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L & Tea Time with Michelle: Episode 10

Topic: Holdovers and Expired Leases
Guest: David Goldoff, Advice for New Property Manager

MMI: Welcome to Landlords TV, a production of Landlords New York. This is L&Tea Time with Michelle, the show where you get to have a cup of tea with me, Michelle Maratto Itkowitz, and we talk about an area where I’ve been practicing law in in New York City for over 20 years, and that’s real estate. Today, I am honored to have back as my guest for the second time, David Goldoff of Camelot Realty.

DG: Good to see you Michelle. Thanks for having me again.

MMI: Thanks for coming back. Now, this time, I just want to tell our audience, we haven’t discussed off-camera any of these questions and today I’m hitting you with the curveballs because you are a veteran.

DG: Ok.

MMI: You were at the Landlords New York convention, and I would be a rich woman if I had one dime for every time a person came to my table and said, “It is getting so hard to manage property in New York City. It gets harder all the time, and there’s new regulations all the time. As a veteran property manager, what advice would you give to the new people coming in – people who’ve inherited buildings, just bought their first building, taking over from their parents – it’s harder all the time, what say you?

DG: Go to the tradeshows. Go to the symposiums. Meet people like you and I. Try to talk to everybody. Don’t get too confused with a lot of information, which is what’s happening. Try to find people that you are magnetized to. I think the reason people are coming to you is because you know what you are talking about, so if you try to find people like that. And referrals: the internet’s a great place for referrals and networking, so they should use that. Social media’s great for that.

MMI: You really do seem like an unusually good networker. Every time I’ve had to talk to you or deal with you, you’ve had this web of people – brokers, engineers, architects, plumbers – you seem to be a very focal point kind of guy, pulling people together. Is that something you more on your own behalf for your buildings or for your clients? How does that work?

DG: I think I try to recognize talent quickly: people that actually believe in what they’re doing, that know what they’re doing, and I try to hold onto them. If we work well together the first round, then I’m always going to use you. I don’t have time to keep hopefully searching, searching, and searching. I want to work with the best because our time is limited – it’s worth something – and we should be as a team, not segregated. So, for that reason, I really work well with people that I think are professionals like myself.

MMI: You’re good at putting together teams too, based on what I’ve seen?

DG: In my business, a lot of it has to do with placing the right resources with the right type of situation. A lot of it’s being like a director and you have to place the assets, hopefully the right mix so that’s it’s actually going to work. If not, you make adjustments quickly, and you move on, and you want to get results too. It’s time, and time is money, so it always comes down to that.

MMI: You have a subspecialty where it’s like consulting, but then it blends itself into property management where you work on conversions, offering plans. That was really interesting. Talk about that.

DG: I was asked about five years ago from an attorney, now a friend, to hopefully help with a Schedule A and B, which is…

MMI: The hard part.

DG: The hard part. It’s trying to come with figures that don’t exist for a building that doesn’t exist.

MMI: For a market that doesn’t exist yet because it’s going to change.

DG. Right, it’s going to change. The first time doing that you have to call up vendors, you have to call up architects, engineers, all the people involved with creating a building and running a building: “Can you give me a price or a budget number for something that doesn’t exist?” Once you get over that hurdle, what that means is that you get results. We put together numbers that we think are realistic. We work with the brokers, the developers, and the attorneys to help put together budgets.

MMI: The brokers are going to be saying that budget is too high.

DG: Always, and for good reasons. They want they are going to be doing to be marketable. The developer wants to sell. Our job is to find a middle-ground that’s realistic but within the confines of still being marketable.

MMI: What happens after the plan is filed if that isn’t so accurate?

DG: A lot of times what happens is it’s also because of utility costs and things that you can’t control: rates and increases in inflation, change, the cost of running a building may change. A building gets built in 2-3 years – the numbers in the book can’t really be held, are pigeonholed – you have to be more realistic that those numbers can change. You wait six months to a year to really look at what the actuals are versus what the budget was to come up with a variance.

MMI: And you can amend?

DG: We can always amend. We have to.

MMI: Do you get the management when the building is created and built?

DG: Fortunately enough, we’ve been in that setting for a while. We help staff the buildings. We help open up the buildings after there’s closings. We help develop and create the boards for the first time, and educate. A lot of it in the very beginning is understanding the nuances of a building, creating a board, and watching the building actually in operation, and understanding where to make adjustments quickly.

MMI: That’s just great stuff, honestly. Can you take a little break now, and hang around? We’re going to do the teaching portion.

DG: I’d love that, sure.

Teaching Segment

MMI: For today’s teaching portion, we are talking about doing a holdover for a tenant whose lease has expired or for a tenant who never had a lease. Now, we are not operating in the rent stabilization realm here – not everything is rent stabilization – there are a lot of free market apartments out there. So let’s say you have a tenant, and the tenant’s lease has expired or the tenant paid monthly, but just never had a lease, so now you want to do an eviction. As with all of these cases, there are some first steps that you have to take, so in this case, the first step to take would be a Thirty-Day Notice of Termination. I just want to say this: a Thirty-Day Notice is a long notice – it’s not a Three-Day Rent Demand, or even a Five- or Seven-Day Rent Demand. It’s thirty days, so if you mess this up, you end up losing at least a month. The first thing I want to say about these Thirty-Day Notices, and they are pursuant to Real Property Law 232-A, is that they have to span the entirety of a billing cycle for the tenant, from the first of the month to the thirtieth or the thirty-first of the month. Let’s say a client walks into me on March 31st, and they want to do one of these things. I need to get that Thirty-Day Notice of Termination served before the end of March, so that it can span April 1 to April 30th, so then the case will be starting in early May. That’s the math, so really it’s kind of like six week to two months that you lose if you mess this up. That’s why, as with all this stuff, the beauty’s in the details. I just want to share a few details with you. Sometimes, especially when you buy a building from somebody else, you occasionally see a lease where they start the lease on the 15th of the month, and the payment cycle is at that point – the lease goes from the 15th to the 14th. If that is the case, then your termination period also spans that, so you are going to want to give the notice before the fifteenth to expire on the fifteenth of the following month, then it can start thereafter. Just watch out for how the lease toggles the starting date. Then, watch out for the February Problem. Why? February never has thirty days. If I’m trying to serve a Thirty-Day Notice of Termination and I’m trying to span February, I really need to send it on January 28th and get it served on January 28th, so that I’m going to have a full thirty days when it expires February 28th. What you always need to do with these things, and you’ve heard me say it in all these segments, is you need to build in time. Be very careful. Serve it a week early. That just ensures you are not going to have as many problems because Thirty-Day Notices need to be served in accordance with RPAPL, just like a Notice of Petition and Rent Demand, so you need a process server. You need that server to try to go out and find the tenant. I always do three different days – you’re probably ok doing two – but because you need to build that time in, it’s all the more reason that you plan and that you start early.

DG: That was great, Michelle, thank you.

MMI: Thank you so much for returning, and hopefully we’ll get you on again in the near future.

DG: I would love that, thank you.

MMI: Alright, this is Landlords TV, and this is Landlords New York. You’ve been watching L&Tea Time with Michelle.

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