Why use Essential New York
Should you rent or should you buy?
New York's three main types of apartment leases
What to bring on your apartment search
Building and apartment terminology and definitions
Why use Essential New York
To help you negotiate the complex Manhattan real estate market, you need the help
of an experienced Essential real estate agent. Why? Here are five of the best reasons:
1. Your time is valuable!
Don't waste it looking through countless listing resources and inappropriate apartments.
Your Essential New York agent is a knowledgeable market professional who will analyze your housing
needs and match you only with available apartments that suit your needs. Spend your
time wisely with our rental experts and find your new rental home quickly and efficiently.
2. Your money is precious!
Don't overpay. Our agents know the value of the type of home you seek in our ever-changing
Manhattan marketplace. Each is a professional negotiator who knows when a rent is
"asking" and when its "firm". Our agents will get you the best rental value for
your dollar.
3. Your interests are paramount!
Don't expect a landlord's representative or an on-site agent to represent you. Your
Essential New York agent will represent only your interests and negotiate from strength so you
deal with the landlord over the table not over a barrel.
4. What you don't know can hurt you!
There is no such thing as a "standard" lease in Manhattan. Leases can be complex
and our agents analyze each lease, getting the right lease on the best space for
you. We know the buildings, the players and the leases. That gives you a powerful
advantage in negotiations.
5. You don't do this everyday!
Most tenants sign or renegotiate a lease infrequently, yet rental housing is usually
your most significant financial expense. Our experienced market professionals search
for homes, and negotiate leases every day. It's what we do for a living.
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SHOULD YOU RENT OR SHOULD YOU BUY?
You've probably heard that buying a home may offer important tax advantages. If
you've never owned a home, you may not understand what that means. Although many
people enjoy the pride and sense of accomplishment that comes with owning a home,
it's the tax advantages that really prompt many renters to take the plunge and buy
a home.
Just as an example, let's say you buy a home and your mortgage payment is $3,000
a month including real estate taxes. In the early years of the life of the mortgage,
most of the payment is interest, so almost all of that $36,000 ($3,000 x 12 months)
could be deductible from your taxable income. If you are paying income taxes at
a rate of 28%, a $36,000 deduction means a tax savings of just over $10,000... or
more than $800 a month. It's easy to see why people decide to buy. In this example
not only do you get a place to live, you get a tax break of $10,000 and all the
appreciation as your home grows in value.
Gain from sale of a principal residence. The act allows taxpayers to exclude up
to $250,000 of gain ($500,000 for married couples filing a joint return) realized
on the sale or exchange of a principal residence occurring after May 6, 1997. Unlike
the "one time" exclusion provided under prior law, the exclusion is allowed each
time a taxpayer sells or exchanges a principal residence, although the exclusion
generally may not be claimed more frequently than once every two years. Also unlike
prior law, the taxpayer is not required to reinvest the sales proceeds in a new
residence to claim the exclusion. To be eligible, the residence must have been owned
and used as the taxpayer's principal residence for a combined period of at least
two out of five years prior to the sale or exchange. The taxpayer must recognize
gain to the extent of any depreciation allowable with respect to the rental or business
use of such principal residence for period after May 6, 1997.
Tax advantages like deductions from taxable income and the deferral of tax on profits
when you sell a home are some of the important reasons why many individuals and
families chose to buy rather than rent their homes. Renting is relatively hassle-free:
the owner worries about taxes, compliance with city regulations, maintenance, service
and supplies. Therefore, for many people, renting can be a convenience, especially
if their lives are in flux, or likely to change soon.
In addition, the decision to rent often does not represent as great a long-term
commitment, both financially and emotionally, as buying and owning an apartment.
Many people rent initially with the expectation that after they get settled and/or
established, they plan to buy and move. The bottom line is that a rental apartment
may be a good short term-solution to your housing needs but ownership of a cooperative
or condominium apartment is likely to offer you significant tax advantages and a
better place to live, as well as considerably more long-term stability.
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NEW YORK'S THREE MAIN TYPES OF APARTMENT LEASES
PRIME LEASE
A prime lease is a lease that comes directly from the building owner. If the building
has more than five separate apartments, they are probably "rent stabilized" under
the New York State rental guidelines unless they have rents above $2,000 per month
and have been officially been registered as "decontrolled". Common aspects of rent
stabilized leases are:
- The annual rent increases are based on rates established each year by the New York
City Rent guidelines Board.
- The tenant can renew the lease on a one or two-year basis.
- Security deposits must be placed in an interest bearing bank account.
- As of July 1993, vacancy leases for apartments that were previously renting for
at least $2,000 a month are generally no longer
subject to rent stabilization guidelines.
Common Aspects Of Decontrolled Leases are:
- Luxury decontrol in units renting for $2,000 or more per month has now expanded
to include tenants earning $175,000 or more per annum.
- Tenants in occupancy have a right of first refusal to the unit at the new market
rent
SUB-LEASES
Sub-leases are generally used for renting a cooperative apartment or a rental apartment
for a period of the remaining lease. Since owners in cooperative buildings are technically
owners of shares in the Apartment Corporation, each shareholder is a proprietary
tenant and has the right to sub-lease his or her apartment. Common aspects of a
sublease are as follows:
- Separate application and processing fees through the building's managing agent are
required.
- Approval by the board of directors or landlord is always required and time limits
are usual.
- Under certain circumstances, rent stabilized tenants may sublease their apartments.
CONDOMINIUM LEASES
Leases for condominiums are often similar to leases in rental buildings. However,
the owner is a private owner, as opposed to a
general building owner. Common aspects of the condominium lease are listed below.
- Term of lease is negotiable.
- Board approval is generally not required, but separate application and processing
fees through the building's Managing Agent are customary to receive a Waiver of
the Right of First Refusal.
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WHAT TO BRING ON YOUR APARTMENT SEARCH
In today's hot real estate market, time is of the essence if you want to guarantee
that your dream home is yours to rent. That means having all the necessary paperwork
and materials ready and available before you begin your apartment quest.
Essential New York recommends that you bring the following items with you:
- Letter of employment (should be on company letterhead, signed by supervisor) salary,
guaranteed bonus, title, start date and housing allowance, if any.)
- two recent pay stubs.
- Bank account numbers.
- Investment account numbers.
- Names, addresses and phone numbers of previous landlords.
- Names, addresses and phone numbers of accountant and attorney.
- Names, addresses and phone numbers of personal and business references.
- A copy of your past two years federal income tax returns.
- Additional sources of income, if any, with verification.
- Personal ID with photo, e.g. driver's license or passport.
Essential New York recommends that you line up necessary funds particularly if you are relocating
from out-of-town since landlords require certified or bank funds and will not accept
a personal check out of the Tri-state area:
- If you can't open a New York bank account before you begin your apartment hunt,
bring the necessary funds with you.
- Bring enough travelers' checks to cover the cost of 2 months' rent. (This comprises
the required first month's rent and one month security.)
- Bring funds to cover the broker's fees. These fees are due upon signing of the lease.
- Bring funds to cover a credit check. (Usually this amounts to $25-$50 and can usually
be paid by personal check.)
- Bring funds to cover possible move-in/move-out fees.
- If your salary level and financial picture does not meet the landlord's minimum
requirement, be prepared to line up a guarantor who will guarantee your lease. The
guarantor will need to live in the New York tri-state area, have an income of twice
that required by the landlord and to produce financial documentation to prove it.
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BUILDING AND APARTMENT TERMINOLOGY AND DEFINITIONS
Luxury doorman buildings
Usually refers to new construction or apartment buildings that were built within
the past twenty or so years. These buildings tend to be condominiums, typically
stand twenty to forty or more stories tall and provide concierge services. Many
have health clubs and/or swimming pools.
Pre-war buildings
By definition, a building built before World War II. These buildings are usually
ten to twenty stories tall and are sought after for their larger rooms, fireplaces,
hardwood floors and higher ceilings. They may or may not provide a doorman.
Post-war buildings
These buildings were built between the late 1940s and the late 1970s. They are generally
hi-rise and most have doormen.
Elevator buildings
This term usually describes a 6 to 20 stories tall non-doorman building which may
be pre-war or post-war. Elevator buildings usually have an intercom or video security
system.
Walk-up buildings
This is the least expensive type of housing in Manhattan and the quality can vary
widely. Usually these are 4 to 5 story buildings with no doorman and no elevator.
They were originally constructedl as multi-family dwellings and do not exude the
charm or elegance of brownstones or townhomes.
Brownstone or Townhouse
4-6 story buildings built in the 1800s to early 1900s. These can be single family
houses or may have been converted over the years into multiple apartments. They
are prized for their charm and elegance. In almost all cases these buildings do
not have a doorman.
Loft apartments
Former commercial or industrial buildings that have been converted into apartments.
These buildings almost never provide a doorman and usually consist of vast spaces
with high ceilings. Most lofts are found in Greenwich Village, Soho, Tribeca, Chelsea
or the Flatiron District.
Apartment terminology and definitions
Studio
One or two rooms with combined living and sleeping areas.
Alcove studio
A one or two room apartment with a separate alcove which can be used as a sleeping
or dining area. Alcoves usually adjoin the living room space of the apartment, are
generally less than 100 square feet and can sometimes be walled off to create an
additional bedroom.
Junior One
An apartment with an alcove off of the living room has been converted into a bedroom
or dining room.
Convertible or Junior 4
This is typically an apartment with an alcove adjacent to the living room that can
be used to create another room by using this "flexible" space to "convert" the apartment
from, for example, a one bedroom to a two bedroom.
Classic
The word "classic" is usually followed by a number indicating the number of rooms
in an apartment. It is usually associated with pre-war apartments that meet criteria
for numbers of rooms and design. However, a "classic" can exist in a post-war building
assuming it follows the same guidelines. As an example, a "classic six " is comprised
of a living room, dining room, kitchen, two bedrooms and a maid's room. A "classic
seven" is comprised of a living room, dining room, kitchen, three bedrooms and a
maid's room.
Loft area
This is an additional space created in apartments with very high ceilings. The loft
area is constructed above the living area, accessed via a staircase or ladder and
used for extra storage, sleeping or living space (e.g. an office.)
Duplex
In Manhattan this refers to an apartment with two floors or levels and not to two
apartment units.
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