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Friday, April 25, 2008

FINDING YOUR FIRST APARTMENT

from the New York Times
April 20, 2008
Finding Your First Apartment
By
VIVIAN S. TOY
THE dream: finding a one-bedroom, one-bath apartment in an elevator building with a doorman in Greenwich Village for $2,000 a month. The reality: nearly impossible.


Spring is the season when newly minted college graduates flock to
New York City to start their careers. They begin the search for their dream apartment, brokers say, with the same single-minded determination that earned them their degrees and landed them their jobs in the first place.
But that determination only goes so far when it comes to
Manhattan real estate.

“Almost every single person I’ve worked with thinks there’s a golden nugget of an apartment waiting right for them,” said Paul Hunt, an agent at Citi Habitats who specializes in rentals. “They all want to be in the Village, and they all want the ‘Sex and the City’ apartment.” The first shock for a first-time renter will probably be the prices.


Consider that the average monthly rent for a one-bedroom in the Village is more than $3,100 and that the average for a studio is just over $2,200. Or that the average rent for a one-bedroom in a doorman building anywhere in Manhattan is close to $3,500. Mr. Hunt said that when he shows prospective renters what their budget really can buy, they are sometimes so appalled that “they think I’m trying to fool them or something, and they run away and I don’t hear from them again.”

Alternatively, the renter checks his or her expectations and grudgingly decides to raise the price limit, look in other neighborhoods or get a roommate. “When expectations are very high, the process can be very frustrating,” Mr. Hunt said. The thousands of new graduates who will be driving the engine of the city’s rental market from now until September will quickly learn that renting in New York is not like renting anywhere else.


The second shock is likely to be how small a Manhattan apartment can be. It is not uncommon in New York, for example, to shop for a junior one-bedroom or a convertible one-bedroom, neither of which is a true one-bedroom at all but really a studio that already has or can have a wall put up to create a bedroom.

Aside from the realities of price and space, the requirements set by New York landlords are also bound to help turn a bright-eyed first-time renter’s outlook grim. To start with, landlords want only tenants who earn at least 40 times the monthly rent, which means an $80,000 annual salary for a $2,000 apartment. According to census data, more than 25,000 graduates ages 22 to 28 moved to the city in 2006, and their median salary was about $35,600. Those who don’t make 40 times their monthly rent need a guarantor, usually a parent, who in turn must make at least 80 times the monthly rent. In addition to a security deposit, some landlords also want the first and last month’s rent. Tack on a broker’s fee and a prospective renter for that $2,000 apartment is out of pocket nearly $10,000 just to get the keys to the place.


“There’s a lot of stuff that doesn’t happen in other markets,” said Gary Malin, the president of Citi Habitats. “On top of that, every owner also has their own requirements, so just because you qualified here doesn’t mean you’ll qualify there. And there’s no rhyme or reason to it.” So the key to finding that first apartment is to learn as much as possible about the market before arriving in the city and also to know that keeping an open mind will make the search easier. “People who walk in with blinders on and can only say, ‘I want, I want, I want,’ when their budget doesn’t allow for it, they create this anxiety,” Mr. Malin said. “You have to be flexible and you have to come to the city armed with information and financial paperwork.”
Mr. Malin said that the volume of calls his agency has fielded in the last few weeks would suggest the city is headed for another strong rental season. The market was so tight last year that the vacancy rate hovered under 1 percent, but the rate has now inched a little over 1 percent, he said, so there will be slightly more inventory and prices may stay stable. Daniel Baum, the chief operating officer of the Real Estate Group New York, a brokerage in Manhattan, said he felt the market had softened enough that there might be room for negotiation, particularly in areas that recent graduates would consider better suited for their parents, like the Upper East Side.
In certain neighborhoods, he said, “there may be opportunity to get concessions from landlords; maybe one month’s free rent or a chunk of the brokerage commission.”
To understand the rental market, brokers and recent first-time renters recommend searching the Internet for listings and getting recommendations from friends who already live in the city. That elusive $2,000 one-bedroom apartment, for example, can be found in neighborhoods like
Harlem, Morningside Heights and Washington Heights, probably in a nondoorman building. And the average price for studios is below $2,000 in the East Village, the Lower East Side and neighborhoods north of Midtown.
Most real estate agency Web sites have guides that explain the intricacies of New York’s rental world. Citi Habitats sends agents to about 20 universities nationwide to offer seminars on what it takes to get an apartment.
Cullen Hilkene, an agent who ran a Citi Habitats seminar at
Princeton University last week, said that prospective renters need to know the limitations the market might impose on them. “I give them information so they can figure out how they’re going to be able to live in New York,” he said. “It’s better to know sooner rather than later that they need to bring in a roommate because they won’t be able to rent a studio on their own.”
Alex Sooy, who moved into a two-bedroom near Union Square last June with his roommate, David Isaacs, said he knew the first thing they had to decide was whether to use a broker. For placing you in an apartment, brokers typically charge 15 percent of the annual rent or 1.8 times the monthly rent, which means $3,600 on a $2,000 apartment.
Mr. Sooy said he tried looking online for no-fee apartments, “but we would have to go to all these places on our own and work individually with the landlords and that was an overwhelming process.” Like many recent graduates, Mr. Sooy and Mr. Isaacs planned to travel after graduation and they had only three days to hunt for an apartment. “We hated to pay the fee, but it was the easiest way to look at a number of places in a row without having to do so much legwork ourselves,” Mr. Sooy said.
Their goal was to find a $3,000 two-bedroom downtown. They visited eight apartments with brokers from two firms before choosing one near Union Square with two real bedrooms, as opposed to ones carved out of a living room, for $3,600. They did not need guarantors because Mr. Sooy works for a consulting firm and Mr. Isaacs works for an investment bank and their combined income satisfied the landlord.
Mr. Sooy says his rent is much more than the $400 a month he paid when he was in school and it eats up more than 50 percent of his after-tax income. “I would prefer to have more disposable income,” he said, “but it’s a good apartment and the location is great.”
Alicia Schwartz, a former Citi Habitats agent and director of
howtorentinnyc.com, said that trolling the Internet for no-fee apartments had become easier in recent years. The Web site Craigslist, for example, offers no-fee listings by owners, no-fee broker listings where the landlord will pay the broker’s commission and fee-based broker listings.
There are also listing services that charge a fee for providing no-fee listings. Ms. Schwartz said, though, that those Web sites can be outdated. “At the height of the rental season, landlord listings change from hour to hour,” she said. “And the only ones who talk to landlords hour to hour are brokers, not listing services.”
It’s also possible to search for management companies directly. Ms. Schwartz’s Web site lists some 300 management companies and posts uncensored reviews of many of them. “So many management companies have gone online that you can get an apartment without a broker, especially if you have a friend who’s rented through a company and can recommend it,” she said.
Some management companies represent only high-end buildings that would be too expensive for a typical new hire, but others offer a range of apartments.
For instance Jakobson Properties, which manages some 2,000 apartments in about 30 buildings in Manhattan and
Queens, offers what it describes as middle- and upper-middle-income housing. Peter Jakobson Jr., a principal, said, “Our clientele is in school, going back to school, first job, second job, and not from New York.”
He says that Jakobson leases most of its apartments through its Greenwich Village office and its Web site,
nofeerentals.com, but that brokers bring in about 35 percent of its business. Ms. Schwartz said, however, that some management companies work exclusively through brokers.
Lindsey Zuckerman, who has moved twice and found renters to take over her leases by advertising on Craigslist, knows that first hand. She said that the first time she listed an apartment, she had trouble getting through to her leasing company on behalf of prospective renters, but the company would take calls from brokers.
She also said Craigslist might work better for people who aren’t first-time renters. She recently sublet her $2,400 alcove studio in NoLita to someone who responded to her listing on Craigslist. “I got a ton of responses,” she said, “but they tended to be from people who already know the market. Students who wanted to see it a week from when I posted it would have been too late.”
Because the competition for desirable apartments can be intense, brokers and renters say that having all the necessary documentation in hand when apartment hunting is crucial.
Leslie Lazarus, the agent for DJK Residential who helped Mr. Sooy find his apartment, said that because landlords have such different policies, prospective renters should have guarantors lined up even if they don’t think they will need them. For people in the financial industry, she said, some landlords will accept bonus potential as part of their income and others won’t.
And while some landlords will accept the combined incomes of two or three roommates, some don’t and will require one guarantor who can cover the rent for all the roommates.
Many landlords require the same level of financial documentation for both a renter and the guarantor, which means a sheaf of personal records that includes tax returns, pay stubs, bank statements, proof of income for stocks or other investments and reference letters. “That can be a difficult thing for parents to understand because it is so invasive,” Ms. Lazarus said.
Brokers agree that being upfront about credit problems is also important because the $25 to $150 application fee that landlords charge goes toward a credit check. “Some people won’t have a credit history or they’ll have ruined it already with that $30 nonpayment to the cellphone provider,” said Senad Ahmetovic, a vice president at Halstead Property. “You would be surprised to see how many of those cases I’ve had, and they do not realize how damaging that can be to their credit score.”
The best time to plan a visit to the city to view apartments is four to six weeks before an expected move-in date. Brokers say that while most recent graduates want to stay downtown and want to look in the Village or in Murray Hill, more reasonably priced apartments can be found on the far east and west sides of town and on the Upper East Side, where there are more large apartment buildings, including Normandie Court on East 95th Street, a building so popular with recent graduates that it is known as Dormandie Court.
But Ms. Lazarus said that many 20-somethings consider anything above 86th Street to be the suburbs. “It all boils down to the money,” she said. “If you can afford what you initially say is your dream apartment, then great, let’s go out and get it.”
For others, the suburbs aren’t so bad.
How to Prepare for an Apartment Search
FINDING the right apartment in
New York City is a challenge for anyone, but for recent graduates who are first-time renters, meeting the landlord’s financial requirements and coming up with enough cash to get in the door can be even more daunting.
This is documentation that many landlords want to see from prospective tenants and their guarantors:
A letter from an employer stating position, salary, length of employment or anticipated start date.
Pay stubs if already working.
Tax returns for at least two years.
Recent bank statements.
Proof of other income, like revenue from stocks, securities, real estate or trust funds.
Contact information for previous landlords.
Personal reference letters.
Business reference letters.
An estimate of the money that renters might need to have on hand to get a $2,000 apartment (* = not always required):
Nonrefundable application fee — $25 to $150
First month’s rent — $2,000
Last month’s rent* — $2,000
Security deposit — $2,000
Broker’s fee (15 percent of the annual rent)* — $3,600
TOTAL — $4,025 to $9,750

Sunday, March 2, 2008

DO IT YOURSELF LEGAL

By Sean Hayden, Esq.


Do It Yourself. Great idea for redoing your kitchen tile. Perhaps not a great idea for creating your own legal documents.
Consumers these days are besieged by ads for internet downloads and store bought mass market do-it-yourself legal kits. These products promise to save you hundreds of dollars in legal fees. However, when one considers the role that a legal document, such as a Last Will and Testament or a Living Trust, plays in your life, it’s important to realize some things are best for professional advice.
This summer after spending a bit too much time in the sun, I noticed a couple of skin moles. Naturally, I was concerned about skin cancer. I could have consulted the internet to self diagnose myself. After all, there are lots of sites with pictures and descriptions of which moles are malignant and benign. Instead, I made an appointment with a pathologist to properly check them out. And a clean bill of health later, I’m glad I did.
I think it’s the same way with legal matters. While we’re not talking about a literal life and death matter, faulty estate documents, in particular, can mean financial ruin for your loved ones after your death. When a prospective client brings in a document he has prepared through an internet or software form, invariably the final product simply does not express what the client intended. Many times the document simply has no legal effect. Interestingly, most of these premade forms carry the disclaimer “You should seek appropriate legal, financial, or other expert advice or assistance as may be required.”
An internet form can, however, provide you with a framework to start thinking about issues you’ve never had to contemplate. And the internet can be a great tool to educate yourself about legal matters so that your representation by an attorney can be more effective. But be aware there is a lot of misinformation out there. (I can’t tell how many people visit my office thinking a Living Trust will save estate taxes or that the City of New York domestic partner registry conveys full inheritance rights.)
Still, it seems many people will avoid seeing a lawyer and opt for DIY because they don’t believe they can afford legal services and they see the internet as a cheaper alternative. Yet I’m amazed to hear of friends who can easily can justify spending on that long weekend to Mexico or that splurge at the Barney’s Sale but will scrimp and save when it comes to medical and legal care. Fortunately, there are plenty of reasonably priced attorneys out there to suit almost anyone’s budget. And at some point, we simply have to decide that one’s well being, whether it is medical or legal, is worth the personal investment.
So remember, DIY may be great for that new kitchen tiling. After all, if you make a mistake you can always do it over. When it comes to estate documents, there is no "do-over." After you pass away, your loved ones may be left picking up the pieces of your bargain.

Tuesday, January 22, 2008

DIY LEGAL

By Sean Hayden, Esq.

TOPIC: ATTORNEYS

Do It Yourself. Great idea for redoing your kitchen tile. Perhaps not a great idea for creating your own legal documents.

Consumers these days are besieged by ads for internet downloads and store bought mass market do-it-yourself legal kits. These products promise to save you hundreds of dollars in legal fees. However, when one considers the role that a legal document, such as a Last Will and Testament or a Living Trust, plays in your life, it’s important to realize some things are best for professional advice.

This summer after spending a bit too much time in the sun, I noticed a couple of skin moles. Naturally, I was concerned about skin cancer. I could have consulted the internet to self diagnose myself. After all, there are lots of sites with pictures and descriptions of which moles are malignant and benign. Instead, I made an appointment with a pathologist to properly check them out. And a clean bill of health later, I’m glad I did.

I think it’s the same way with legal matters. While we’re not talking about a literal life and death matter, faulty estate documents, in particular, can mean financial ruin for your loved ones after your death. When a prospective client brings in a document he has prepared through an internet or software form, invariably the final product simply does not express what the client intended. Many times the document simply has no legal effect. Interestingly, most of these premade forms carry the disclaimer “You should seek appropriate legal, financial, or other expert advice or assistance as may be required.”

An internet form can, however, provide you with a framework to start thinking about issues you’ve never had to contemplate. And the internet can be a great tool to educate yourself about legal matters so that your representation by an attorney can be more effective. But be aware there is a lot of misinformation out there. (I can’t tell how many people visit my office thinking a Living Trust will save estate taxes or that the City of New York domestic partner registry conveys full inheritance rights.)
Still, it seems many people will avoid seeing a lawyer and opt for DIY because they don’t believe they can afford legal services and they see the internet as a cheaper alternative. Yet I’m amazed to hear of friends who can easily can justify spending on that long weekend to Mexico or that splurge at the Barney’s Sale but will scrimp and save when it comes to medical and legal care. Fortunately, there are plenty of reasonably priced attorneys out there to suit almost anyone’s budget. And at some point, we simply have to decide that one’s well being, whether it is medical or legal, is worth the personal investment.
So remember, DIY may be great for that new kitchen tiling. After all, if you make a mistake you can always do it over. When it comes to estate documents, there is no "do-over." After you pass away, your loved ones may be left picking up the pieces of your bargain.

Tuesday, January 15, 2008

THE INCREDIBLE REVOCABLE LIVING TRUST



TOPIC: TRUSTS AND ESTATES
By Sean Hayden, Esq.

One of the documents new clients most often ask me about is the Revocable Living Trust. If you’ve ever been stuck at home on Saturday nights watching Suze Ormon on CNBC (uh…guilty), you no doubt have heard her sing its praises.

For the rest of you who actually go out every Saturday night, the revocable living trust is a document everyone should have in addition to a basic Last Will and Testament. A Living Trust is a document which allows the assets placed in your trust to avoid probate upon a person’s passing.
Why do we want to avoid probate? (And hey...what is "probate"?)
Probate is a special court in which a Last Will and Testament must be submitted and a special certificate of authority called “Letters Testamentary” must be issued to the Executor of the Last Will. Only then can the assets can be distributed to the beneficiaries. Probate can be very slow, costly and can provide a venue for will contests from disgruntled family members.

So how does the Living Trust work?
Think of a Living Trust as a storage container with a front door, which remains open, and a back door which remains shut. During the lifetime of the person who sets up the Living Trust (we call her the “Grantor”), the Grantor can go in and out of the front door to place assets in the trust, remove assets at any time or even change her mind about the beneficiaries. That’s the “revocable” part. The Grantor is also called the “Initial Trustee” of the trust. Upon the Grantor’s death, the back door opens and the “Trustee” (a person appointed by the Grantor, much like an “Executor” under a Will) can then distribute the assets to the beneficiaries. There is no court procedure and no special certificates to apply for. Assets are swiftly distributed to beneficiaries. That’s great!

Why do you also need a Last Will and Testament?
Well, a Living Trust is “asset specific.” That means the Grantor must specifically itemize each asset and retitle each asset in the name of the Grantor in his capacity as the Trustee. In a Last Will and Testament, you can globally list your assets by specifying something along the lines of “all of my personal possessions, etc.” A person who only has a Living Trust and does not have a Last Will would therefore have assets not covered by any document as it is unlikely a person could possibly update a Living Trust continually to name every possible asset she owns. That’s bad.

So your Living Trust should work with your Last Will to cover your entire estate. However, you will want to make sure you update your Living Trust regularly to ensure as many assets as possible are covered by the Trust. For instance, my clients will visit me for an annual check up meeting to update their Living Trust as well as their other documents.

Together, your Last Will and Testament and your Revocable Living Trust will have you covered...and that's incredible!







Monday, January 14, 2008

CHOOSING AN ATTORNEY

TOPIC: ATTORNEYS

By Sean Hayden, Esq.

You’ve just put in an offer for your dream apartment and the seller’s broker says “So can I have the contact information for your attorney?” You say, “Uhhhh….”

One of the most daunting tasks a person can face is choosing a lawyer. And it not any easier when you’re under a time clock to secure counsel.

An attorney should be a part of your life planning “team.” I always say everyone should have in their back pocket a primary care physician, an accountant, a financial advisor and an attorney.

Often professionals in your life, such as brokers, financial advisors and accountants, will have good recommendations for legal counsel. Some of the best sources for attorneys can also be from your friends. Be sure to ask them what they liked and what they didn’t like about the attorney and whether they would enlist the attorney’s services again.

Once you find an attorney, schedule an initial consultation after confirming your matter is the type of matter handled by the attorney. Also be sure to confirm the cost of the consultation. Many attorneys will offer a consultation for no fee or for a reduced rate.

The initial consultation is your opportunity to interview the lawyer and assess whether he is right for you. It is helpful that you take any relevant questions and documents with you which the attorney may need to adequately address your concerns.

What types of questions you should pose in the consultation?

Does the attorney frequently handle your type of matter? How many similar matters has he handled in the past year? Remember attorneys have become more like doctors in that they specialize. You probably don’t want a lawyer who takes on anything that walks in the door.

Will the attorney you are interviewing be personally handling your file or will be passed to paralegals or to less experienced associate attorneys?

How available is the attorney at the moment? Is his workload such that your matter cannot be given priority?

How will you be billed? Will the attorney bill at a flat rate or an hourly rate?

Finally, what is your feeling about how responsive the attorney will be? Does he seem aloof and not sensitive to your needs? Many a client has been disappointed by his attorney client relationship because an attorney did not promptly return phone calls or repeatedly dismissed the client's concerns about his file. Your attorney doesn't have to be your best friend. However, he should be someone with whom you feel comfortable and someone you trust!

And remember, the consultation is a two way street. The attorney may determine he cannot represent you due to a conflict of interest or he simply doesn't believe the relationship presents the right fit for the parties.


Good luck and good legal health!