11 Oct 2010 8:00 am   //   Filed under: New York is different

Money never sleeps

People often ask me for advice about moving to New York City. This post is long and over-sharey, but I’m writing it as a service piece to explain what it takes to find an apartment in New York in 2010. As some of you know already, I’m making a big move next month from Brooklyn to Manhattan. Here’s the story of how it happened.

If you don’t live here, the first thing you need to know is that New York real estate is not like other cities. Most people rent. You have to be pretty well set to buy even a tiny part of one floor of one building, especially in Manhattan. The mortgage crisis of 2008 changed nothing for renters; we weren’t the ones building McMansions in the desert. Low-end rental prices still climb a few percent a year. Access to the rental market is controlled by hyper-competitive brokers who act as go-betweens between landlords and tenants and are pretty much despised by all. Decades of odd rent-control laws mean some people pay drastically more than others for the same thing.

In 2002, I moved to New York and found my first apartment through an ad in the back of the Village Voice. I moved into a basic 1-bedroom in south Park Slope, paying $950 a month. To get it, I had to go through a sketchy broker who operated out of his car and required payment in cash up front for the security deposit, the first month of rent, and of course his $1,200 fee. But once I was in, my landlord was easygoing. I wasn’t on a lease and my rent was steady. (It went up once in eight years, by $50.) By now, my apartment is easily $500 cheaper than comparable units on the same block. (As an aside: I recently heard about a family across the street that was paying $200 a month for their rent-controlled apartment. They just accepted an offer of $80,000 cash from their landlord to move.)

Though I only planned to live in this apartment a year or two, I stayed because I liked having a good deal. Cheap rent was a wonderful gift. It let me splurge on experiential expenses like vacations, which matter more to me than real estate. I didn’t mind the long uphill walk home from the subway, the distance that kept friends from visiting, or the occasionally leaky roof and quirky plumbing. Financially, it was a safe choice.

But a few months ago, I considered a change. I’m further along in my career than I was in 2002. Brooklyn was starting to seem stale*. There was that other borough across the river where I spent an increasing amount of my time. On July 13, I made a plan:

  • Save money all summer.
  • After Labor Day, begin apartment shopping.
  • Find an ideal apartment by November 30.
  • Be living in Manhattan by January 1, 2011.

So what’s my ideal apartment?

  • Studio or 1-bedroom.
  • Anywhere in Manhattan below 59th Street.
  • $2,000 a month or less.

This plan turned out to be totally possible. You can do downtown on 2 grand. $1,800 or less would be tough; apartments that cheap exist, but it might be on an unappealing street, or a wacky floorplan, or far from a subway station. Any cheaper than that and you’d have to look far uptown, or be really lucky, or be willing to make serious compromises.

To begin my search, my first course of action was to ask friends if they could recommend a real estate broker or management company. A few friends made suggestions, but the good brokers, upon hearing my budget, hurried me off the phone as soon as possible.

At the same time, I started browsing online listings for apartments. The default place to find cheap apartment listings is Craigslist, even though that site is overrun by spammers and con artists. A better choice is Street Easy, which at least requires the posters to provide their names. More importantly (as will become clear later in this post), Street Easy lists the exact addresses of the buildings. Through Street Easy, I made appointments with three brokers.

Broker one

A woman who offered to show me an apartment in the Financial District canceled 15 minutes before our appointment.

Broker two

Another broker arranged to meet me on 21st Street in Gramercy to show a couple of apartments. (I fell briefly in love with the idea of moving from 21st Street in Brooklyn to 21st Street in Manhattan. How delicious!) This broker dressed and acted professionally and seemed like a nice guy. But weirdly, a random friend of his joined us partway through the showing, and another potential renter show up after that. So at one point there were 4 of us on the tour. He had 5 apartments available in three different buildings, all on the same block. He told me he was charging a broker fee for apartments in one building, but not for the apartments in the other two buildings. I’m pretty sure the landlord of the no-fee buildings was paying the broker to fill the units, suggesting they were tough to fill. Indeed, they were dim and small, in old buildings with sagging floors. For the nicer apartments, the broker was asking a fee of 12% of one year’s rent, which works out to $2,880 for a $2,000 apartment. My hunch is any broker who ask a 12% fee anticipates that you will negotiate them down to 10% (or $2,400 in this case). Broker fees are unfair, but I decided early on I would be willing to pay one if the rent was a sufficiently good deal. The apartments in Gramercy were not good deals. On to the next broker.

Broker three

Next, I met a broker who worked for a real estate management company on Rivington Street in the Lower East Side. Friends who live there say this neighborhood is fun and convenient, despite the appalling traffic, the loud party scene, and its long-obsolete reputation for being gritty and dangerous. The broker I met was a mess. She couldn’t find her keys and had to empty her overstuffed pocketbook on a table to locate them. As we walked around the neighborhood looking at various dingy and unkempt apartment buildings, the broker complained about her life, saying she was trying to get a new job (at a Ford dealership). She told me her age (42) and how much she made last year ($60,000). She complained about having to climb stairs all day. Some of the apartments she showed me had serious problems. One had a bedroom window overlooking an active scaffold. (How long would it be there? Sometimes buildings have scaffolding up for years.) Another was directly over a garbage room and smelled accordingly. At the last of these depressing and disappointing apartments, the broker, growing desperate, said the apartment was listed at $2,000, but she was sure the landlord would accept $1,800. Her fee was 10%. I told her I’d think about it. As we walked back to her office, we passed two guys wheeling a beat-up oven down the middle of Rivington Street on a hand truck. The cart started to tip precariously, the oven door swung open, and the oven racks clattered loudly out onto the street. The broker knew them, and called their names, and the two men hollered back, laughing. “Those guys work for us,” she explained. Would that be my future oven?, I thought silently. This was not looking good.

The no-broker strategy

I decided to focus my efforts on the Financial District—which is where I work, and which was rumored to have good deals—and see if I could bypass the broker system. There are a lot of freshly-converted apartment buildings down there thanks to late-1990s and post-9/11 tax incentives. Downtown doesn’t have the cachet of other Manhattan neighborhoods, since you’re living in a business district with limited night life and few options for food and shopping.

I started looking for listings on Street Easy. I noticed multiple brokers posting very similar listings at the same addresses, and saw many of the listings were several months old. I spent a Sunday riding my bike around, examining address I’d seen listed and jotting down any place that had a flag or a sign indicating they were a residential rental building. Then I went back to the computer and looked everybody up. Most large apartment buildings have web sites now, something that wasn’t true when I was apartment hunting in 2002. I made a list of buildings that looked promising. And I started making calls.

When I called buildings directly and asked for their leasing offices, the first thing they asked was, “Are you a broker or are you looking to rent for yourself?” They’ll help you out either way. That’s because these buildings all work both with brokers (who charge fees as a go-between) and with renters directly (who pay no fees). Basically, I was being my own broker. Things moved very quickly.

Two Wednesdays ago, I called three buildings downtown that I thought were most likely to have something close to my price range. Two of them did, and could show them immediately. On my lunch break, I looked at 7 apartments and identified one that was clearly the best value. I e-mailed the agent from the company a few hours later to tell her I was interested, and asked if they would reduce the rent by $75 if I agreed to a two-year lease (for which they already dangling an incentive of 2 free months, amortized). She said maybe, and e-mailed me an application. I spent Wednesday evening completing the application, which entailed printing a stack of bank statements. The next morning, I dropped off my application. Two hours later, I got an e-mail saying I was approved, and they’d agree to the discount I asked for. They needed two certified checks for the security deposit and first month’s rent. I got the checks from the bank that day and signed the lease the next morning. Done.

I was pleased that I didn’t have to deal with a broker or pay a fee. The apartment is small, but in a nicer building than I had hoped for. There’s laundry in the building, a roof deck, and central air, perks I never dreamed I would actually achieve in Manhattan. There’s also a small gym I can use for free, which will save me money. The building is actually on Wall Street, giving me a vanity address I intend to have fun telling jokes about.

One thing that’s interesting about my building is that, because it took advantage of those tax breaks, it might become rent-controlled. There’s a lawsuit pending. I’m not banking on this lawsuit playing out in my favor, but that would be a fantastic stroke of good luck if it did.

The bottom line

Here’s how I recommend finding an apartment in Manhattan. Write down a goal, give yourself time, do your own legwork, negotiate, and be ready to pull the trigger in a split second. Before you begin, you should choose two of the following three options:

  1. Spend more money than you’re comfortable spending.
  2. Compromise on something you really want.
  3. Live with a roommate.

I chose options 1 and 2. What did I compromise? Space. I’m moving from a small apartment in Brooklyn to a tiny apartment in Manhattan. In terms of city amenities, the Financial District is comparable to where I live in Brooklyn, but lacking compared to other Manhattan neighborhoods. Everything closes after business hours. There’s no bike shop and only one veterinarian. I don’t think you can even get Pad Thai delivered on a Saturday. But I’m 10 minutes from Union Square and my commute will be a 5-minute walk, which is worth a lot.

After 8 years in the same place, I’m worried most about what unforeseen consequences this move might have. Everybody knows me as a Brooklyn guy. I will still go back to Brooklyn often, for church, for parties, for the best pizza, for a Nets game if that arena ever gets built. But living on the other side of the river, going from 11215 to 10005, is a big mental leap. It’s exciting. It’s scary. I don’t work in finance, but nevertheless: I’m now a Wall Street guy.

* Check back tomorrow for a post with more about why I’m leaving Brooklyn.