Archive for June, 2008
I don’t get it: Why would one choose to rent?
June 27th, 2008
Nearly every real estate agent out there is trying to convince their clients that buying makes more sense than renting. But… in the heated Brooklyn real estate market, an argument can be made to the exact opposite… without much effort.
We compiled an exhaustive, handy list that strongly builds the case for rentals in the borough—whether any (or all) items on the list outweigh ownership or not… we leave to you to decide.
The list also includes quotes from some of our clients and friends, who went through the trouble of explaining why they prefer (or have no choice but) to rent.
We thank them all for their time and willingness to share their views—and in particular, we extend our thanks to: Gene T., Miranda D., Kim, Nicole Yolanda, Jonathan S., Mr. Klein and Mrs. Schwartz, Jacob W., Josh F., Francis, Frances D., Mr. Steinaker, Tonya F., Miss Koralenko, Dexter H., Janine L….
The list is sub-categorized based on common denominators…
Convenience
- No bulbs to change, no window cracks to repair, no lawns to mow, no termites to exterminate
Affordability
- Renting is more affordable than buying. “Have you seen the prices of real estate property in Brooklyn? For example, a $450,000 1-bedroom condo, with maintenance and taxes, could run up to $3,800/month—in a significant contrast to a similar rental, at about $2,700.”
- “I just finished college and got my first job. No lender in hell will give me a loan to purchase my own apartment—as a matter of fact, I’m looking at paying off my school loans first.”
- “I live in a rent-stabilized apartment—buying could never, ever beat the deal I have right now.”
Location Advantage
- “I’ve had enough of commuting, it’s just easier to rent close to work… I work in the Methodist Hospital, and own a condo in Bronx.”
- “We own a limestone in Fort Greene. It is cheaper to rent an apartment in this school district [P.S. 321] for a few years than to buy another piece of property in Park Slope just to be able to send our two children to this school. It’s also cheaper to rent here—however ridiculously expensive apartments may have become—than to send our kids to private school/s. We upped our family and moved it only a half a dozen of blocks away—and are renting out our limestone to a great couple from SoHo.”
- “Our avenue [Fifth Avenue] is the coolest combination of fantastic coffee shops, awesome boutiques, fabulous restaurants, local cooks (as in: weirdo), Brooklyn old-timers, trendy newcomers, environmentalists, chess players, yoghurt consumers. Me and my two roommates pay $650/month to live in the epicenter of Brooklyn’s life. How many friends would I have to gather and convince to buy a brownstone with me in order for us to be able to pay a $650 mortgage each? 20? 40?… Yeah. Really.”
Investment Preference
- “I’d rather invest in the financial markets, as they typically outdo real property ownership in the ROI domain.”
Flexibility
- “I suffer from severe fear of commitment. If I rent, I can easily pick up and move (if I, say, start liking another neighborhood better)”
- “My company relocated me to Brooklyn, and I’m on a 3-year contract. I don’t think it would make too much sense to buy at this point… this early in my relocation.”
- “I like to travel, and I prefer to rent a “base” in Brooklyn to come back to—and I like the simplicity and financial sense of subletting my place while I’m away.”
Few Buying Opportunities (“Frustrated Buyer Syndrome”)
- “We are a “buyer not-meant-to-be.” We’ve been waiting for years now for Brooklyn’s real estate prices to go down, and nothing… In the meantime, we’ll keep on renting, and stashing our money away for the day the right opportunity comes by.”
- “I sold my apartment last year, convinced that the market has peaked. I haven’t found a comparable one to purchase in this area as of yet… so now I rent, and wait.”
We’d like to hear your reasons why (or why not) rental would make sense. Help us grow the list…
Divorced… or about to get single again? Now what? What do you do with your rental apartment?
June 20th, 2008
On June 14th, Brooklyn Paper cited Kings County Supreme Court sources and declared Brooklyn the city’s “Splitsville” central. The borough’s divorces are up 30% in four years—and the “sad trend” was graphically illustrated through an appropriately colored, blue chart.
It’s not too big of a secret that divorce and real estate often mingle in not-so-pleasant ways: disposition of a formerly happy family home often causes a host of problems in a divorce proceeding and divorcees’ life-to-come.
When it comes to marriages, real property is typically an emotional possession; but from the practical point of view, it is extremely difficult to divide between formerly emotionally engaged parties. Real property is not easily converted to liquid funds; it is expensive to maintain, and implies tax liability. Rental apartments, on the other hand, are not as emotionally imposing on either party, and could be fairly easily replaced with a smaller, more appropriate unit in case of urgent need.
From a point of view of real estate professionals, we get typically involved in rentals to divorcees with the acute awareness of the utmost of urgency and tightest of deadlines. Divorced people need to rent immediately, and tend to be less demanding in terms of amenities—what they traditionally require is speed, and immediacy of attention.
For the sake of brevity, we will only address situations involving rental properties; broken relationships are hard enough—can you imagine when a mortgage is involved? Ouch.
First, what to do when one person must go, and the other decides to stay? If the lease cites both yours, and your ex (or ex-to-be) spouse’s names—have it redone. Most landlords will want to have only the remaining spouse’s name on the lease. Most landlords will also be understanding of the situation and would want to make sure to make the process relatively painless.
Whichever party stays in a rental apartment—covering the rent can become an issue, and so what are they to do…
…but get a roommate! Picking up a stranger or a friend to split the cost of a rental apartment in the heated Brooklyn rental environment is the most logical course of action; as agents, we find this to be the most frequent path taken. Living with a loved one—and usually a combined income—normally allows one to live in a preferred neighborhood in a decent size apartment. When love goes to hell in a hand basket, however, suddenly affording the same type of domicile can become tricky without the help of a second party. Picking up a roommate can boost your budget from, say $1,300/month, to $2,600/month, thus allowing one to stay in their neighborhood of preference, close to friends and favorite hot spots. I, personally, have been with my roommates for quite some time at three different abodes, but all have been in the area we love precisely because of the point mentioned above. It’s much, much easier to get a two- or three- bedroom place for a $1,000 each than it is to find a one-bed (or a studio even!) for $1,000 by yourself.
Divorces and split relationships are traumatizing and painful enough, so moving out alone can realistically only compound the situation. One should attempt to keep the stress level to a minimum by picking up a roommate and getting a new place to call home immediately. Who knows, it may just end up being the ultimate bachelor/ette pad!
Licensed Real Estate Salesperson
Ideal Properties Group LLC
mcolombo@idealpropertiesgroup.com
917.757.4958
Who Recently Moved to/within Downtown Brooklyn***?
June 16th, 2008
This report examines the profile of tenants who moved to (or within) Downtown Brooklyn in the first quarter of 2008…
(***For the purposes of this Report, “Downtown Brooklyn” includes nine neighborhoods in the borough: Boerum Hill, Brooklyn Heights, Carroll Gardens, Clinton Hill, Cobble Hill, Fort Greene, Park Slope, Prospect Heights, and Windsor Terrace.)
Let’s meet Downtown Brooklyn’s typical tenant of Q1 2008… He or she:
- is 21 to 25 years old
- is one half of a couple (roommate or family)
- lived in Brooklyn before
- works freelance in entertainment industry
- makes $50,000
- needs no guarantor to be approved for an apartment.
Age
According to Ideal Properties Group LLC documentation, it would seem that young adults prefer to move during cold months. 93% of those who rented an apartment in Downtown Brooklyn were 21 to 35 years of age. The single largest sub-group within this category is that between the ages of 21 and 25—this age group makes up 42% of all those who moved to (or within) the area from January 1, 2008 through March 31, 2008.
Status: Singles v. Couples/Roommates
Singles appeared to prefer staying put during the cold early months of 2008. Couples and/or roommates make up three quarters of those who moved into a rental unit during Q1 1008.
Previous Residence
Brooklynites kept on dominating the rental market during the first quarter of 2008. 47% of all those who rented an apartment during this time—previously lived in Brooklyn. The second largest group were Manhattanites, at 27%.
Occupation
Freelance writers and entertainment occupations were on the move in the first quarter of 2008. 33% of tenants who moved to (or within) the area were employed by the entertainment industry. In general, creative professions seem to have moved more than others—24% were those employed in art, design, and architecture fields; and 9% in advertising and media.
Median Income
Median income of people who moved to (or within) Downtown Brooklyn in Q1 2008 was $50,000.
Gender
It seems that moving didn’t discriminate along gender lines during the first quarter of 2008: 51% of those who moved were male, while the remaining 49% were female.
Guarantor***
18% of people renting in the area in Q1 2008 used a guarantor during the rental approval process. Half of the guarantors were female (the other half male), and a guarantor’s median income was $425,000.
***Guarantors are usually required by local landlords when an applicant for a rental unit either makes less than 40 times the rental amount, has blemished credit, or no credit. Should a tenant default on rent payment, a guarantor would guarantee rent payment by assuming full financial responsibility associated with the rental… for the entire lease term. An income of approximately 80 times the monthly rent is required to qualify to act as a guarantor.
research@idealpropertiesgroup.com
Comments: Who Rents Here?, Brownstoner
Do you speak the Code?
June 6th, 2008
Can you decipher residential rental Adspeak?
Ever falling behind in our race against time, we all tend to cut verbal (and written… and typed…) corners by inventing ways to speed up our communication. Abbreviations and acronyms help us appear masters of the keyboard, they help us seem indisputable experts in our respective fields; they make us look more “in on the game”…
And when we don’t know their meaning, they make sure to help us reach the farthest corners of frustration.
We abbreviate our emails, our text messages, and we speak in code. And real estate professionals join in the fun.
Here are some of our usual suspects – and if you encounter others, let us know. Chances are we’ve seen (or used) them before…
a/c – air conditioning
appl – appliances (e.g. refrigerator, stove, dishwasher, microwave…)
apt – apartment
avail - date when the apartment will be available for rent
ba – bathroom
balc – balcony
br – bedroom
bldg – building
DM – doorman
dr – dining room
dplx- duplex (bi-level) apartment
d/w – dishwasher
EIK – eat in kitchen
elec – electricity
fpl – fireplace
full bath - bathroom with a sink, toilet and bathtub/shower or stall shower
furn – furnished
half bath – washroom with a sink and toilet
H/HW – heat and hot water
hook-up – electric and plumbing in place for tenant to install a washer and dryer
hw or hrdwd – hardwood floors
kit – kitchen
kitchenette – super small kitchen (under 50 sq ft)
lr – living room
PS – public school
REBNY – The Real Estate Board of New York
RR – railroad apartment
sec dep – security deposit
sep – separate
ter – terrace
twnhse – townhouse
unfurn – unfurnished
util – utilities
wbfp – wood-burning fireplace
w/d – washer and dryer
yd – yard
