the second day came late at 12pm after the 11am call, and they were supposed to be there at 9:30am. Court attorney still let them proceed in the case. Then the tenant left, leaving his “fiance” behind named as Jane Doe, and still let the case be heard.
I started another case with another lawyer and finally had an official eviction date on September 30th, 2016. I paid for the Marshalls to come in advance because these squatters were making my life hell. They provoked fights with me but I did not give in. They keyed my car. They called police officers saying I was harassing them. They lied about me turning the heat off and electricity off. They would throw trash all over the property and cut garbage bags. And of course, the judge did not care and cops never came to help. The cops refused to file a police report. I ended up paying the squatters to leave because they were going to drag this out especially the prostitute with both her special needs children (no doubt that way because of her hard drug and alcohol use).
Little did I know that these scum put holes in every single wall, broke the radiators, water pipes, toilet, bathtub, and etc. The contractors all came around $40,000 to fix the apartment (essentially a gut rehab). I was able to negotiate $32,000 in total. I have lost my entire life’s savings from losses upon losses endured in 2015 and 2016. Now I have cases pending against the original tenants for missed rent and damages, and also for the squatters for missed rent and damages.
What I have learned in the first two years is that background checks, cosigners, and also 3 months deposit would definitely alleviate some of the issues I faced as a new landlord. I consider the last two years the best class in land-lording. I learned how worst case scenario tenants could be, how ineffective/helpful the NYPD are, and how one-sided housing court is in NYC. I also learned to make sure you have 6-9 months of mortgage and expenses set aside because if you depend on rental income to cover house-related expenses with no emergency fund, you will find yourself in foreclosure.