Selling your NYC Rent Stabilized Building

Are you a property owner that wants to sell their condo, investment property or needs to rent an apartment or retail space in New York City? Call or text me: Sam Moritz, licensed real estate agent, 203–209–3640.

Do you know a property owner that might need real estate help? Refer me! I provide great and professional real estate services across all five boroughs.

How much is your NYC rent-stabilized building worth?

Long story short: the value of a rent-stabilized six family apartment building, where the NET rental income is around $100,000 per year (net means total rents minus expenses), has dropped about 20% since 2019, when the “the Housing Stability & Tenant Protection Act of 2019” was passed in New York City. 

What is rent stabilization?

In New York City, about a million apartments are under “rent stabilization,” which means, according to the rent guidelines board of NYC (definition here) that “Rent stabilized tenants are protected from sharp increases in rent and have the right to renew their leases… The NYC Rent Guidelines Board sets the allowable rental adjustments for rent stabilized renewal leases each year.”

Today, rent stabilized apartments can not become market-rate apartments, even if a long-term tenant vacates the apartment. But, for the most part, this wasn’t the case five years ago. 

Back in the beginning of 2019, I was working to sell a six family building in Bushwick. At the time, I was living in the neighborhood, near the Dekalb avenue L stop, and was doing most of my real estate work in the area. The building that I was working to sell was brick (more sought-after than frame – wooden – buildings, because brick is more durable than wood), and the building had six apartments and no commercial spaces. Back then, these buildings, no matter the income, had more upside than they do today, because if tenants moved out of their apartment, landlords could renovate the units, remove the units from rent stabilization, and charge close to market-rate rent. 

For that building, I received an offer of $1,100,000 — a good, fair price. Unfortunately, the owner was holding out for a little bit more than that — and a few months later, the laws changed, plunging the market for rent-stabilized buildings into a lot of uncertainty. 

That year, “the Housing Stability & Tenant Protection Act of 2019” was passed. These set of laws have been controversial. It prevents landlords from being able to substantially increase the rent on rent-stabilized apartments even when a tenant moves out. No matter the condition of the apartment, and no matter how much renovation the unit may need, owners can, to an extent, only increase the apartment’s rent a little based on repairs made.

Some of these apartments need substantial renovations. 

But alas, I’m not here to discuss how right or wrong the law was. I’m here to discuss the value of these buildings.

Near the building that I was working on in 2019, on Wyckoff avenue, a six family, frame building, sold for $800,000 in 2021. This building likely would have been sold for around $1,000,000 pre-2019.

Recently, I was asked to shop around a six family brick all-rent stabilized building in Bed-Stuy, close to Bushwick. The current total net income of the building was around $100,000 and I received many offers in the range of $700,000. Investors are determining the value of these buildings just based on their current income.

So, basically, prices of rent-stabilized buildings — at least with six units — have dropped by about 20%. I’ve spoken to some owners who are hopeful that perhaps the laws of 2019 might be rolled back substantially in the next few years, which will once again increase the value of their buildings. 

There’s a lot being written about the 2019 law. Here is a link to a Real-Deal article about everything from earlier this year.

Are you a property owner that wants to sell their condo, investment property or needs to rent an apartment or retail space in New York City? Call or text me: Sam Moritz, licensed real estate agent, 203–209–3640.

Do you know a property owner that might need real estate help? Refer me! I provide great and professional real estate services across all five boroughs.