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Re: Rent increases in light of revaluation
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Home away from home
 
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...yes, but the value of the building(s) has undoubtedly grown over the past 11 years. Plus, loan payments aren't usually indexed for inflation. E.g. if you started paying $5000/month in 2006, in terms of purchasing power, it costs you about 25% less to make that payment today than in 2006. Quote: Plus you neglected to mention that I paid $100,000 in taxes, easily another 100k in repairs and legal fees in heavily tenant-sided legal system. The RE is not equity where you just buy and sit on it. You paid an average of $9000/yr in taxes, for a building with multiple apartments? Sounds like you did pretty well most of that time. Plus, it wasn't really you who paid those taxes; it's your tenants, since you collected the rent from them. Quote: I understand income taxes when people realized gain and have income to report cool. Here I am taxed for the future gain that is not realized and quite ephemeral. Why don't they tax everyone who has two legs and two hands based on their potential to earn money? What in the wide wide world of sports are you talking about? Everyone pays property taxes. You pay those taxes, because you own the property -- the actual property. Not potential. Nor is that value locked up beyond all reach, as you can easily access it via an equity loan. Last I checked, no one is willing to lend me $50,000 based on my likely future earnings. Quote: The investment in DT RE is the biggest mistake I made. The cost of ownership goes up and equity goes down. Y'know, I am not a lifelong landlord. I know very little about your situation. I even agree that a smart, dollar-cost-averaging, diversified, low-fee investment in equities is a good idea. But I'm pretty sure that if your equity has gone down on an apartment building in JC over the past 11 years, then you're doing something wrong. Just a guess.
Posted on: 2018/2/6 21:10
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Re: Rent increases in light of revaluation
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Quite a regular
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2005/12/12 18:42 Last Login : 2018/6/1 15:46 From Departing Paulus Hook
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The amortization deduction is best to be perceived as a loan. You will have to pay back at the sale time. Plus you neglected to mention that I paid $100,000 in taxes, easily another 100k in repairs and legal fees in heavily tenant-sided legal system. The RE is not equity where you just buy and sit on it.
I understand income taxes when people realized gain and have income to report cool. Here I am taxed for the future gain that is not realized and quite ephemeral. Why don't they tax everyone who has two legs and two hands based on their potential to earn money? Aside from property tax we also pay OUR FARE SHARE of income tax which dwarfs bodypooh contribution into our tax levy. The investment in DT RE is the biggest mistake I made. The cost of ownership goes up and equity goes down. Don't buy anything in JC, take your money across the river. Invest in equity market (compare S&P 500 in 2008 and 2009). Don't wait until JC implode in its ignorance.
Posted on: 2018/2/3 0:32
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Re: Rent increases in light of revaluation
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Home away from home
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Even buying in that peak, you've certainly made much equity in that time, cash on cash probably 200% even if you put down 20%, plus $100k in cashflow. That's not too shabby. Plus, by the time you add in depreciation and deductible taxes, I think that negative is much smaller. Now, I doubt you were really at market rate with those tenants who refused your increase, I've never had legacy tenants anywhere near market, so that's an opportunity to reduce that negative further, no?
Posted on: 2018/2/2 2:38
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Re: Rent increases in light of revaluation
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Quite a regular
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2005/12/12 18:42 Last Login : 2018/6/1 15:46 From Departing Paulus Hook
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I rent two apartments to Mexican immigrants (purchased a property with them as tenants). One family lives there 27 years the other apartment was rented for 14 years. One family agreed on 10% increase, the other family didn't and refused to vacate. As of today I started the eviction proceedings. I had 1 thousand dollars positive cashflow. I expect to be around $700 dollars negative in 2018. That's after 11 years of ownership with an acquisition price of 2007. That makes it a very shitty investment. Good job Jersey City.
Posted on: 2018/2/1 20:45
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Re: Rent increases in light of revaluation
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Home away from home
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As mentioned earlier in the thread, "unconscionable" is variable / relative. If the landlord can demonstrate for a court that his total expenses for a set of units exceed rental income, then he has a good case. As for rents, and whether the market is softening, I can add that some of the larger units in the nicer developments are starting to get price cuts. I know it is anecdotal, but I have seen at least two units get fairly deep discounts over the past month or so.
Posted on: 2018/1/31 18:34
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Re: Rent increases in light of revaluation
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Home away from home
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if one has been charging below markets rents, there will be clearly pressure/need to raise rent(s) as costs increase, but for those already charging market rate rent, they have been getting a windfall (as far as taxes as part of cost) and now their margin's will shrink.
on the other hand in areas that are seeing reductions in assessments and taxes, pressure on rents should ease, though I doubt they will be reducing them, unless the market forces them.
Posted on: 2018/1/31 16:11
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Re: Rent increases in light of revaluation
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Home away from home
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Some years back, my attorney who was reviewing my lease said there is a state statute that prevent 'unconscionable rent increases'. You couldn't say raise rent 150% when the lease went month to month. The purpose was to prevent landlords from using rent to get rid of a tenant.
Would this law apply to having to do say a 30% increase to offset your 100%+ increase in property taxes? I don't know. As others have pointed out, the market may not tolerate such an increase, even if you are legally entitled to do it. I just rented two vacancies. Given the strong interest and ease of renting them, it appears the mid-price rental market is still strong. For the higher end ($2,000+ a month 1 & 2 bed), I have some anecdotal evidence , from high end apartments having to cut rents, due to lack of demand.
Posted on: 2018/1/31 13:02
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Re: Rent increases in light of revaluation
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Home away from home
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They don't give their methodology, but I assume that's rent for new leases, not all leases. $80 on a $2k lease doesn't seem like a lot to me. But I guess if I just purchased and that put me under on my taxes, I'd be more upset.
Posted on: 2018/1/30 21:10
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Re: Rent increases in light of revaluation
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Not too shy to talk
 
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Quote:
https://ny.curbed.com/2018/1/24/169251 ... c-rent-2017-decrease-2016 Median rents in NYC down ~4% YoY. Median is unaffected by fantasyland oligarchs.
Posted on: 2018/1/30 20:28
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Re: Rent increases in light of revaluation
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Home away from home
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Another aspect to consider is how federal tax changes may impact your overall tax bill.
Unlike residential property tax owners, if you are set up as a corporation or some other pass-through entity, you're likely to get a tax break. I suggest you talk to a CPA some time during the year to figure out your likely overall tax liabilities.
Posted on: 2018/1/30 20:03
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Re: Rent increases in light of revaluation
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Home away from home
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I always take these reports with a grain of salt, since so much of the upper end of the Manhattan rental market is fantasyland prices, same as the sales. You see condos drop from $30M to $15M because there was no actual reason to be $30M other than they thought they might get it from some foreign oligarch. Lower ends of the market are not nearly so volatile. But in general I agree with you, unless someone has let their rental slip far below market they can only raise it so high before pricing themselves out.
Posted on: 2018/1/30 1:05
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Re: Rent increases in light of revaluation
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Home away from home
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2007/7/4 16:37 Last Login : 2021/11/4 21:55 From Hamilton Park
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My impression is that landlords will not be able to raise rents very much, not because of the law but because of the market. There are plenty of units for rent (coming) on the market, combined with the folks who will have to rent part of their house, combined with the downward trend in rents in Manhattan, all of which will put a limit to what landlords can do. I know this, I am one of them and I have seen quite a few lingering for rent signs recently. I can only do a gradual increase at this point.
Posted on: 2018/1/30 0:18
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Re: Rent increases in light of revaluation
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Home away from home
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I was thinking along the same lines, but this is a particularly unique situation. I wonder if some housing court judges may prove to be sympathetic to the plight of landlords that are suddenly faced with much larger tax bills. Certainly, the section titled "What does the landlord have to prove?" in the linked article seems to indicate that it is possible for a landlord to raise rents substantially if the circumstances warrant it (eg, expenses exceed rental income) so this could be interesting.
Posted on: 2018/1/30 0:10
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Re: Rent increases in light of revaluation
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Home away from home
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It will need to fall within the parameters of what is a conscionable rent increase vs what can be argued an unconscionable rental increase : http://www.lsnjlaw.org/Housing/Landlo ... round-Rent-Increases.aspx
Posted on: 2018/1/29 23:50
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Re: Rent increases in light of revaluation
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Home away from home
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A lot of words, none of which address the original question. You obviously missed the entirety of the OP's point and question. His post clearly indicates that he already knows he is looking at a 100% increase in RE/property taxes, so he is asking other property owners (who happen to be landlords) what they are planning to do about such an increase. Your post added nothing of value, or substance.
Posted on: 2018/1/29 22:25
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Re: Rent increases in light of revaluation
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Home away from home
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2010/5/26 20:32 Last Login : 2023/9/14 15:34 From Hamilton Park
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Can either of you articulate how the answers you are blabbering about have to do with my question? Or do you hijack every thread and ramble on?
Posted on: 2018/1/29 22:21
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Re: Rent increases in light of revaluation
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Home away from home
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Market value will dictate the assessments. The Mayor's house was purchased for $800k the new tax rate is predicted to be around $16 per a grand. His house is now assessed at $100k multiplied by the current rate of $77 so he is paying around $8k but at the new rate the mayor could be looking at a $5k jump to near $13k in annual taxes.
Posted on: 2018/1/29 22:08
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Get on your bikes and ride !
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Re: Rent increases in light of revaluation
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Home away from home
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I don't have an answer to how landlords will deal with it, but property owners in general should expect a dip in their property values to "even-out" the difference. (Example a house worth $500,000 and $10,000 annual taxes might now be worth $480,000 if they're facing $25,000 taxes. Don't get bent out of shape over the numbers, I just pulled them out of the air.)
Posted on: 2018/1/29 21:36
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Rent increases in light of revaluation
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Home away from home
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2010/5/26 20:32 Last Login : 2023/9/14 15:34 From Hamilton Park
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How are other small time landlords handling the reval and rent? I'm looking at over 100% increase in my RE taxes and there is no way I can ask my tenant to cover the change. I'm hoping I can get 50% out of them or have them leave and then hopefully increase it with new tenants and be back to even.
Posted on: 2018/1/29 21:30
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