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Thursday, July 19, 2007

WNYC Reports on Foreign Real Estate Investors in the Bronx

WNYC's Cindy Rodriguez has a piece today on how big real estate firms, often from abroad, are buying up apartment buildings in the Bronx and Northern Manhattan. Fueled by the weak dollar, foreign firms are purchasing properties "this cheap stock of housing that’s far from luxurious."

But at the current rents these buildings are barely profitable (if at all), so they still can't be considered bargains even for someone buying with euros or pounds. The deals only work for the investor when they can raise the rents.

While the piece is not very detailed, she does interview Benjamin Dulchin from the Association for Neighborhood and Housing Development (ANHD), who highlights the mass law suits used to force low rent tenants out, similar to the tactics used by Pinnacle, reported on by the Norwood News. (Read about the new lawsuit against Pinnacle on racketeering here).

Rodriguez also interviews an NYU real estate professor who mistakenly says, "They can’t just raise rents and push tenants out..." Obviously this professor is not aware of increases landlords can take when performing Major Capital Improvements (MCIs), or the change in rent stabilization regulations a few years ago that allows landlords to do away with preferential rents whenever a lease is up. (Why do they interview professors from NYU about what's going on in the Bronx, anyway?)

The piece is entitled, Big Real Estate Firms Buy Up in Poor Neighborhoods. But if you'd like to read an in depth report on the topic, check out the Shrinking Affordibility report by University Neighborhood Housing Program.


  1. The common denometer with these big purchasers is often UrbanAmerican Management located in New Jersey.

    There are often bookkeeping problems when buildings change hands, but what we're seeing now is qualitatively different: legal actions begun over what smaller owners would consider bookkeeping errors or misunderstandings.

    Examples: A rent-control tenant taken to court for $8,000 owed. Thankfully this tenant had every receipt going back for years, so we were able to prove easily that the problem was sloppy bookkeeping by the former owner. Normally this would have been taken care of in the ownere's office, or by phone and fax, and only if that failed would an eviction begun But this tenant (a senior citizen) was taken to court while correspondence was in progress. The case was dismissed (with a written apology from the management) but the senior still suffered great anxiety.

    In another case, a hold-over was begun against a widow, because her husband had been the tenant of record even though she had signed every rent check since they had moved into the building 40 years ago!

    In both cases, it was very clear that in addition to moving to evict without clear evidence, UrbanAmerican's staff knew very little about New York State Housing Law. They were also virtually impossible to get hold of. We got a quick response only when we put detailed information in writing.

    In these two cases, the tenants involved were long-term Bronx renters who understood their rights, and knew where to get help.

    I am really concerned about newer Bronx residents, who may not know their rights or how to proceed, and then when you add the overlay of fear because of immigration status, and/or limited English, and you know that many too many Broxites will move or be evicted.

  2. Although you cite two examples of mistakes by the LL which is inevitable, there are FAR more examples of deadbeats who don't pay rent, are engaging in illicit and dangerous activities, or are illigally occupying apartments. I am thrilled that Pinnacle has bought so many units and bringing accountability, discipline, and responsibility back to these blighted buildings. Tenants have been screaming for improvements for years, and now that the new ownership is providing the much needed changes, tenants do not want to pay for them! You cannot have your cake and eat it too. Renovations cost money, and they will inevitably be passed along to tenants who legally occupy the building through rent increases. Welcome to the real world!

    I hope Pinnacle does it's best to root out the deadbeats, drug dealers, and filth that inhabit too many of these buildings. It's time somebody did.


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