Hi all. I am thinking about buying my first park in New York. I don’t live in the state but do currently own rental property there and visit often. Wondering who owns parks there and their thoughts on evictions laws and rent control. There are a lot of parks for sale in the state with some attractive cap rates. I’m thinking a good run park with rents close to market should be able to be profitable if bought right. Appreciate any feedback.
Following this, I have similar thoughts…
The question with New York is can you live with rent control and eviction laws. The rent control portion makes it a cash flow play. So if you’re comfortable with that, it’s great. Otherwise, unless you buy a park with large amounts of infill, your upside is capped (unless the laws get changed). I think the laws as it relates to these two topics are difficult to deal with. For rent control, that’s fine if you buy at a high enough cap rate. But if interest rates rise, you may get caught on a refi. As it relates to evictions, it can take up to 1 year in New York. Which makes it very difficult if you have a lot of evictions at once. Personally, I’ve wanted to look at New York for a while now but those have been major gating issues for me.
New York is a challenging state to operate in, but as always, there are deals to be made if the operator knows how to do it (both buying and running it). To summarize:
Extremely difficult tenant laws, making it so the tenant can jerk you around easily, waste your money and time with attorney fees. Bottom line, it is hard to get non-paying tenants out, even more so in Covid/Political times.
Highly litigious, so tenant screening becomes dangerous for any missteps or tenant organizations will hawk you for any mistakes or controversial moves, such as changing utility billing or rent increases of any kind. This is also the state where you must be very careful on pet rules, and how you react in emergency situations with tenants. The courts do not like landlords in this state and if you get caught in the million dollar lawsuit for a dog bite, you will hate yourself for being in New York.
Rent control. If you buy a park that is low on rents, you will struggle to get to market. Meaning, you have to be aware of this and don’t buy a park on low rents and expect to get your money out with a big increase because you overpaid the seller for the park. Plan accordingly.
In the end, it’s a buyer’s beware state, but not necessarily a “don’t buy state”. I know operators who are very successful in the state, but they tend to dedicate themselves to those areas.
Personally, I would never buy in a state like NY, but mainly due to the politics and policies. If you can buy and operate in other easier to operate locations then why not.
More and more people will be leaving states like NY and IL…
Just my 2 cents.
Thanks for the input everyone
I would never buy another park here. The laws are extremely tenant friendly and it takes many months to remove anyone for anything. That includes drugs or rule breaking. The tenants know they can get away way just about anything. insurance costs are high and taxes are high and going up. Oh and you can only increase rent by a max of 3% per year. I guess if you wanted to know what operating a park in a communist country would be like - then maybe NY makes sense.
No freaking way I would