A week ago, I received an email about a vacant industrial warehouse on 46th Street in Sunset Park that recently sold for $1,100,000. Each of the 4,900 square feet came to $225. I wondered why a bare bones property like this would cost so much, but somewhere out there a landlord was probably excited that it cost so little.
This is the landlord-tenant language divide. Tenants often complain their landlord hikes up rent, adds fees or takes their time to do necessary repairs. Landlords complain of their high property taxes, late rent checks and the cost of maintaining properties. On each side is a gut reaction to what a space should lease for, and often, neither is interested in the other’s cost-related woes.
My roommate Will recently got a call from Eugene, the owner of our two-bedroom apartment in Prospect Heights, about our upcoming lease renewal. A few of his initial suggestions sounded a bit shady. Looking to increase his revenue, Eugene suggested we pay our own heating costs on top of a $200 rent increase. Other suggestions, like charging extra for our outdoor space, which was previously free, were also thrown out there.
To catch you up to speed, Will and I moved into our apartment on Jan. 1, 2008, and received a discount of half a month’s rent to deal with the poor state in which the apartment was delivered. Beyond the $725 we saved, we put our own sweat and money into scrubbing the floors, painting all the walls, and replacing light fixtures and outlets, putting down carpets on ugly tile floors, and making an actual home out of a previously mold and grease-covered, albeit spacious, mess.
The building was built around 1930, and what was one large four-bedroom residence on the second floor was split up into a pair of two-bedroom apartments that top three commercial spaces. Over the year we’ve resided on Washington Avenue our oven was replaced; the ceiling has been temporarily repaired three times thanks to a leak; and our bathroom faucet was recently replaced for the same reason. Sometimes our heat doesn’t come on, and Eugene recently relieved our heating pipes of the air that had accumulated within them.
For all this, we’ve paid him $1,450 every month.
AIMING TO WRAP MY head around why Eugene might think his proposals were realistic in such an economic climate, I did some research. Clearly a small-time landlord, Eugene bought our property in 1987, and lived here for a while before eventually moving out to Coney Island with his wife. According to a property records search for his name, he also owns the space that houses a garden store down the street and an auto repair shop in the Stapleton section of Staten Island. (This does not include, and I am not aware of, any properties he may own that are listed under names other than his own, though he’s made allusions to other properties.)
According to city records, Eugene will pay about $19,755 in property taxes this year on our building, an increase of $3,279 over the previous year. Annually, the residential units in my building rent for $31,800, on top of what rent he collects from a women’s accessories shop and a vegan restaurant downstairs.
From the perspective of my landlord – who compared our Prospect Heights rent with the high prices in Park Slope and concluded that he should be making more of a return – neighborhood amenities have improved and many new buildings have gone up over recent years. According to a 2007 report by the Furman Center for Real Estate at NYU, Prospect Heights had a rental vacancy rate of 2.7 percent and the median monthly rent, including regulated units in the area, had increased to $801 from $696 in 1990.
Despite the current economic forecast, these factors embolden Eugene’s argument in favor of a hike. But from the tenants’ perspective, according to a study of Brooklyn real estate by brokerage Marcus & Millichap, 85% of the housing stock in South Crown Heights/Prospect Heights (we live on the border) is either rent-regulated or subsidized, so why are similar apartments without the same regulations?
AFTER WILL AND OUR neighbor, Chelsea, played phone tag with Eugene about his proposals, we set up two meetings. First, to strategize a counter proposal and second, to present said proposal. Fearful that our market-rate apartment could garner whatever amount another tenant would be willing to pay – and the recent influx of young renters to the area would be far more willing to pay since we’ve fixed up the place – we set out to bridge the landlord-tenant language divide.
A few days before our meeting with Eugene, Will, Chelsea and I sat in my living room and discussed our options. Will, having previously lived in a rent-stabilized apartment, was pessimistic about what we could do to prevent such a drastic increase, considering the lack of regulation on our apartment. Chelsea was worried that her smaller apartment, with no outdoor space, would see the same increase as our larger and more expensive apartment.
After my previous landlord kept rent static for three years, I felt like our investment in the property should at least win us a freeze for the upcoming year. Like a lot of people, we were all worried that the economic climate could mean less income at the same time we might get hit with an increase in housing costs. Like many basic costs of living now, income is not keeping pace with housing costs.
Our proposal included a 5 percent rent increase – an extra $870 annually for my apartment and just above the 4.5 percent increase on one-year leases for regulated apartments. Next, we devised a demonstration of how we’ve made real homes of our previously uninhabitable apartments and plan on remaining in them for the foreseeable future, guaranteeing rental income through a troubled economic climate. We figured if Eugene wanted us to take on heating costs, we wouldn’t like it, but we would take on the extra $1,000 or so per season (for both apartments combined) if the rental hike was capped at 5 percent.
Should the meeting turn negative, we resolved to stick to our talking points: the country is in a recession; we’re great tenants who’ve put our own time and money into this property.
Our aim was to stay positive, lest the landlord-tenant divide grow further.
FINALLY, THE DAY CAME and the three of us sat down with Eugene. He began with the proposed $200 increase as he laid gas bills from Keyspan across the table. Visibly distressed over the cost of heating, it was clear that it had become his main concern. We offered to pay it, as long as our rent hike didn’t exceed 5 percent. He was starting to back off the $200 figure and we knew it could be a lot worse.
After some consternation about his profit margin, Eugene claimed to have a mortgage on the building to impress his point upon us. He did have bills to pay, but I reminded him that property records indicate the contrary, which he denied and stated "that is my personal business."
Next came the immediately dismissed suggestion that we chip in on the water bill, but it was merely a last ditch effort before he finally agreed to our proposal.
Overall, I think we came out fairly unscathed, though I still do not believe that our costs should have gone up at all considering the return. But I realized that when the rent goes up, there isn’t always a return for the tenant – hence the value of homeownership. The residential rent increases in our building will pay about half of Eugene’s tax hike this year, and unburden him of heating costs. Though he did promise a new enclosed structure for garbage cans and to fix pipes that tend to leak onto the floor below, both of these issues are his responsibility anyway.
In the long run, Eugene is like most landlords of average Brooklyn buildings: he squeezes what profit he can, and re-invests as little as possible into the comfort of those who live there. But from his perspective, Will and I live in a cheap apartment, close to transportation and Prospect Park and with little discomfort at all.
But at least for now, we’ve compromised and bridged the landlord-tenant divide.