The mix of condos and co-ops in NYC are part of the reason the market remains stable, but they’re also a giant pain in the ass when it comes to subletting/renters. The more old school, the more obnoxious they seem to be #klenksvsboomers.
For those of you who don’t know, co-op and condo sublets make up a significant portion of the NYC rental market. Some, like 870 Pacific (representttt) or sponsor units (more on that another time), have basically no board or approval besides the individual owners, and no additional fees. Others, like many in Manhattan, have elaborate processes for accepting tenants. This can include physical board packages hundreds of pages long...for a one year rental. And unnecessary paperwork aside, and ignoring that you often can’t gauge how long the approval process will take, there are the fees, fees, FEES!
Here’s a recent example from a condo sublet:
$300 in credit check fees (because the new laws do not apply to these types of buildings)
$650 “processing fee” (for their time going over the paperwork they made us do)
$50 fee to create the board package (I paid for this because I honestly felt like I needed to do something for my clients here, however small)
$1500 elevator fee (even if you weren’t hiring movers or actually moving furniture)
Right there we have $2500 in additional board package related fees, sunk costs that my clients will never see back (and none of this goes to the agents doing the legwork).
And, on top of that, there is an additional $1000 move-in deposit
This is extremely typical. I always warn clients off the bat that they could be putting down additional thousands, so it only makes sense if you are planning to stay for more than two years.
It’s not all bad — because of the higher barrier to entry these apartments are often priced lower than comparable spots in rental buildings. So as long as you are staying over two years you actually end up saving in the long run. But that can be a negative for owners, who are often renting to cover their maintenance or common charges + real estate taxes. And it is often buildings with the highest fees that also have the highest monthly costs to owners (ok, maybe this is anecdotal, but it has been my experience).
Really, some of the fees are ridiculous and I don’t think they should exist. A steep deposit during move in? Makes total sense. But a $1500 “elevator fee” plus another $900+ in “processing” — what are you processing here? And the thing that bothers the most about it is how excited buildings were when it came out that the Albany rent laws didn’t apply to them.
At the end of the day, if you are renting in an owner building, it maybe makes sense you need to submit to a higher level of scrutiny in the form of recommendations and application materials. But I have submitted to plenty of rental buildings that were more thorough than a board package while being significantly less stupid. A board package in this day and age seems more like a power move than anything actually meant to protect or help owners. Colored dividers, multiple hard copies hand delivered, managing agents with egos that you need to make sure you don’t upset by asking them too many questions about the typos and/or discrepancies in said board package…
Co-ops and condos will need to have their systems overhauled drastically in the next decade, and some have already started. But all methods have their drawbacks and it leads to amusing but ridiculous idiosyncrasies like having to notarize a form or sign something “wet ink” only to upload a scanned copy. As companies like DocuSign (my fav company on earth right now) make document transmission safer, easier, and more transparent, I look forward to how this will help make things clearer and less risky for both purchasers AND renters.
But going back to subletting: with all the press around trying to make move-in less expensive for tenants, it’s unfortunate that a significant portion of the rental market is completely exempt. And this, my friends, is why we need more dialogue between lawmakers, people in real estate, and building managers. Because the system, as is, is as stupid as it is broken.
xo
Anna