Wall Street Journal says "Landlords offer incentives to stay put" for current renters in NYC

ORIGINAL LINK: By DAWN WOTAPKA

Amid the jobless recovery, some landlords are showering flat-screen TVs, cash, rent cuts and other incentives on tenants to encourage them to renew their apartment leases and thus avoid the expense of filling empty units.

The rise in unemployment has prompted tenants to seek roommates, move home or trade down to cheaper units. In the third quarter, the national apartment-vacancy rate hit 7.8%, a 23-year high, according to Reis Inc., which tracks vacancies and rents in the top 79 markets.

"Many companies are doing whatever they can to keep units occupied, especially heading into the seasonally slower leasing period," said Paula Poskon, an analyst with Robert W. Baird & Co.

The trends are taking a toll on the bottom line. Apartment Investment & Management Co., which owns and operates roughly 150,000 units nationwide, reported Friday that its funds from operations, a key REIT metric, fell to 19 cents a share from 60 cents a year earlier. UDR Inc., which has about 45,000 units on the West Coast and in Washington, D.C., reported earlier this month that its funds from operations dropped 42% to 19 cents.

"We do need job growth in order for our business to prosper," said David Neithercut, chief executive of Equity Residential, the country's largest apartment REIT by market capitalization. "I think 2010 will be another year of doing the best we can."

Some of the large REITs were able to keep their occupancies up. UDR managed to increase occupancy to 95.6% from 95% a year earlier. Colonial Properties Trust, which operates 35,000 Sunbelt apartments, said its third-quarter occupancy fell to 94.4% from 96%a year earlier.

Landlords attracted and retained tenants by offering incentives and rent cuts. Equity Residential said new tenants in the third quarter paid 9% to 10% less rent than the previous residents. AvalonBay Communities Inc., an upscale operator, said its decline was about the same.

Owners are focusing on keeping existing tenants because when apartments become vacated they can sit empty for months and often require marketing, painting, brokerage commissions and other expenses to attract new tenants. Denver-based UDR is offering renewing tenants a flat-screen TV, new carpet, kitchen upgrade or, $300 in cash. The money is the most popular choice, said Chief Executive Thomas Toomey,

Mr. Neithercut said Equity Residential doesn't initially offer rent cuts to existing tenants to persuade them to renew. But if the tenant plays hardball, the company asks: "What can we do to keep you?" he said.

One problem for landlords is that existing tenants can easily check the Web to see what deals new tenants are being offered. And new tenants are getting incentives like a waived pet deposit or two months' free rent.

Some landlords have also become more open-minded about tenants with credit issues involving home foreclosures. In the past, a foreclosure on a credit record could have meant an automatic denial. Now such blemishes are so commonplace that the stigma is easing. Equity Residential looks for reasonable credit history "outside of a problem that they've had with a single-family home," Mr. Neithercut said.

Another sign of the times: In New York City, landlords are paying broker fees. Typically in New York, which has traditionally been a tight rental market, tenants have to pay fees as high as 15% of a year's rent. But so far this year, Equity Residential has paid about $1.5 million in such commissions.

Apartment landlords say that one benefit of the bad market is that it has practically halted new construction. New completions are expected to be 98,000 next year and 109,000 in 2011, compared with 188,000 last year and 204,000 this year, according to Green Street Advisors Inc.

When loss rates are taken into account—the removal of units because of obsolescence—the actual addition will be immaterial. That means that when the economy rebounds, the supply will be tight, increasing landlord profits.

"I have utmost confidence in our ability to be successful when we get to there," said Mr. Neithercut. "I just don't know how far away 'there' is."

How To Find an Apartment in New York City

ORIGINALLY FROM "HELP ME HOWARD" CHANNEL 11 NEWS

Finding an apartment in New York is possible. Just do your homework.

We spoke with Alicia Schwartz, she's the director of the rental resource www.HowToRentInNYC.com.

The following is her advice.

Think about hiring a broker. If your time is limited or you've been looking but haven't found the apartment of your dreams, a broker could make the difference. They may end up showing you an apartment you could have found yourself. But keep in mind they can show you places you would never have had access to. But if the thought of paying one really puts you off; usually you pay the equivalent of one month's rent for their services and remember that will be on top of your first and last month's rent and security that you pay upfront. If you're going to be in the apartment for awhile..paying out that money feels less painful.

If you accept the challenge of going it alone..keep the following in mind.

There are no fee websites for management companies where you can see their listings. There's a contact number so you can set up your own appointments to see the places listed. HowToRentInNYC.com has a large list of management companies that you can call directly.
Check out Craigslist.com and Backpages.com. Listings in Manhattan are in Manhattan County. In Brooklyn check Kings County. In the Bronx check Bronx County. Queens is Queens County. Staten Island is Richmond County.

Make sure you check for "owner" listings to avoid brokers.

Walk around the area you want to live in. Go inside, find the plaque that lists the management company. Make friends with the doormen.

They know when an apartment is coming on the market. They can give you a name at the management company or they are probably on a first-name basis with the owner. They know other doormen in other buildings. Be nice to them, if you end up living there you'll be seeing a lot of them.

Call everyone you know. There is always someone trying to sublet, or looking for a roommate. Again, no fee.

Go back to craigslist.com and backpages.com to find people looking for roommates. The thought of living with someone you don't know might creep you out at first but it's a very New York thing to do. Don't be afraid to interview them. And by all means check their history and references.

If you are relocating here be prepared to devote three solid business days. Weekends are probably the most convenient for you but they are not the best time to look for an apartment.

Do your research before you get here..at least one week beforehand.

Set up all your appointments for the first morning you're in the city.

Meet with at least two brokers that first afternoon. This way you can double the listings you'll have access to.

Make sure you have all your paperwork and money in order and bring it with you. This includes your tax returns.

Give yourself about two to three weeks lead time. This will give you the most inventory to look over.

Be flexible. You could decide on an apartment that opens up on the first of the month then negotiate your move-in date for the 15th.

Do your advance work, work like crazy when you get here, and pretty soon you'll be sitting pretty.

For more information:

www.HowToRentInNYC.com