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Why use ATCO Residential
Group
Should you rent or should you buy?
New York's three main types of apartment leases
What to bring on your apartment search
Building and apartment terminology and definitions
Why use ATCO
Residential Group
To help you negotiate the complex Manhattan real
estate market, you need the help of an experienced ATCO
real estate agent. Why? Here are five of the best reasons:
1. Your time is valuable!
Don't waste it looking through countless listing resources
and inappropriate apartments. Your ATCO agent is a knowledgeable
market professional who will analyze your housing needs
and match you only with available apartments that suit
your needs. Spend your time wisely with our rental experts
and find your new rental home quickly and efficiently.
2. Your money is precious!
Don't overpay. Our agents know the value of the type
of home you seek in our ever-changing Manhattan marketplace.
Each is a professional negotiator who knows when a rent
is "asking" and when its "firm". Our agents will get
you the best rental value for your dollar.
3. Your interests are paramount!
Don't expect a landlord's representative or an on-site
agent to represent you. Your ATCO agent will represent
only your interests and negotiate from strength so you
deal with the landlord over the table not over a barrel.
4. What you don't know can hurt you!
There is no such thing as a "standard" lease in Manhattan.
Leases can be complex and our agents analyze each lease,
getting the right lease on the best space for you. We
know the buildings, the players and the leases. That
gives you a powerful advantage in negotiations.
5. You don't do this everyday!
Most tenants sign or renegotiate a lease infrequently,
yet rental housing is usually your most significant
financial expense. Our experienced market professionals
search for homes, and negotiate leases every day. It's
what we do for a living.
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SHOULD
YOU RENT OR SHOULD YOU BUY?
You've probably heard that buying a home may offer important
tax advantages. If you've never owned a home, you may
not understand what that means. Although many people
enjoy the pride and sense of accomplishment that comes
with owning a home, it's the tax advantages that really
prompt many renters to take the plunge and buy a home.
Just as an example, let's say you buy a home and your
mortgage payment is $3,000 a month including real estate
taxes. In the early years of the life of the mortgage,
most of the payment is interest, so almost all of that
$36,000 ($3,000 x 12 months) could be deductible from
your taxable income. If you are paying income taxes
at a rate of 28%, a $36,000 deduction means a tax savings
of just over $10,000... or more than $800 a month. It's
easy to see why people decide to buy. In this example
not only do you get a place to live, you get a tax break
of $10,000 and all the appreciation as your home grows
in value.
Gain from sale of a principal residence. The act allows
taxpayers to exclude up to $250,000 of gain ($500,000
for married couples filing a joint return) realized
on the sale or exchange of a principal residence occurring
after May 6, 1997. Unlike the "one time" exclusion provided
under prior law, the exclusion is allowed each time
a taxpayer sells or exchanges a principal residence,
although the exclusion generally may not be claimed
more frequently than once every two years. Also unlike
prior law, the taxpayer is not required to reinvest
the sales proceeds in a new residence to claim the exclusion.
To be eligible, the residence must have been owned and
used as the taxpayer's principal residence for a combined
period of at least two out of five years prior to the
sale or exchange. The taxpayer must recognize gain to
the extent of any depreciation allowable with respect
to the rental or business use of such principal residence
for period after May 6, 1997.
Tax advantages like deductions from taxable income and
the deferral of tax on profits when you sell a home
are some of the important reasons why many individuals
and families chose to buy rather than rent their homes.
Renting is relatively hassle-free: the owner worries
about taxes, compliance with city regulations, maintenance,
service and supplies. Therefore, for many people, renting
can be a convenience, especially if their lives are
in flux, or likely to change soon.
In addition, the decision to rent often does not represent
as great a long-term commitment, both financially and
emotionally, as buying and owning an apartment. Many
people rent initially with the expectation that after
they get settled and/or established, they plan to buy
and move. The bottom line is that a rental apartment
may be a good short term-solution to your housing needs
but ownership of a cooperative or condominium apartment
is likely to offer you significant tax advantages and
a better place to live, as well as considerably more
long-term stability.
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NEW YORK'S THREE
MAIN TYPES OF APARTMENT LEASES
PRIME LEASE
A prime lease is a lease that comes directly from the
building owner. If the building has more than five separate
apartments, they are probably "rent stabilized" under
the New York State rental guidelines unless they have
rents above $2,000 per month and have been officially
been registered as "decontrolled". Common aspects of
rent stabilized leases are:
- The
annual rent increases are based on rates established
each year by the New York City Rent guidelines Board.
- The
tenant can renew the lease on a one or two-year basis.
- Security
deposits must be placed in an interest bearing bank
account.
- As
of July 1993, vacancy leases for apartments that were
previously renting for at least $2,000 a month are
generally no longer
subject to rent stabilization guidelines.
Common
Aspects Of Decontrolled Leases are:
- Luxury
decontrol in units renting for $2,000 or more per
month has now expanded to include tenants earning
$175,000 or more per annum.
- Tenants
in occupancy have a right of first refusal to the
unit at the new market rent
SUB-LEASES
Sub-leases are generally used for renting a cooperative
apartment or a rental apartment for a period of the
remaining lease. Since owners in cooperative buildings
are technically owners of shares in the Apartment Corporation,
each shareholder is a proprietary tenant and has the
right to sub-lease his or her apartment. Common aspects
of a sublease are as follows:
- Separate
application and processing fees through the building's
managing agent are required.
- Approval
by the board of directors or landlord is always required
and time limits are usual.
- Under
certain circumstances, rent stabilized tenants may
sublease their apartments.
CONDOMINIUM LEASES
Leases for condominiums are often similar to leases
in rental buildings. However, the owner is a private
owner, as opposed to a
general building owner. Common aspects of the condominium
lease are listed below.
- Term
of lease is negotiable.
- Board
approval is generally not required, but separate application
and processing fees through the building's Managing
Agent are customary to receive a Waiver of the Right
of First Refusal.
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WHAT TO BRING ON YOUR APARTMENT
SEARCH
In today's hot real estate market, time is of the essence
if you want to guarantee that your dream home is yours
to rent. That means having all the necessary paperwork
and materials ready and available before you begin your
apartment quest.
ATCO recommends that you bring the following items
with you:
- Letter
of employment (should be on company letterhead, signed
by supervisor) salary, guaranteed bonus, title, start
date and housing allowance, if any.)
- two
recent pay stubs.
- Bank
account numbers.
- Investment
account numbers.
- Names,
addresses and phone numbers of previous landlords.
- Names,
addresses and phone numbers of accountant and attorney.
- Names,
addresses and phone numbers of personal and business
references.
- A
copy of your past two years federal income tax returns.
- Additional
sources of income, if any, with verification.
- Personal
ID with photo, e.g. driver's license or passport.
ATCO recommends that you line up necessary funds particularly
if you are relocating from out-of-town since landlords
require certified or bank funds and will not accept
a personal check out of the Tri-state area:
- If
you can't open a New York bank account before you
begin your apartment hunt, bring the necessary funds
with you.
- Bring
enough travelers' checks to cover the cost of 2 months'
rent. (This comprises the required first month's rent
and one month security.)
- Bring
funds to cover the broker's fees. These fees are due
upon signing of the lease.
- Bring
funds to cover a credit check. (Usually this amounts
to $25-$50 and can usually be paid by personal check.)
- Bring
funds to cover possible move-in/move-out fees.
- If
your salary level and financial picture does not meet
the landlord's minimum requirement, be prepared to
line up a guarantor who will guarantee your lease.
The guarantor will need to live in the New York tri-state
area, have an income of twice that required by the
landlord and to produce financial documentation to
prove it.
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BUILDING AND APARTMENT TERMINOLOGY
AND DEFINITIONS
Luxury doorman buildings
Usually refers to new construction or apartment buildings
that were built within the past twenty or so years.
These buildings tend to be condominiums, typically stand
twenty to forty or more stories tall and provide concierge
services. Many have health clubs and/or swimming pools.
Pre-war buildings
By definition, a building built before World War II.
These buildings are usually ten to twenty stories tall
and are sought after for their larger rooms, fireplaces,
hardwood floors and higher ceilings. They may or may
not provide a doorman.
Post-war buildings
These buildings were built between the late 1940s and
the late 1970s. They are generally hi-rise and most
have doormen.
Elevator buildings
This term usually describes a 6 to 20 stories tall non-doorman
building which may be pre-war or post-war. Elevator
buildings usually have an intercom or video security
system.
Walk-up buildings
This is the least expensive type of housing in Manhattan
and the quality can vary widely. Usually these are 4
to 5 story buildings with no doorman and no elevator.
They were originally constructedl as multi-family dwellings
and do not exude the charm or elegance of brownstones
or townhomes.
Brownstone or Townhouse
4-6 story buildings built in the 1800s to early 1900s.
These can be single family houses or may have been converted
over the years into multiple apartments. They are prized
for their charm and elegance. In almost all cases these
buildings do not have a doorman.
Loft apartments
Former commercial or industrial buildings that have
been converted into apartments. These buildings almost
never provide a doorman and usually consist of vast
spaces with high ceilings. Most lofts are found in Greenwich
Village, Soho, Tribeca, Chelsea or the Flatiron District.
Apartment terminology and definitions
Studio
One or two rooms with combined living and sleeping areas.
Alcove studio
A one or two room apartment with a separate alcove which
can be used as a sleeping or dining area. Alcoves usually
adjoin the living room space of the apartment, are generally
less than 100 square feet and can sometimes be walled
off to create an additional bedroom.
Junior One
An apartment with an alcove off of the living room has
been converted into a bedroom or dining room.
Convertible or Junior 4
This is typically an apartment with an alcove adjacent
to the living room that can be used to create another
room by using this "flexible" space to "convert" the
apartment from, for example, a one bedroom to a two
bedroom.
Classic
The word "classic" is usually followed by a number indicating
the number of rooms in an apartment. It is usually associated
with pre-war apartments that meet criteria for numbers
of rooms and design. However, a "classic" can exist
in a post-war building assuming it follows the same
guidelines. As an example, a "classic six " is comprised
of a living room, dining room, kitchen, two bedrooms
and a maid's room. A "classic seven" is comprised of
a living room, dining room, kitchen, three bedrooms
and a maid's room.
Loft area
This is an additional space created in apartments with
very high ceilings. The loft area is constructed above
the living area, accessed via a staircase or ladder
and used for extra storage, sleeping or living space
(e.g. an office.)
Duplex
In Manhattan this refers to an apartment with two floors
or levels and not to two apartment units.
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