If you’re a townhouse owner with a rental apartment or two you’ll be glad to hear that rents in Harlem are going up. The latest report from MNS Real Estate shows that over the past year rents in doorman buildings are going way up…
Studios – Up 27%
1 BR – Up 19%
2 BR – Up 34%
The doorman buildings tend to be newer and are far more likely to be market rate apartments. I’m sure some of that is new, high-end buildings coming onto the market for the first time, still – 30% is a BIG rent hike.
Non-doorman buildings haven’t done as well…
Studios – Up 5.5%
1 BR – Up 5.25%
2 BR – Down 2.4%
The non-doorman buildings are generally the older apartment buildings that make up the bulk of Harlem apartments. They tend to be somewhat run-down and have minimal maintenance. There’s a reason why the rents in them are far lower. Many of the studios and 1 bedrooms are probably largely rent stabilized, which would explain their low increases. It’s interesting that the rents for 2 bedrooms actually went down slightly.
I’ve always wondered what the market rate for our rental apartment will be. The MNS report doesn’t exactly answer the question. Technically we’ll be a non-doorman one bedroom which is currently $1,723, BUT it’ll be new construction and it’s got more space than many two bedrooms (about 1,050 sq. ft.) with in-unit private laundry room, tons of storage, a bright room in the cellar that can be used for a home office or a media room, plus use of a garden. All in all I think market rate is probably a bit less than for a doorman 2 bedroom ($3,147). But $3,000 is a long way from $1,723.
When we were looking in 2009 we saw one townhouse on 130th Street that had been renovated very nicely. It was 18 feet wide – so just wide enough for two small bedrooms side-by-side. Even with little bedrooms they were getting #2,800/mo for one of the floor-thrus, and $3,000/mo for the other one. So you can get good money for Harlem apartments if they’re good apartments.
Either way, the increase in rental prices is good for townhouse owners who have an income unit. It means more of your mortgage expenses can be supported by rental income. In rough terms you can get another $200,000 in mortgage for every $1,000 additional you pay per month in mortgage payments. That drops to about $160,000 when you add in things like insurance and taxes (which you’d pay anyway), and you need to allot for months when you don’t collect rent, and if you share any utilities with your tenant you have to subtract that as well. Still, your garden apartment may have gone from $2,000 to $2,600 over the past year. The extra $600 could support nearly $100,000 more of your mortgage. Not bad – though bumping up an existing tenant’s rent by $600 isn’t wise. Still, the trend is up, so next time you change tenants you’ll see a nice bump in rental income.