Submitted by recklessmax80 t3_11mvz4l in jerseycity
[deleted] t1_jbk6ckh wrote
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flapjack212 t1_jbk7tre wrote
i just need to point out the obvious that while taxes increased 32% that number is not directly comparable to your 25% rent increase....
said simply, it is highly unlikely that a rent increase of 25% will not cover a tax increase of 32%. however i'm sure the property tax issue is indeed one of the major contributors to the rent increase
to OP: unfortunately there are only 2 options -- negotiate (and win), or move out, a lot of folks are stuck in the same situation because the increases have been so high
[deleted] t1_jbk9cyi wrote
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micmaher99 t1_jbkdyne wrote
I work in commercial real estate. This is not true. Debt service coverage ratios on major commercial real estate never let a borrower pay 100% of the NOI in interest.
flapjack212 t1_jbkajzw wrote
in your own example, if rent = mortgage + tax + maintenance and tax increases by 32% to balance the equation the rent side does not need to go up by 32%
how much the rent side needs to go up depends on the size of the tax component vs the mortgage + maintenance, which is again not directly related to each other. however you can make some directional guesses, in any case leading you to the conclusion that 25% increase in rent likely more than covers 32% increase in taxes.
iron64 t1_jbkhqnb wrote
The property tax increases this year were unprecedented and contributed a lot to what you are seeing. Yes, there will always be landlords looking to bring their units in-line or just under the market rate for the brand new units in the city. But a lot of families that have owned for a long time (since the 90’s), who had their properties reevaluated in 2019 (probably had their taxes tripled then), and then got hit with the 30% increase in October are forced to either sell or increase rent to continue living here.
[deleted] t1_jbkb3nf wrote
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pixel_of_moral_decay t1_jbkk3xo wrote
It is when you realize minimum wage climbs each year in NJ (for another 2 years?), and unionization across the river made labor way more expensive here.
Newport buildings have concierge and porters maintaining them. Their wages had to go up about 20% if they kept up with the region. A bit more if it was someone they really wanted to retain.
And wages are likely ~40% of the operating budget for any luxury building that age.
recklessmax80 OP t1_jbm4252 wrote
In all honesty i am very friendly with the handyman and porters as i have lived here for few years and their wages have not gone up 20% or 40% from what they tell me. Infact they laid off staff during the pandemic and have since not hired the same number of them back to service the building . Even if some hourly inceases are factored in it still does not justify the monthly price increases of 20-25%
pixel_of_moral_decay t1_jbmc2r6 wrote
They aren’t telling you the full story. Year over year it’s about 20% from 2021 to 2022 from the budget I’ve seen for door staff in my building. And still short staffed because you make way more if you take a job across the river, and there’s a ton of openings there.
You should do the right/ethical thing and suggest they job hunt then, because they can do way better in this economy.
recklessmax80 OP t1_jbkk187 wrote
Sorry but thats a poor justification. A 32% tax increase on a 500K property would increase property taxes by 600$ a quarter or 200$ per month which is less than 5% of the rent so there is no comparison to the price gouging
pixel_of_moral_decay t1_jbmo5mv wrote
$200 per month is “Less than 5% of the rent”?
$500k downtown is an walk up 1 bedroom or studio… that needs renovation. Definitely no amenities other than a mailbox. Where in Newport is there a >$4,000/mo studio apartment with no amenities?
You’re math seems really off here.
flapjack212 t1_jbp3cy3 wrote
yeah OP's math is definitely off. by my guess the tax increase could justify anywhere between 10-15% increase in rent.
the next biggest component is probably the increase interest rates, as commercial loans are often variable rate. interest rates have doubled
pixel_of_moral_decay t1_jbpd4y0 wrote
Next is by far labor.
Look at condo budgets and you’d see it’s always about 50% labor directly (doorman, porter) and indirectly (plumbers, hvac, carpet cleaners etc). That’s outpaced inflation by quite a bit due to minimum wage increases, unionization in NY for doormen and a shortage of tradespeople.
recklessmax80 OP t1_jbu66wf wrote
Sorry to say but your reasearch is off. There are multiple properties on zillow in the area 1bed 1 bath for close to 500K and up (not much renovation needed) and 2 bed 2bath from 700K upwards based on when it was built and facilities
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