Sheila Collins is a second-generation landlord and property manager in New York City.
Just about everyone’s heard that if you can make it in the Big Apple, you can make it anywhere. So what does it take to make it as a landlord in New York City? Is it the jungle that some claim it to be, or is it possible to use your wits to survive and prosper?
Brooklyn landlord Sheila Collins knows the answer to that question. She currently owns a 3-unit property in Prospect Heights, and she is in the process of purchasing a second 3-unit property. Sheila is a second-generation property owner whose father owned a 3-unit property in Flatbush where she grew up.
Circumstances are a lot different for Sheila than they were for her father when it comes to finding suitable tenants, “The neighborhood I live in is desirable. It’s near the Brooklyn Library, Prospect Park, and the Brooklyn Botanical Gardens. It’s up and coming, not posh.” In the language of New York real estate, that means you can find lots of amenities like cultural institutions and restaurants, but at a price that’s still affordable. Her Dad, on the other hand, didn’t have all of those extras to offer tenants, so he couldn’t attract the same quality individuals that Sheila does.
In spite of everything the neighborhood has to offer, Sheila still needs to spend a significant amount of time finding good tenants. She uses sources like Craigslist and real estate brokers, but she always practices due diligence by conducting a credit check on a possible candidate. She also meets with them to engage them in conversation to see what kind of people they are. She asks them things like how they like their job, and what they do in their free time, to get an insight into what type of tenant they will be.
The other part of her strategy is to charge less than market value rent because she finds that it widens the pool of possible tenants and increases her chances of finding the best ones. Her approach seems to work because she doesn’t have any problems with delinquent tenants who don’t pay the rent. In fact, she has one tenant who pays ahead of time.
She isn’t always this lucky when it comes to finding repairmen. Describing the process as “challenging”, Sheila asks friends and neighbors to give her referrals. This seems to work out much better than just “letting her fingers do the walking through the Yellow Pages.” Sheila illustrated her point with an anecdote about finding a locksmith on her own. In her words, “He beat me over the head with what he charged me.”
Her tenants are for the most part fairly responsible when it comes to maintaining the property to avoid unnecessary repairs. But this isn’t a matter of luck, but rather of experience. Sheila learned what to look for when it comes to responsible tenants by making the mistake of renting to college roommates who treated the apartment like a Frat House. She also adds an addendum to the lease regarding things like noise level.
She considers her costs for things like property tax and insurance to be reasonable as compared to what landlords on Long Island and in Upstate New York pay. She carries standard homeowners insurance, but doesn’t have extra coverage for natural disasters like floods.
Sheila deliberately chooses 3-unit properties to avoid being subject to rent control. This is a government program run either by the local municipality, as is the case with New York City, or by the state. It puts limits on the amount of rent a landlord can charge a tenant and also regulates the services the landlord must provide in their
New York lease.
An apartment is considered rent controlled if the tenant, or their lawful successor such as a family member or spouse, has continuously lived in that apartment since before July 1, 1971. When a rent controlled apartment becomes vacant, one of two things can happen. It can become rent stabilized, meaning that tenants are protected from significant increases in rent and have the right to renew their leases. The New York City Rent Guidelines Board sets the amount a landlord may increase a rent-stabilized tenant’s rent. Or, if it is in a building with fewer than six units, it becomes deregulated, meaning it’s no longer part of the rent control program.
Apartments in one or two family houses can also be considered rent controlled if the tenant has continuously lived there since April 1, 1953. In this case, when the apartment becomes vacant, it is automatically deregulated. There is no rent-stabilization option.
What makes Sheila so successful as a landlord is that she doesn’t see things like rent control as a roadblock to her goal, but rather as an obstacle that can be maneuvered around. She is proof-positive that with enough good old-fashioned street smarts you can make it in New York City and beyond.