The purchase of condo apartments by limited liability companies – also known as LLCs, or shell companies – is nothing new in New York City. But here’s something new: more and more people are treating condo units as income-generating investments, buying them and immediately putting them on the market as rental properties. In Brooklyn and Queens, such listings more than doubled in 2017, StreetEasy reports.
More than 1,300 condo units bought citywide during 2017 were listed for rent on StreetEasy within 180 days of closing – the highest level in StreetEasy history, both in absolute terms and as a share of the number of condos sold in the city. This trend has persisted despite the enormous number of new rental homes arriving on the market – often in the same areas as new condo development – and despite the fact that new development has slowed rent growth to some of the lowest rates since the financial crisis.
The poster child for this trend might well be 550 Vanderbilt, part of the Pacific Park project on the northern end of Prospect Heights in Brooklyn, where 172 condo units were sold in 2017, making this the second best-selling building in New York City for the year. Of the 191 total units sold at 550 Vanderbilt between late 2016 and the first quarter of 2018, 75 of them – nearly 40 percent of the total – were listed for rent on StreetEasy within 180 days of closing. While co-op boards frown on such high levels of subletting and have the power to control it, condo boards generally do not – which is one of several reasons why condos have become more attractive than co-ops to many buyers in recent years. Especially buyers who yearn to turn their condo apartment into a money maker.
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