June 3, 2010
How to Be a Brainy Renter
By MARC SANTORA
EVERYONE has heard a nightmare story of a newbie in Manhattan’s crazed
rental market: the crooked brokers, the bait-and-switch online
advertisements, the cajoling landlords, the thousands of dollars spent
— and sometimes lost — in deposits.
As the power of the market turns once again to favor landlords and
their gatekeepers, the brokers, it is useful to understand what they
know that first-time renters may not.
Armed with an understanding of how professionals view the market, as
well as some of the tools now available on the Web, renters can decide
whether to use a broker, what size apartment they can afford and the
neighborhood where they are likeliest to find it.
But even with a thorough understanding of the market, renters may find
the apartment hunt daunting because there is no centralized depot for
information.
“It is almost like fishing in the dark,” said Danny Hedaya, the
executive vice president of Platinum Properties, which specializes in
rentals in Manhattan.
During the busy season between Memorial Day and Labor Day, landlords
will be testing to see how much they can push prices in a
still-uncertain market — getting rid of rebates, ending their payment
of broker’s fees and pressing prospective renters to make fast
decisions.
Even a reasonably priced one-bedroom, say $2,500 a month, will cost
$60,000 over the course of a two-year lease. That’s a lot of money to
spend based on a gut reaction.
What the Pros Know
In early May, Gary L. Malin, the president of CitiHabitats, the
largest rental brokerage in New York City, gathered 120 members of his
staff in the conference room of the company’s sleek Park Avenue
headquarters.
As summer and hordes of renters approached, it was time for a crash
course on the latest market conditions.
CitiHabitats, which last year signed leases on 13,000 apartments, has
a unique method of tracking what is happening in the market: it
monitors rental activity in 25 to 30 buildings, ranging from luxury
towers to small walk-ups, in 11 Manhattan neighborhoods.
The “bellwether buildings,” as CitiHabitats calls them, not only
provide a snapshot of what landlords are charging, but highlight how
quickly apartments are turning over, whether property owners are
willing to bargain and other emerging trends.
“I get real-time data, minute by minute,” Mr. Malin said.
Since April, he said, prices have increased by 20 percent in the
bellwether buildings. The number of vacant apartments has also fallen,
and landlords are starting to stick more firmly to their prices.
Mindful of these trends, Mr. Malin’s brokers say that although it made
sense six months ago to show an apartment more expensive than the
client had budgeted for, landlords are now unwilling to negotiate, so
that might be a waste of time.
Other companies use research from both internal and external surveys,
all trying to sort supply from demand.
“If you have the information,” Mr. Malin said, “you can demystify the process.”
The most comprehensive overview of the Manhattan rental market is
compiled by the Real Estate Group of New York every month and made
public on its Web site, tregny.com.
The report breaks Manhattan down by neighborhood, tracking the average
rental rates of studio, one- and two-bedroom apartments. It is further
broken down by buildings with and without doormen.
The information is based on data pulled from more than 10,000
available listings below 155th Street and with rents under $10,000 a
month; ultraluxury properties are omitted, to avoid skewing the
numbers, said Andrew Barrocas, the chief executive officer of the Real
Estate Group.
Renters looking for one-bedrooms in the East Village, for instance,
will find the average rent paid for similarly sized apartments a year
ago, as well as more recent month-by-month fluctuations and how those
prices compare with costs in other neighborhoods.
The report also shows how much more people pay for the convenience of
a doorman: an average East Village one-bedroom with a doorman costs
$3,764, versus $2,313 for no doorman.
While some 125 major companies dominate the rental market, the city
has thousands of small and midsize landlords. Some work directly with
brokers, but others operate independently, generating an untold number
of untracked transactions — including sublets, leases directly from
owners, and the passing of apartments between friends.
“I call this the shadow market,” Mr. Malin said. “I explain to
everyone, even our own people, that there is no company that can tell
you 100 percent of the inventory on the market.”
To Use a Broker or Not
Given that Manhattan is such a chaotic and fragmented rental market,
perhaps it is no surprise that brokers play an outsize role.
Brokers know they are not beloved; they know that some people want to
avoid them at all costs. But they also know that in many cases, they
are the only game in town.
Some buildings rent apartments only through brokers. Landlords often
feel more comfortable with a middleman because brokers generally
deliver clients who have been vetted financially and otherwise. For
renters short on time, energy and persistence, a broker may be in
order.
The longer a renter plans to stay in an apartment, the more sense it
makes to use a broker, since the initial investment — usually 15
percent of the first year’s rent — will amortize over time, especially
if the deal is good. And for someone completely unfamiliar with
Manhattan, a broker can be a good guide.
Jacob Camp, 21, who moved to New York from North Carolina in May,
wanted to apartment-hunt on his own. “My initial impression of brokers
was negative,” he said. “Why pay someone for what you can do
yourself?”
In his first days of searching on Craigslist, he said, he almost fell
victim to a scam: someone tried to get him to wire a deposit for an
apartment, sight unseen. Unnerved by the specter of imaginary
apartments, Mr. Camp turned to Samantha Brenneman, a broker from
Platinum Properties. Through her, he found a studio on Roosevelt
Island for $2,000 a month.
In Mr. Camp’s case, the broker’s fee was picked up by the property
owner, which is happening less and less these days.
Howard Feingold, the president of Best Apartments, which caters to the
budget-conscious under-30 crowd, said landlords were no longer picking
up his tab and that, unfortunately, “Clients have gotten used to not
paying fees.”
Of course, some people’s instinctual aversion to paying a broker
thousands for something that they think they can do on their own will
win out. Craigslist and other Web sites are powerful tools, able to
leap those tall fees. But they do have downsides, among them
information overload.
If you know the neighborhood you want to live in, the best investment
may be a decent pair of shoes. There is no substitute for walking
around the target area, looking for for-rent signs, and talking with
doormen and supers.
Old-fashioned word-of-mouth sometimes works wonders. Odds are that
someone knows someone who knows someone who is moving out of an
apartment.
New Tools of the Web
In part because the market is so fragmented, an ever-expanding
universe of Web sites and iPhone applications are available to the
apartment hunter. They promise, among other things, to rid renters of
fees, to connect them with honest brokers and to vet listings
thoroughly. At their most ambitious, some new sites herald radical
changes in how one goes about finding an apartment.
The Web is “the Wild, Wild West,” said Laurence Rosenberg, who left
his traditional broker business 15 years ago to start Rent-Direct.com.
Mr. Rosenberg was among the first to see the Web as a chance to
provide some of the services of a broker — linking landlords and
clients — but without the broker’s fee. At Rent-Direct, landlords list
properties; for a fee of $159 to $219, depending on the amount of the
monthly rent, potential clients can view the listings for 60 days.
“I was doing real estate in the traditional way,” he said, “and it was
unsatisfying for both me and the client. When we had the right
apartment, people were paying a hefty brokerage fee. Even though they
were happy we had the apartment, the minute they had to write the
check they were a bit sour on it.”
Jordan Cooper, a venture capitalist who last year co-founded the Web
site JumpPost.com, is convinced that the way people look for an
apartment in New York will be transformed in the next few years.
“We viewed the current state of affairs as one where the consumers do
not have access to good information,” he said. “The information is
controlled by property owners when the apartment becomes vacant and
the brokers when they find out from the landlord.”
Exploiting the same model as social-networking Web sites, JumpPost is
an early-bird service connecting apartment hunters to people who are
planning to move. If the apartment ends up renting through the site,
JumpPost pays the outgoing residents $500.
The site has been active for only the last three months, but according
to Mr. Cooper, users say they benefit from finding out about available
apartments in advance, gaining more time to consider their decision
and to plan their move.
It is only at the very end of a transaction, when someone agrees to
rent the apartment, that a broker enters the picture to help with the
closing. Because the process is not as labor-intensive as a
traditional rental, JumpPost charges renters a third of the
traditional broker rate — 5 percent of a year’s rent, instead of 15
percent.
“Empowering the consumer is inevitable,” Mr. Cooper said. He is one of
a growing number of entrepreneurs trying to slice off a piece of New
York’s rental business from the big players.
The site that did more than any other to change the apartment hunt in
the city, Craigslist, is still the first stop for many renters —
despite complaints that some of the ads are exercises in bait and
switch.
Other sites cast a smaller net — sublet.com, for instance. Often, a
sublet costs less than a direct rental from the landlord, but comes
without the security of a proper lease.
New York City provides a list of tips for apartment hunting on its Web
site, nyc.gov. And there are sites that contain mountains of useful
data on buildings and neighborhoods, like propertyshark.com. This site
is particularly good for finding out about the financial health of a
building and whether it has been cited for violations of city code.
Some sites try and match brokers with renters in nontraditional ways.
For instance, nakedapartments.com is the rental equivalent of a dating
Web site. Apartment hunters anonymously list the kind of apartment
they are seeking and provide their financial information; for a small
fee, brokers or landlords can contact them.
So although brokers are still involved in the process, the initial
broker-client meeting is a little less of a blind date.
How to Be a Brainy Renter
By MARC SANTORA
EVERYONE has heard a nightmare story of a newbie in Manhattan’s crazed
rental market: the crooked brokers, the bait-and-switch online
advertisements, the cajoling landlords, the thousands of dollars spent
— and sometimes lost — in deposits.
As the power of the market turns once again to favor landlords and
their gatekeepers, the brokers, it is useful to understand what they
know that first-time renters may not.
Armed with an understanding of how professionals view the market, as
well as some of the tools now available on the Web, renters can decide
whether to use a broker, what size apartment they can afford and the
neighborhood where they are likeliest to find it.
But even with a thorough understanding of the market, renters may find
the apartment hunt daunting because there is no centralized depot for
information.
“It is almost like fishing in the dark,” said Danny Hedaya, the
executive vice president of Platinum Properties, which specializes in
rentals in Manhattan.
During the busy season between Memorial Day and Labor Day, landlords
will be testing to see how much they can push prices in a
still-uncertain market — getting rid of rebates, ending their payment
of broker’s fees and pressing prospective renters to make fast
decisions.
Even a reasonably priced one-bedroom, say $2,500 a month, will cost
$60,000 over the course of a two-year lease. That’s a lot of money to
spend based on a gut reaction.
What the Pros Know
In early May, Gary L. Malin, the president of CitiHabitats, the
largest rental brokerage in New York City, gathered 120 members of his
staff in the conference room of the company’s sleek Park Avenue
headquarters.
As summer and hordes of renters approached, it was time for a crash
course on the latest market conditions.
CitiHabitats, which last year signed leases on 13,000 apartments, has
a unique method of tracking what is happening in the market: it
monitors rental activity in 25 to 30 buildings, ranging from luxury
towers to small walk-ups, in 11 Manhattan neighborhoods.
The “bellwether buildings,” as CitiHabitats calls them, not only
provide a snapshot of what landlords are charging, but highlight how
quickly apartments are turning over, whether property owners are
willing to bargain and other emerging trends.
“I get real-time data, minute by minute,” Mr. Malin said.
Since April, he said, prices have increased by 20 percent in the
bellwether buildings. The number of vacant apartments has also fallen,
and landlords are starting to stick more firmly to their prices.
Mindful of these trends, Mr. Malin’s brokers say that although it made
sense six months ago to show an apartment more expensive than the
client had budgeted for, landlords are now unwilling to negotiate, so
that might be a waste of time.
Other companies use research from both internal and external surveys,
all trying to sort supply from demand.
“If you have the information,” Mr. Malin said, “you can demystify the process.”
The most comprehensive overview of the Manhattan rental market is
compiled by the Real Estate Group of New York every month and made
public on its Web site, tregny.com.
The report breaks Manhattan down by neighborhood, tracking the average
rental rates of studio, one- and two-bedroom apartments. It is further
broken down by buildings with and without doormen.
The information is based on data pulled from more than 10,000
available listings below 155th Street and with rents under $10,000 a
month; ultraluxury properties are omitted, to avoid skewing the
numbers, said Andrew Barrocas, the chief executive officer of the Real
Estate Group.
Renters looking for one-bedrooms in the East Village, for instance,
will find the average rent paid for similarly sized apartments a year
ago, as well as more recent month-by-month fluctuations and how those
prices compare with costs in other neighborhoods.
The report also shows how much more people pay for the convenience of
a doorman: an average East Village one-bedroom with a doorman costs
$3,764, versus $2,313 for no doorman.
While some 125 major companies dominate the rental market, the city
has thousands of small and midsize landlords. Some work directly with
brokers, but others operate independently, generating an untold number
of untracked transactions — including sublets, leases directly from
owners, and the passing of apartments between friends.
“I call this the shadow market,” Mr. Malin said. “I explain to
everyone, even our own people, that there is no company that can tell
you 100 percent of the inventory on the market.”
To Use a Broker or Not
Given that Manhattan is such a chaotic and fragmented rental market,
perhaps it is no surprise that brokers play an outsize role.
Brokers know they are not beloved; they know that some people want to
avoid them at all costs. But they also know that in many cases, they
are the only game in town.
Some buildings rent apartments only through brokers. Landlords often
feel more comfortable with a middleman because brokers generally
deliver clients who have been vetted financially and otherwise. For
renters short on time, energy and persistence, a broker may be in
order.
The longer a renter plans to stay in an apartment, the more sense it
makes to use a broker, since the initial investment — usually 15
percent of the first year’s rent — will amortize over time, especially
if the deal is good. And for someone completely unfamiliar with
Manhattan, a broker can be a good guide.
Jacob Camp, 21, who moved to New York from North Carolina in May,
wanted to apartment-hunt on his own. “My initial impression of brokers
was negative,” he said. “Why pay someone for what you can do
yourself?”
In his first days of searching on Craigslist, he said, he almost fell
victim to a scam: someone tried to get him to wire a deposit for an
apartment, sight unseen. Unnerved by the specter of imaginary
apartments, Mr. Camp turned to Samantha Brenneman, a broker from
Platinum Properties. Through her, he found a studio on Roosevelt
Island for $2,000 a month.
In Mr. Camp’s case, the broker’s fee was picked up by the property
owner, which is happening less and less these days.
Howard Feingold, the president of Best Apartments, which caters to the
budget-conscious under-30 crowd, said landlords were no longer picking
up his tab and that, unfortunately, “Clients have gotten used to not
paying fees.”
Of course, some people’s instinctual aversion to paying a broker
thousands for something that they think they can do on their own will
win out. Craigslist and other Web sites are powerful tools, able to
leap those tall fees. But they do have downsides, among them
information overload.
If you know the neighborhood you want to live in, the best investment
may be a decent pair of shoes. There is no substitute for walking
around the target area, looking for for-rent signs, and talking with
doormen and supers.
Old-fashioned word-of-mouth sometimes works wonders. Odds are that
someone knows someone who knows someone who is moving out of an
apartment.
New Tools of the Web
In part because the market is so fragmented, an ever-expanding
universe of Web sites and iPhone applications are available to the
apartment hunter. They promise, among other things, to rid renters of
fees, to connect them with honest brokers and to vet listings
thoroughly. At their most ambitious, some new sites herald radical
changes in how one goes about finding an apartment.
The Web is “the Wild, Wild West,” said Laurence Rosenberg, who left
his traditional broker business 15 years ago to start Rent-Direct.com.
Mr. Rosenberg was among the first to see the Web as a chance to
provide some of the services of a broker — linking landlords and
clients — but without the broker’s fee. At Rent-Direct, landlords list
properties; for a fee of $159 to $219, depending on the amount of the
monthly rent, potential clients can view the listings for 60 days.
“I was doing real estate in the traditional way,” he said, “and it was
unsatisfying for both me and the client. When we had the right
apartment, people were paying a hefty brokerage fee. Even though they
were happy we had the apartment, the minute they had to write the
check they were a bit sour on it.”
Jordan Cooper, a venture capitalist who last year co-founded the Web
site JumpPost.com, is convinced that the way people look for an
apartment in New York will be transformed in the next few years.
“We viewed the current state of affairs as one where the consumers do
not have access to good information,” he said. “The information is
controlled by property owners when the apartment becomes vacant and
the brokers when they find out from the landlord.”
Exploiting the same model as social-networking Web sites, JumpPost is
an early-bird service connecting apartment hunters to people who are
planning to move. If the apartment ends up renting through the site,
JumpPost pays the outgoing residents $500.
The site has been active for only the last three months, but according
to Mr. Cooper, users say they benefit from finding out about available
apartments in advance, gaining more time to consider their decision
and to plan their move.
It is only at the very end of a transaction, when someone agrees to
rent the apartment, that a broker enters the picture to help with the
closing. Because the process is not as labor-intensive as a
traditional rental, JumpPost charges renters a third of the
traditional broker rate — 5 percent of a year’s rent, instead of 15
percent.
“Empowering the consumer is inevitable,” Mr. Cooper said. He is one of
a growing number of entrepreneurs trying to slice off a piece of New
York’s rental business from the big players.
The site that did more than any other to change the apartment hunt in
the city, Craigslist, is still the first stop for many renters —
despite complaints that some of the ads are exercises in bait and
switch.
Other sites cast a smaller net — sublet.com, for instance. Often, a
sublet costs less than a direct rental from the landlord, but comes
without the security of a proper lease.
New York City provides a list of tips for apartment hunting on its Web
site, nyc.gov. And there are sites that contain mountains of useful
data on buildings and neighborhoods, like propertyshark.com. This site
is particularly good for finding out about the financial health of a
building and whether it has been cited for violations of city code.
Some sites try and match brokers with renters in nontraditional ways.
For instance, nakedapartments.com is the rental equivalent of a dating
Web site. Apartment hunters anonymously list the kind of apartment
they are seeking and provide their financial information; for a small
fee, brokers or landlords can contact them.
So although brokers are still involved in the process, the initial
broker-client meeting is a little less of a blind date.
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