Categories
Rentals

How to Sublease an Apartment in NYC

For a lot of people living in New York, subleasing was their first housing option. Short-term rental housing is a popular option in this city. If you will be away for a couple of months or more, subletting your apartment might be a great way to have someone looking after it while you are away while making some extra money.

Before listing your home for potential sub-lessees, there are a few considerations you need to make. Read on to learn how to sublease a property in New York City.

Building Rules on Subletting Your Apartment (Post Covid)

Although you have the right to sublet your apartment, you will need approval from your landlord. Approval is gotten by sending out a certified mail with a return- receipt requested, to your landlord once you find a lessee. This request must carry your personal information, that of the potential lessee, the reason for the sublease, intention to return to the unit, a copy of the sublet terms, and any other details relating to the sublease agreement.

Subletting an apartment is a simple process in New York City but you will also have to follow some simple rules like the regular heating laws as landlords.

30 Days Reception of Proposal

Your landlord is required to reply within 30 days of reception of the proposal. In case of denial of consent to sublease, the landlord must put forward valuable arguments as to reasons for refusal.

When you have a roommate, they must agree with your decision. It must be stated in writing as part of the subletting agreement.

Getting Your Apartment Ready to Sublease.

Make sure you leave the apartment clean for the new user. Take away all your valuables and fragile objects. You need to make sure all the amenities mentioned in the agreement are available before vacating the premise.

Always plan for emergencies and let someone else have a spare key to take care of unforeseen issues while you are away. Also, leave your contact information for your tenant to be able to reach you in case of any inquiry.

Categories
Buying Guide

What is the CEMA Loan? And Who Qualify for the Loan

Are you a New York (NY) property owner who needs a refinance or tax relief? You should certainly learn about and consider the CEMA (Consolidation Extension and Modification Agreement) loan.

Let’s go through what this loan is, those who qualify for it, and some of the things you must consider when applying for it.

What is the CEMA Loan?

As most New Yorkers already know, the state is not a tax haven for property investors, especially those who live in the southern part where property values and mortgage tax rates are considerably higher. The CEMA loan can best be defined as a contract between a new lender and an existing lender. Both lenders decide to create a unique, consolidated loan by combining two or more without filing any cancellation on the current mortgage.

After completing this process, the property owner’s credit report will appear in the new CEMA mortgage, and it will show that the existing mortgage has successfully been transferred. Then, the homeowner is allowed to pay the tax calculated on the additional amount above what they initially borrowed (the difference between the two loans), which consequently decreases their mortgage tax.

Who Qualifies for the NY CEMA Loan?

Only residents of New York are eligible for the CEMA loan. In most cases, the loan acts as a refinanced mortgage, even though there is a slight chance that you could use it to buy your dream property. The main challenge that NY residents encounter when applying for a CEMA loan is finding a lender who offers such loans if their current one does not provide such a loan. Besides, changing lenders is not always the best choice because it is time-consuming and it could also be expensive.

Upon realizing that you qualify for a CEMA loan, you must consider a few factors before beginning the application procedure. These include:

  • Time: CEMA loans take time to complete, usually 30-90 days. This could be because you have to switch lenders to get the best deal. The NY regulations may also slow down the approval process. If your case is dire, and you can’t wait that long to get a refinance, think about taking a conventional loan instead.
  • Fees: A CEMA refinance is not devoid of costs. How much fees you pay when applying for this loan boils down to your lender. If they have experience working with CEMA mortgages and are ready to process yours, count yourself lucky. The cost you’ll incur will be much less. With new lenders, you might have to part with a few more bucks than anticipated.

Why Is CEMA Loan Popular?

Hopefully, this piece enlightens you about the popular CEMA loan that can offer the tax relief you badly need as a property owner in New York. Note that CEMA is not an ideal option for loans perceived as second mortgages, Home Equities or HELOCs. CEMA loans also don’t mean that your mortgage will be discharged. Before you make up your mind about applying for this loan, make sure to consult a competent loan officer in the state. They can help you decide if the loan fits your current needs and guide you through the application process.

Categories
Buying Rentals

Buying a New York City Co-Op

New York City has one of the most complex and expensive real estate markets in the world. Co-op housing or cooperative housing is the most common alternative in NYC (over 75% of apartment buildings). If you are looking to invest in your first co-op apartment successfully, there are certain things you need to understand before taking this giant step. Below is s a short guide on everything you need to know about buying a co-op in NYC.

What Is A Co-Op vs Condo?

A co-op is a form of residential housing whereby buyers do not own a housing unit in the building but rather buy shares in a corporation that owns the building. Unlike a condo, you do not get a property deed after purchase. What you get is a propriety lease which gives you access to a specific apartment.

This form of investment is considered a personal investment rather than a real estate investment as you are buying shares in a company and not real estate property.

Are you wondering if this form of investment is worth it? Worry not! We will outline both the advantages and disadvantages of Co-ps in the paragraphs below.

Advantages of Buying a Co-Op

  • Low Cost: Compared to condo units and houses, co-ops are 20 -30% cheaper. That is what makes them such a go-to option for those looking to settle or invest in NYC real estate.
  • Security: Co-ops are run by boards that carry out thorough background checks on individuals before agreeing to sell. Once in, you have an assurance that your co-op neighbors are safe.
  • Low Closing Cost: As mentioned above, co-ops are considered a personal investment. Therefore, you will incur lesser fees if you decide to sell. Selling your property involves a transfer of shares; therefore, it will not be subject to any mortgage recording tax, and you won’t need an insurance title.
  • Price Stability: Co-ops have strict requirements that contribute to the stability of the real estate market in NYC. Usually, not less than a 20% down payment (each co-op sets its range) is requested. Potential buyers equally need to have a debt-to-income ratio higher or equal to 25%, nothing less (a few go up to 30%). 
  • This system prevents banks from making aggressive loans. It preserves the value of a co-op building from reducing in case one owner has to sell.
  • Combined Property and Maintenance Costs:

With co-ops, both your shares of maintenance charges and property taxes are billed together and paid to the corporation. It is then in charge of settling the building’s property tax with the state.

On the other sides of things, here are a few considerations to have before making your purchase:

Disadvantages of Buying A Co-Op

  • Limiting Subletting Rules: While they cost less to acquire, co-ops have strict renting rules. Most prefer owners to occupy their premises over renters who could cause damages. The board may equally restrict the number of years you are allowed to sublet your property.
  • High Flip Tax: If you decide to sell your coop shares, you will be subject to a flip tax. This is a fee you pay to the co-op. They average 2% of the total sales price. This fee is less costly with condos.
  • Board Application Approval: Unlike houses and condos, buyers are screened and approved by the co-op board. This limits room for negotiations and the procedure can be invasive. Some boards may reject co-applications or gifted contributions to the down payment.
  • Post-Closing Liquidity Requirement: In addition to your down payment, the board equally requires you to disclose how many months of payments you can afford to have in cash, stocks, and any other liquid assets after you close. This excludes retirement savings and property investments. Most buildings demand 12 or 24 months of post-closing liquidity.

After looking at the advantages and disadvantages of this housing option you are willing to invest in, your next step will be to place an offer. For this, it is advisable to find a real estate broker to help review your application to be sure you meet all the criteria. Once your offer is accepted, all you need to do is wait for the board’s approval to close and move in.

Categories
Buying

1031 Exchange Rules & How Does it Work?

Some of the savviest real estate investors have taken advantage of the 1031 exchange to grow their net worth and improve their portfolios. The 1031 exchange is a convenient procedure that enables you to swap an investment property for another of the exact nature while you put off capital gains tax. This program only succeeds if all its requirements are met, regardless of whether the like-kind property an investor picks has equal or greater value.

Are you looking to learn more about the 1031 exchange? Worry not! This blog post will discuss the rules of a 1031 Exchange and how it works. Keep reading!

1031 Exchange Rules

The 1031 exchange comes with several rules that property investors must follow to enjoy the program’s perks. These are:

180 Day Rule:

This is another rule that real estate investors must adhere to when using this common tax strategy. They must close on the newly-acquired property within 180 days after selling the old one.

One noteworthy aspect of these two 1031 exchange rules mentioned above is that the periods run simultaneously. Therefore, one must start counting the days immediately after the successful sale of their initial property.

200% Rule

This rule of the 1031 exchange permits investors to identify as many replacement properties as possible, but there’s a catch. Their total value should not exceed 200% of the original property’s value.

How the 1031 Exchange Works?

A 1031 exchange is a process that entails several steps. Here are some of the things that the property investor should do when performing it.

  • Make up their mind about selling their property and opt for the 1031 exchange.
  • List the particular property for sale.
  • Start looking for worthwhile replacement properties.
  • Choose a reputable intermediary.
  • Begin negotiations with potential buyers, evaluate offers and settle for the best one.
  • Close on the sale of the old property.
  • Select up to three replacement properties within 45 days.
  • Sign an agreement on the first-choice property they choose.
  • Close on the desired replacement property.

The 1031 exchange procedure is pretty straightforward, right? This is partly why most property investors don’t mind doing it time and again. It is the perfect way to defer paying taxes and build wealth faster than if they paid the required taxes every time they acquire a new property.

Categories
Buying Guide Rentals

New York City Housing Lottery [2021]

Finding affordable housing is a near-impossible feat in New York City, where the average price for a one-bedroom apartment is $2,980. Therefore, debates have sprung up to determine ways to provide affordable housing in New York City. One way is through the New York City housing lottery (NYCHL). The idea is to provide affordable housing that costs individuals a third or less of their household income as rents. It only applies to buildings whose developers are getting tax breaks for setting aside some affordable apartments.

As we move forward, we’ll discuss the New York City housing lottery guide.

Check If You Qualify

To know if you qualify for lottery programs, check each building’s guidelines. Generally;

  • Your age is a crucial factor as you must be 18 years old.
  • Have a good credit score and a history of paying your debt and taxes in time. If your credit score is low, you can start working on it immediately.
  • Your household income has to lie within a specific range depending on the total number of people in your house.

Apply for The Lottery

You do not pay a broker or developer fee to apply for the lottery. You can either apply online through the NYC Housing Connect portal or offline through the mail. Note that developers will discard incomplete or fraudulent applications online or offline. Make sure you sign the application mail before sending it back. Developers may discard your application if you apply more than once for an apartment in the same building. Also, they will not consider your application if you submit it after the application deadline.

Although your chances of winning the lottery are higher if you have a small log number, there’s a way to improve your chances. Each building has preferred groups of people in the selection process. Some of which include:

  • Current community board residents
  • Veterans
  • Some disabled applicants
  • Municipal employees

If you fall within any of these groups, include this in your application to increase your chances of winning.

Getting The Results

Generally, applicants are contacted roughly 2 to 10 months after the application deadline. A developer may reach out to you for one of many reasons.

  • In case there was a flaw in your application for a lottery.
  • If you submitted more than one application for the lottery, and they have disqualified you.
  • The developer will contact you if you are selected to move on to the interview stage.

In some cases, qualified applicants do not go to the interview stage because of the enormous number of people who apply for this housing lottery.
If the developer randomly selects you after the interview, you may sign some more documents and wait for the HPD’s approval before signing the lease. Or you may be put on the waiting list until there is a vacant apartment. Within the waiting period, you have to write to the developer twice yearly to show your continual interest in the apartment.

Categories
Rentals

Manhattan Tenant Rights

People’s rights and democratic freedoms are topics that are on the lips of almost everyone in the 21st century. They range from basic fundamental rights like the right to play to more advanced ones like tenant rights. New movements and protests spring up ever so often to ensure the preservation of individual rights. The goal is to live in a comfortable environment and grants you access to what you deserve. Nobody likes knowing another person has infringed their rights for any reason, tenants inclusive. Therefore, landlords have to make life pleasant for their tenants by ensuring they are safe and comfortable. In this article, we’ll discuss Manhattan tenant rights.

Pest Control

Pests and vermins are such a nuisance to tenants. They ruin clothing, destroy documents, worsen tenant’s health conditions, and spread diseases.

Manhattan tenants have a right to live in a vermin and pest-free environment. Landlords have to ensure they do not breach this right. Landlords ought to fix all leaks, cracks and have an excellent way of containing garbage.

They ought to work only with pest control professionals licensed by the NY State Department of Environmental Conservation. Their job is to inspect the property, identify where pests and vermins hide and use pesticides that are not poisonous to humans to eradicate the pests. They also have to do regular follow up to see that the vermins have not returned to create new breeding grounds.

Tenant Safety

  • To keep children below six years safe, landlords have to hire professionals to reduce lead-based painting hazards. This rule applies to buildings constructed before 1960 and those that have lead paint.
  • Manhattan tenants have the right to request window guards in writing, after which landlords must install them.
  • Tenants have the right to remove double cylinder locks from apartment entrance doors since they are illegal and unsafe.
  • Tenants have the right to request stove knob holders.
  • Landlords must install smoke detectors in every apartment. Also, they have to install carbon monoxide detectors a few feet away from the main entrance of every bedroom. The carbon monoxide detector must have an alarm that signifies when it is almost out of use. Furthermore, they have to give tenants a manual to let them know how the carbon monoxide detector functions and maintenance.

Tenant Heating

  • Tenants have a right to constant hot water supply all year round. Hence, landlords have to make sure it is always available.
  • Landlords have to provide Manhattan tenants with heat from October to May regardless of what temperature it is outside. However, they are only obliged to do so from 10 pm to 6 am daily.

Additionally, tenants have the right to privacy, and landlords can only enter their apartments with their consent. They also have a right to join or form tenant organizations to protect and promote their rights. Disabled tenants have the right to request modifications that will ease their discomfort. However, this will be at their expense.

Call 311 to report right violations to the NYC Department of Housing Preservation and Development (HPD).

Categories
Guide

NYC Heating Laws & Requirements

Outdoor temperatures are dropping, and NYC residents are doing everything possible to stay warm and healthy. NYC heating laws stipulate that landlords must ensure they keep all residential buildings warm during the heating season. The heating season spans from the 1st of October till the 31st of May. They must provide heat between 6:00 am and 10:00 pm if the outdoor temperature falls below 55 degrees Fahrenheit. They must ensure the indoor temperature is at least 68 degrees Fahrenheit.

When Is Landlord Require to Turn Heat on in NYC?

Also, owners and landlords must provide heat between the hours of 10:00 pm and 6:00 pm. The indoor temperature must be at least 62 degrees Fahrenheit. However, there are no outdoor temperature requirements. Additionally, the law requires that building owners provide hot water at 120 degrees Fahrenheit all year round.

The goal is to keep people safe from the biting cold in autumn and prepare them for freezing temperatures in winter. In this light, the HPD helps landlords and tenants understand the heat season’s requirements for heat or hot water problems.

What to Do if Your Apartment Does not have Heating or Hot Water in NYC

If your apartment doesn’t have hot water or heat during the heating season, let your landlord, managing agent, or superintendent know about it. Go through your lease to see the right way to report damages and the need for repairs. You may call or send an email depending on how urgent the situation is. Note that it is your legal right to seek your landlord’s assistance in case of heat or hot water issues. Keep copies of the emails and record all calls because you may need them as evidence in court.

However, if your landlord doesn’t react to remedy the situation, dial 311 to register an official complaint with the HPD. You can also file a complaint using the 311 mobile app or visit 311 online. If you have hearing difficulties, you can file a complaint using a Touchtone Device for the Deaf at (212) 504-4115. the HPD can sometimes get multiple complaints from the same building signifying the same problem.

What Happens When You Report a Landlord to the Department of Housing Preservation and Development (HDP)?

The HPD will try to get in touch with your building owner on the specific issue. After this, they will reach out to you to see if the landlord has solved the problem. You can check your complaint status on the HPD website or through text if you provided a phone number when registering the complaint.

The Department of Housing Preservation will send an inspector to your building within two days tops if your issue is still unresolved. The inspector will carefully assess the entire building to identify the problem. After which, the landlord will have to fix it within a certain period. If not, the HPD will carry out repairs to keep tenants healthy and safe during the heating season. The HPD then levies fees and penalties on uncooperative homeowners through a court order.

Summarily, it is your right as a tenant to have hot water all year round and a heated apartment during the heating season. If you don’t get any of these, you may be subject to hypothermia, dehydration, and other health problems that accompany freezing temperatures.

Categories
Buying

What Is NYC Flip Taxes? And How to Avoid Flip Tax

Flip taxes are a foolproof method to raise funds for a building without incurring additional costs. It is a transfer fee that a buyer or seller pays the cooperative after selling or transferring an apartment. Additionally, flip taxes provide funds for capital improvements. Cooperatives and co-ops have to treat all shareholders equally to ensure the courts approve of the flip tax. Averagely, transfer taxes in NYC range between 1% to 3% of the building’s final sales price. Flip taxes are part of the building’s closing costs.

What Are the NYC Flip Taxes?

There are multiple flip taxes from which to choose. Carefully weigh the pros and cons of each flip tax before making a decision.

The flat fee and per share amount types of flip transfer taxes are similar. Both require that the cooperative sets a fixed flip fee for all shareholders. Also, the flat fee flip tax requires cooperatives to set a flat fee amount for all shareholders. The per-share amount requires shareholders to pay a fixed dollar amount per share.  This policy is beneficial to shareholders to a larger property and those who bought buildings years ago at fair prices. It is a total disaster for shareholders who have smaller buildings and those who bought buildings a few years ago. Nonetheless, it helps maintain a certain degree of order when calculating flip taxes. It is important to know that the flip tax is different from the NYC mansion taxes.

Percentage

The percentage of the sales price is not so different. Here, the cooperative demands a percent of the total amount made from selling the building.

Another method is the percentage of net profit. It is the most stressful method for cooperatives because it is not easy to calculate only the gain from selling a property. After which, they request a certain percentage of the amount.

The combining method is a less popular method cooperatives use to collect flip taxes. It requires combining two or more flip tax methods. Although it works, it is quite tedious.

Who pays the Flip Tax?

Sellers typically cover the cost of flip taxes. Nevertheless, buyers will pay if the cooperative demands the payment of this tax. Therefore, buyers have to carefully read through their real estate contract to know if the seller will pay the NYC flip taxes.

The amount a seller or buyer pays as flip taxes depends on how much the cooperative requires. Since there is no specific amount that cuts across all cooperatives, they demand different amounts. Some cooperatives make a higher demand if the seller sells the property at a high price. The goal is to add funds to the cooperative’s reserve funds.

Cooperatives can change their flip taxes by voting. Every shareholder has to vote before the board makes a final decision. They can only change the flip taxes if the majority agrees to it.

In summary, flip taxes are a fee cooperatives request for maintaining buildings without incurring additional costs. Family members may not pay house flip taxes depending on the cooperative’s policy. Seek the assistance of a real estate agent if you need clarification on your real estate contract.

Categories
Rentals

NYC Rental Laws [2021]

People’s rights and democratic freedoms are topics that are on the lips of almost everyone in the 21st century. They range from basic fundamental rights like the right to play to more advanced ones like tenant rights. New movements and protests spring up ever so often to ensure the preservation of individual rights. The goal is to live in a comfortable environment and grants you access to what you deserve. Nobody likes knowing another person has infringed their rights for any reason, tenants inclusive. Therefore, landlords have to make life pleasant for their tenants by ensuring they are safe and comfortable. In this article, we’ll discuss Manhattan tenant rights.

Pest Control

Pests and vermins are such a nuisance to tenants. They ruin clothing, destroy documents, worsen tenant’s health conditions, and spread diseases.

Manhattan tenants have a right to live in a vermin and pest-free environment. Landlords have to ensure they do not breach this right. Landlords ought to fix all leaks, cracks and have an excellent way of containing garbage.

They ought to work only with pest control professionals licensed by the NY State Department of Environmental Conservation. Their job is to inspect the property, identify where pests and vermins hide, and use pesticides that are not poisonous to humans to eradicate the pests. They also have to do regular follow up to see that the vermins have not returned to create new breeding grounds.

Safety

  • To keep children below six years safe, landlords have to hire professionals to reduce lead-based painting hazards. This rule applies to buildings constructed before 1960 and those that have lead paint.
  • Manhattan tenants have the right to request window guards in writing, after which landlords must install them.
  • Tenants have the right to remove double cylinder locks from apartment entrance doors since they are illegal and unsafe.
  • Tenants have the right to request stove knob holders.
  • Landlords must install smoke detectors in every apartment. Also, they have to install carbon monoxide detectors a few feet away from the main entrance of every bedroom. The carbon monoxide detector must have an alarm that signifies when it is almost out of use. Furthermore, they have to give tenants a manual to let them know how the carbon monoxide detector functions and maintenance.

Heating

  • Tenants have a right to constant hot water supply all year round. Hence, landlords have to make sure it is always available.
  • Landlords have to provide Manhattan tenants with heat from October to May regardless of what temperature it is outside. However, they are only obliged to do so from 10 pm to 6 am daily.

Additionally, tenants have the right to privacy, and landlords can only enter their apartments with their consent. They also have a right to join or form tenant organizations to protect and promote their rights. Disabled tenants have the right to request modifications that will ease their discomfort. However, this will be at their expense.

Call 311 to report right violations to the NYC Department of Housing Preservation and Development (HPD).

Categories
Buying Guide

NYC Transfer Tax Guide [2021]

The NYC Transfer Tax affects all transfers of cooperative shares or real estate property worth over $25,000 from one party to the next. Condos, single-family homes, and all other residential property are subject to this tax.

It is one of the most expensive parts of the closing costs of a transaction. It is also applicable to transfers of majority shares within corporations.

What is the NYC Transfer Tax Rate?

The NYC transfer tax depends on the sales price of the property or shares.

The NYC transfer tax is 1% if the sales price is below or equivalent to $499,999. For NYC, the transfer tax is 1.425% for properties with a sales price above $500,000.

Who Pays the Transfer Tax?

It depends on the deal between the buyer and seller. Generally, the seller is responsible for covering the NYC transfer tax. Some sellers put this forward to attract buyers and keep them glued. However, the buyer may end up paying the NYC transfer tax if tax authorities do not know the sellers’ whereabouts. For new development property, a buyer may pay this tax if the sponsor demands it. In this case, the buyer has to bring the cash at closing. Buyers cannot finance it through other methods.

What is the Reason for the Transfer Tax?

Generally, taxes play a role in increasing government revenue. No matter how small the figure may look initially, it all adds up. The NYC Transfer Tax helps fill government coffers. Tax payer’s money enables the government to achieve some of its goals and improve the city. New York City officials take the transfer seriously because the government has raised impressive amounts in previous years. Therefore, they do a thorough follow-up on the transfer tax and ensure the buyer or seller makes the complete payment. Failure to do so may attract dire consequences on either party.

How to Avoid Paying Transfer Tax?

Many people seek ways to either reduce the transfer tax payment or to avoid it. Here are some tips on how to achieve any of them.

  1. Assess Closing Cost

    Assess how much of the closing costs the developer of a new development building is willing to shoulder. You need this information because the buyer usually pays the NYC transfer tax for a new development building. However, a developer may pay the NYC transfer tax if they are desperate to get the property out of their hands.

  2. Seller Purchase of CEMA

    Sellers should purchase CEMA to minimize their transfer tax. Sellers can cut costs if they do not hire a real estate agent to put up their property for sale. They can put it up themselves on real estate platforms and still find buyers.

However, you can only avoid payment if you qualify for an exemption. You can be eligible for an exemption if you are using the property as collateral for a debt. Also, you are exempted if you are selling or buying the property for a non-profit organization. Government institutions may not pay the tax for various reasons. You are also eligible for an exemption if you sell or buy the property for some US affiliated international organizations.

To conclude, paying your tax is crucial. It would be best to learn more about all the taxes you need to pay to avoid getting in trouble with the authorities. Failure to pay taxes has severe consequences we all should avoid. Consult a real estate agent to get professional advice before buying or selling property in New York City.