For rent: one month free, no broker’s fee? I’ll take it.
by Daniel P. Bader The economic uncertainty gripping the city may be helping out some New Yorkers – renters looking to move. Walk by any real estate agency and browse through the rental listings in the windows and you’ll see enticements tied to new leases, such as one-month free rent, or maybe even lower prices. “Right now it’s a renter’s market,” said Andrew Shell, owner of A.N. Shell Realty in Inwood and Harlem. “Vantage [Properties], they’re offering one month free and no security deposit, which is insane.” Rob Hobgood, principal agent of 159 Real Estate in the lower Heights, said he is seeing a lot more listings where the owner of the building pays his commission, called “owner pays” or “OP” in real estate lingo. When the market was tight in years past, renters would pick up that fee, often equal to a month’s rent. “There has been a movement towards OP,” Hobgood said. “The attitude is: do an OP or lower the monthly rent.” Incentives like one or two months free rent are tied to more expensive apartments, with rents typically over $2,000 per month. Hobgood says those gimmicks work downtown where tenants view their rent as a 12-month expense, but not in Northern Manhattan where many people live paycheck to paycheck. “Up here clientele don’t really care about free months,” he said. “It’s all about budget, it always has been.” Frank Ricci, the spokesperson for the Rent Stabilization Association, a lobby group for landlords, said this recent phenomenon is all about the market. “There’s a lot of product on the market right now,” he said. The incentives mentioned by Hobgood and Shell are telling. “That means they’re trying to rent as many apartments as possible right now,” Ricci said. Job insecurity and tenants’ desire to avoid moving costs and brokers’ fees have led to the glut of apartments, says Hobgood. “Less people are moving than they were last year,” he said. “They don’t want to move because they don’t know what’s down the road.” Many landlords are saving money by not renovating their empty apartments and charging lower rent. Shell recently rented a one-bedroom apartment on W. 218th Street above the Indian Road Café “as-is” for $1,250 per month. It was rented just one day after it hit the market. That’s not typical. Hobgood said landlords will decide to pay the brokers’ fee only after apartments have been on the market for 30-60 days. It works, he said. “Those have been going a little more quickly,” he said. Groups like Vantage Properties, he added, have to keep their vacancy rate low to provide a return on their investment; hence going OP. Small landlords don’t want to pay the fees, or can sit on an apartment a little longer. “Small landlords – they still don’t pay me anything,” Shell said.
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