Posted by Stacy on February 12, 2002 at 15:53:50:
In Reply to: Vacant Building... renovation question posted by Ltrain on February 11, 2002 at 15:06:38:
First, check to see if the building was stabalized. You can get those records from DHCR. That will tell you exactly what the previous rents were. Also, if you haven't already, it's worth checking with the NYC Department of Buildings to make sure all six of the apartments are legal.
I believe the formula for how much rents can be raised for MCIs is set by DHCR, tho I could be wrong about that. As you said, the amount the monthly rent can be raised is 1/40 of the cost of the improvements. Keep the receipts for all of your materials, and keep records of the time you put into each apartment. That way, if it ever came down to it, you could calculate an approximate value (what you would have had to pay contractors) for your labor.
My knowledge of landlord oversight is very hazy, but so far as I know, no one is required to inspect the building to make sure the rents are legal. (You may have to get an inspection to make sure the apartments are up to code before you can rent them. I have no idea.) The rent price only becomes an issue if a tenant later pulls those DHCR records and questions the rent hike. So long as you have good documentation and stay reasonably close to the guidelines, raising the rents shouldn't be a problem.
BTW, all this only comes into play if the building is stablaized. If it's not, you can charge whatever you want. If you're still in the process of purchasing, that's definitely something to check on. Good luck.
: I am purchasing a six family building in Brooklyn that has been vacant for over 2 years. I am doing a complete renovation (new electric, hardwood floors, sheetrock, windows, plumbing, kitchens, bathrooms, etc.) The rents per apartment were approx. $500 a month at time of vacancy. Equivelent apartments in this area are now around $1200 to $1500. Question: How is it determined exactly how much i can legally raise the rent for the newly renovated apts. I was told for every $40,000 i put into an apt. i can raise the rent $1000. Question: Who determines this rent increase and how? Do they come and inspect the building? would i have to show receipts amounting to $40000 per apt.? How would i show these receipts if i did the work myself? Any help in this matter would be appreciated. Thank You. BurgToBush@aol.com
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