LogFAQs > #986076652

willythemailboy posted...

In terms of viability, consider that the difference between rent control and market rate is going to be at minimum $1000 a month, meaning even a $50k renovation bill would pay for itself in four years for a market rate unit, and could not ever pay off at all for a rent controlled unit.

Maybe I'm just not thinking long-term enough, but my inclination is that going into the hole for four years in a building that was able to rack up $50k in exceptional repairs in the first place (as you say, it's not impossible, especially if parts of the whole building have to be redone to bring it up to code, but things like fire or water damage usually aren't contained entirely to the uninhabitable unit and will likely rear their heads in other units in the not-too-distant future) isn't overly appealing. Yes, it's more appealing than not making the money back at all, but it'd probably be better invested in a building with a more certain future.

willythemailboy posted...

Existing rent control is why none of this would work. The NYC implementation of rent control is so financially debilitating to landlords that every conceivable scheme has been used to get units out from under such controls. As a result, most of the loopholes allowing units to be changed from rent control to market rate have been eliminated.

It crossed my mind that such an idea could be used as a loophole to circumvent rent control, but it wouldn't be terribly difficult to do something like specify that if the condo-ified unit were rented out within some reasonable time frame after being purchased (like 2-3 years), it would face the same rent cap as pre-purchase (especially if universal rent control is standardized). The intent with the condo-ification idea would primarily be to get people into homes they can own, rather than just to create new rental opportunities.

To be clear, NYC's rent control is probably a little too strict. When I'm thinking of applying rent control universally, I'm thinking somewhere in the 5-10% range, which I don't expect should prevent anyone from making money from a build unless something happens to dramatically spike repair costs (especially if property tax increases on rental properties reflect the rent cap), but would prevent people from having their rents double overnight because something happened to spike demand. That doesn't necessarily correct massive discrepancies like are seen in NYC due to 6-7 decades of 1-3% caps and skyrocketing property values that new construction can't really do anything to alleviate no matter what's done to incentivize it (a lot of NYC can't really get much denser), but that's kind of its own mess that I don't have an easy answer to.

willythemailboy posted...

I know using current policy to argue against changes to that policy seems pretty stupid, but the whole system is so f***ed up you're stuck with a "can't get there from here" problem unless the entire legal code - and possibly the entire physical city - is nuked from orbit, bulldozed flat, and started over from scratch.

I don't entirely disagree. The legal code as it stands right now has been a big part of why the cost of living has gotten as bad as it is. Some substantial overhauls are needed, whether we agree on exactly what they should be or not.