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Stefano, Home Buyer in New York

Condo or coop for investment. What are the rules for short term rental?

Asked by Stefano, New York Wed Apr 6, 2011

I am exploring the possibility of purchasing a small 1 BR or studio with the purpose of renting it for short periods (like through vrbo.com or similar). I imagine that coop might very often prohibit this use of a unit. is this true? what are the rules and constraints for condos for this purpose?
Thanks

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Co-Op Boards often prohibit renting your apartment, or require you to live in the apartment for three years before renting it out. Condos are often less strict and usually the way to go when buying an investment property. If you are still looking for a place I can show you some condo buildings that have great investment properties in the areas you are interested in.
1 vote Thank Flag Link Fri Oct 19, 2012
Short-term rentals for periods less than 30 days are in violation of the New York State multiple dwelling law, unless they fall under limited exceptions, which doesn't seem to apply to your situation.

http://ny.curbed.com/archives/2013/03/25/an_introduction_to_…
0 votes Thank Flag Link Wed Aug 20, 2014
You will be better off with a condo. But you have to ask your real estate attorney the rules of renting in ny for short period of time. I believe you have to rent it for 30 days and above; not less than 30 days.
Co-ops will not allow you to do this- many co-ops you will have to live in it for 2 years or more, and then you are able to rent for a limit amount of years -max I've seen is 6- then you either live in it again or sell it.
0 votes Thank Flag Link Thu Jun 12, 2014
It really varies on which Co-op or condo you go for. Each of them have different rules. Some let you rent no problem, many have a minimum time period you have to live there before you can sublet it, others don't allow renting at all. My advice to you is to familiarize yourself with the board rules of any potential co-op or condo you're interested in subletting. They should have a big book that explains everything that's allowed and isn't. Whoever the listing Real Estate agent is should be familiar with these rules and be able to tell you.
0 votes Thank Flag Link Thu Jun 12, 2014
Hi Stefano,

I would highly recommend sticking to condos only for your situation. As others have mentioned, co-ops have strict rules on renting so skip the headache and purchase with the freedom to rent when YOU decide.

Hope this helps and feel free to contact me at ejensen@townrealestate.com with any questions!

Best,
Eric
0 votes Thank Flag Link Tue May 6, 2014
Condo rules usually require a minimum rental period of 2 years.
0 votes Thank Flag Link Mon Apr 7, 2014
NYC has laws on the book regarding periods less than 3 months. There is a hotel tax that needs to be collected. Beyond this, the rules for short term rentals vary from building to building. In general co-ops usually require you to live in the apartment 3 out of 5 years, allowing for you to sublet for two. For your purposes a condo would definitely make more sense. However, many condos have a one year minimum sublet lease term, so you would need to find a building that has a more flexible policy. I don't think this would necessarily make the best investment since your options would be limited to bulidings with specific policies, and not necessarily the best value. Renting the apartment out for longer periods of time (at least one year) unfurnished is the best way to profit off the property. In the NYC market you will be able to keep your vacancy loss at almost 0 days. I would be very happy to speak with you further. Please feel free to contact me.

Gill Chowdhury
gchowdhury@citihabitats.com
M; 718 404 8142
0 votes Thank Flag Link Fri Jun 28, 2013
Condos are a lot less strict when it comes to renting. A coop is run through a corporation as you may know. The corporation deteres renting because rentiers bring down property value in a banks eyes. They also deter investors from coming in a flipping units, hence the flip tax. Many coops have an owner occupancy stipulation which can range from a year to 3 years before being able to rent it.

Chris
0 votes Thank Flag Link Sun Dec 9, 2012
Hello Stefano,
I work with Citihabitats Relocation and I do get tons of people from all over the world, the nation and the state. The following is a sample of people who may be interested in short terms:
- Some of my people are renovating their apartment so they need short term rentals,
- Some are looking for treatment in Sloan Kattering so they need a few months,
- Some are going for two months internship or medical rotation so they need short term rentals, many are students and they also need short term rentals.
- I get people looking to work with teh Auction houses Sotheby's etc.. and they are all looking.
There are many short term rentals in the city and so many are legal. Whatever you puchase, the requirements for leasing will highly depend on the House rules and on the management. Buying a condo is preferred of course, but some are quite strict.
Bottom line, 6 months is the minimum you can rent in many of these condos with the management blessing . But what you should be aware of : So many management and co-op boards would like you to pay a certain percentage back to the management when you rent your unit and that is not all. About two years ago, there was a law that was passed, not totally aware of all the details, that if you are leasing your apartment, then you should charge taxes, insurance and occupancy rate. Yet, people do buy and lease their unit, not necessarily for the income, but also for building equity. Since appreciation of your unit can mean a substantial amount of money if you make the right deal!!
For any other questions or concerns, feel free to contact me, I will be able to help you.
Fern Hamberger
Vice President Associate broker
fhamberger@citi-habitats.com
0 votes Thank Flag Link Sun Dec 9, 2012
Stefano,

It may be illegal to rent an apartment "short-term" that you own in NYC even if there are no restrictions placed on short term rentals by a co-op or a condominium board..

Both NY state and NYC have passed new laws recently regarding short-term rentals. It is illegal in NYC to rent an apartment for less than 30 days. Any rental under 30 days is subject to the Hotel Room Occupancy Tax.

Many condos now require purchasers to sign a letter regarding short-term rentals that they have read the bylaws that require a lease and board package application submitted to the board for all rentals or subleases no matter the term. Condo boards have first right of refusal on all purchases and leases. Coops have the right to reject any purchaser or renter for any or no reason.
0 votes Thank Flag Link Sat Oct 20, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Most buildings in Manhattan have 6 or 12 month minimum lease requirement. It would be difficult to find a place that allows less than 6-moth, though I came across couple places that have min 3-month sublet. Some people do it unofficially without board approval, saying that they have family or friends but this is very risky and you may get in trouble doing this,
0 votes Thank Flag Link Fri Oct 19, 2012
Most condos have similar rules about short term rentals. You should ask for the rules and regulations of the condo you are considering. Your agent can request it for you.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Thu Apr 7, 2011
Many coops either prohibit or limit rentals (where you have to live in the unit for a particular amount of time). You would have to check the rules. Before evening entertaining a particular coop or development ask your realtor to find that out for you. Unlike a coop where you don't actually own your unit - only the shares of the corporation that allow you to live in a particular unit, a condo you own the unit itself. However, some condos may also have restrictions on rentals. Before signing a contract of sale, ensure that you have a copy of the by-laws or prospectus so you can make sure there's water in the pool before diving in. I have several clients who rent out condos and it's been working out very well for them.

Ralph Windschuh
Associate Broker
Certified Buyer Representative
Senior Real Estate Expert
Century 21 Princeton Properties
631-467-0009
rwindschuh@c21princetonproperties.com
0 votes Thank Flag Link Thu Apr 7, 2011
Most co-ops do prohibit renting; as for condo rules, they do vary; therefore consider working with an agent of your own, he/she will be your best guide...
0 votes Thank Flag Link Wed Apr 6, 2011
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