SRO single room occupancy

[<JeffersonL>]

Does anyone know where i could get some info on SRO's. Information such as rent regulations. I am considering buying a 12 room SRO building in Brooklyn. The current owner said he has never registered rents. Are SRO's rent stabilized?

[Cranky Tenant]

Curious that the owner didn't say they weren't stabilized, but rather that he didn't bother to register the units..

Check this Tenantnet link.
Is your building Rent Stabilized

[<Red Zephyr>]

I encourage you NOT to purchase such a roomming house until you are aware of all the legal ramifications of what you are doing. Roomming houses (SROs) once provide reasonable and low cost accomondation for transient people. Today, they have been all but regulated out of existence. I guess the city thinks that homeless shelters are preferable to SROs.

If you purchase that SRO and attempt to run it as an SRO, you will find that the rents you can charge are pitifully low, too low to even meet your expenses. You will find that you cannot evict even smelly, drug using tenants. And you will go no support whatsoever from the city for all your work.

It might work out if you buy the building with the intention of demolishing or totally renovating (thus removing it from rent-stab SRO status). But that's another post.

[TenantNet]

You got it somewhat backwards. SRO's are declining not due to any red tape, but because lack of enforcement of existing regulations. They are being renovated and changed into boutique motels, youth hostels, etc. and long-time permanent tenants are being forced out -- very easily. Most SRO's are not drug infested (although there have been some). Homeless shelters are really different issues, not SRO issues.

[Cranky Tenant]

Either way, I would avoid any building where the present owner has already incidated he's not operating it within the legal guidelines.

The fact that he hasn't registered the units indicates the rent roll might not be enough to justify the price he's asking. Even worse, if he failed to register the units, what other details of the law might he have overlooked?

[<Red Zephyr>]

Actually, Tenant Net has it backyards. The fact that SROs are being converted to other proves the point that it is all but impossible to sucessfully run an SRO today; therefore, building owners must find other, more profitable, uses for their buildings.

Irrational and overwhelming regulation is the main reason for the decline in SROs. Many people who bought SROs would have liked to keep running them as such but found that this is all but impossible to do. Try as they might lawmakers and activists cannot "force" building onwers to continue investing time and money into an SRO that will simply not make a profit. Thus, we can say that profit making SROs have been virtually regulated out of existence and the days are transients finding a decent room for small money are long gone.

[<link>]

That's a load of crap. All owners of rent-regulated buildings can apply for a Hardship Increase at any time they are willing to open their books to DHCR. They are guaranteed by law an 8.5% profit. Goto the NYTenant section on TN and search for 'hardship'.

"I have no data yet. It is a capital mistake to
theorize before one has data. Insensibly one
begins to twist facts to suit theories instead of
theories to suit facts."
- Sir Arthur Conan Doyle (1859-1930),
Sherlock Holmes

[<Red Zephyr>]

So SRO landlords are supposed to be happy that they apply for "permission" to make a whopping 8.5% profit? Guess what -- in any other industry, 8.5% profit is nothing. And there's no need to apply to a bureacracy for "permission" to make a profit in almost any other type of business. So what does the smart businessman do? He converts his SRO building to some other use and makes a higher profit.

"Link", if you think applying for permission to make an 8.5% profit is so great, why not run out and buy an SRO, renovate it, comply with all the laws, spend all day managing it ... then report back to us about all the easy money SRO landlords make.

[TenantNet]

Yes they should be happy as it's one of the few industries where there's a guaranteed profit mechanism. SOme SRO's get it even better with funding for supportive housing. All SRO's are also rent stab, and all one needs to do is look at the Upper East Side which has the largest concentration of rent stab and rent control buildings -- and these buildings are all making profits. Study after study has shown (unless you read the Post that ignores these studies) that rent regs do not cause abandonment. In the case of SRO's the buildings are not necessarily abandoned, but converted because of lax regulation and a population that's easy to intimidate - one of the lowest rungs on the economic ladder. We know many SRO's that were well-run and successful before some swarmy operators got their hands on them and figured out they could empty them for some other use. ANd to answer the other issue, the level of profit is debatable. Many industries, specifically food and restaurant, operate at much lower margins. They still exist and are well-run. Profit is not always the bottom line.

Red Zypher's assertion is simply unfounded. We won't get into more specifics on SRO's as this could get way out of hand. Nor is the forum meant to be for general economic debate. This is not a soapbox for anti-regulation forces. Let's all get back on-topic.