Saturday, February 14, 2015

How to navigate short-term rentals in NYC

   The vacation rental business is booming New York City. Record numbers of tourists have been flocking to New York City every year, 56.4 million in 2014 according to the city's tourism agency NYC & Co. And while hotel construction has kept up with the new arrivals, hotel rates continue to be some of the highest in the world, with an average room often running more than $300/night. The booming numbers of visitors has led to a surge in the market for short-term apartment rentals, as visitors look to find less costly alternatives to hotels.
   There's a lot of appeal to these kinds of accommodations for many travelers. Large groups of family or friends are often forced to book multiple hotel rooms, significantly expanding the cost of a trip. Families with more than two kids feel the extra burden on the checkbook particularly acutely. So cost is a major factor in how popular vacation rentals are. Apartments also come with more residential amenities like full kitchens and living rooms with places to sit. This is a big benefit for visitors staying for more than a few days and for those who want to save some money by having some meals or snacks at home. Finally, there's the experience of staying in an apartment. It isn't just the sights of New York that are iconic, but the lifestyle. Everything from the local pubs, quaint coffee shops, tree-lined blocks of high stoops, and cups of soup at the deli have entered public consciousness through TV and movies. The experience of not just being in New York, but in some sense being a New Yorker are big draws for people visiting the city. Not to mention that staying in a residential area gives much greater access to grocers, bars, restaurants, shops, and some of the amenities that draw people to the city. There's a lot of good reasons to ditch the hotel and stay in an apartment. There's a catch though.
   In New York City, it's almost always illegal.


   Capital New York recently gave a succinct summary of New York State law regarding short term rentals in a February, 10 2015 article. It wrote, "Under state law, it is illegal to lease most homes--with the exception of one- and two- family residences--for periods of less than 30 days when the owner or tenant is not present." Essentially that means there are two legal options: rent a bedroom in someone else's apartment while they are home, or rent part of a private home that has less than three apartment units inside.
   Illegal short-term rentals have become one of the most passionate issues in New York City in the past two years, and like most passions in New York City, it has to do with quality of life and housing costs. Airbnb alone lists more than 27,000 rentals on its website in New York City. Critics of the practice say that by taking these apartments, mostly clustered in Manhattan and North Brooklyn, and taking them out of the market and away from locals who would rent them it diminishes the amount of already scarce housing and drives up rents. Many also point to the lack of security inherent in having different groups of visitors given keys to a residential building every week. And many simply dislike the idea of not having neighbors that they can get to know and trust. Proponents of short-term rentals point out how it can create income for those renting out a room or an apartment and help them afford to stay in an expensive city. Not to mention many tourists appreciate the local help and perspective gained from staying in someone's home.
   So obviously choosing to stay at in an apartment is a risky decision. But let's say you're a traveler and are still interested in the value or the experience of an apartment stay. What are the problems, dangers, and how can you find a legitimate place to stay?

Beware of Scams!

   This is the most dangerous problem of course. The greatest risk is that someone unscrupulous is just stealing your money and taking off with it. To that end, NEVER book anything that requires advanced payment in the form of cash, wire services, check, or money transfers, even if it's just a security deposit. If you do this, you are begging to be scammed. I repeat, NEVER WIRE MONEY TO PEOPLE YOU DON'T KNOW. At the very least, if you pre-pay with a credit card, there is a process to get a refund from the credit card company for the fraudulent transaction. Though even here, some credit card companies may look poorly on your decision to engage in illegal transactions and then claim fraud.
   This type of scam is happily uncommon, except on completely unregulated sites like craigslist. Though even craigslist puts a dramatic warning about never wiring or transferring money on their listings. The far more common complaint is a bait and switch or misrepresentation of apartments. In my own professional experience, I have have had many clients staying in apartments who were given an address and instructions, only to get a call a few days or even hours before arrival saying that there was a vague problem or issue that necessitated a change of apartment. None of these clients ended up without a place to stay but it was often not the specific place they booked. I even had one client who was forced to spend most of the afternoon at the office of an apartment broker as they frantically tried to find them new accommodation. Many of my clients who have booked apartments and been put in this kind of situation have found their new accommodation to be poor quality.
   Perhaps the most common switcheroo is just basic misrepresentation. Many listings are real and legitimate rooms located at the claimed address, but the rooms bear no resemblance to the photos or descriptions on the website. Many apartment building owners, especially those with rent-protected tenants or those in single-room occupancies--otherwise known as flophouses--have found that renting these rooms to tourists is much more profitable. So they fix up some apartments and call it a hotel. Now these aren't actually legal hotels and they are often run by vacant landlords or property managers. Often, the "hotel" rooms aren't the only rooms in the building and long-term residents will also be in the halls. And since these hotels aren't legitimate businesses, when cleanliness or amenity issues arise, there's often no one to help out. Often these "apartment style hotels" are in terrible condition as well. Check out the reviews of Hotel309 on W. 14th Street. This is an illegally converted SRO and the largely negative reviews are particularly frightening for their depictions of rats running around on the luggage and bed bug infestations. It's a similar story here on West 31st Street. In fact, one of the better reviewed "apartment style hotels" on TripAdvisor has just been sued by the city for operating an illegal hotel that piled up building violations.

How to Avoid Illegal Hotels

   I think many people fall into the trap of trusting the brokers and services that provide these listings. Many folks are rightly skeptical of Craigslist, but don't apply the same rigor to a website like Booking.com, VRBO.com, or any other travel service. All of those illegal hotels can be booked online at any major travel site. Websites like Expedia don't screen their listings, they just provide a forum for hotels to list rooms, whether they're legal or not. Hotel309 is easily booked on Priceline or any other numerous sites. Many other sites specialize specifically in apartment rentals. A site like Villas.com-owned by Booking.com--may work great for renting a Tuscany villa, but many of their NYC listings are just the same old illegal hotels. Luckily, their listings include addresses which enables users to quickly google the address and find the name of the hotel/business. I also have had far more European clients using brokers and vacation rental services to locate an apartment in NYC, and these are often the ones that lead to trouble for my clients. So just because you found your apartment through a broker or trusted website does not make it legitimate or legal!
   This is also where you get to do some due diligence. Let's say you've found an apartment style hotel. It looks nice, it gets good reviews. You've got the address and you want to see if there's anything illegal going on. Well start by typing the address into Google Maps. Does the address exist? Good! Next go to the street view of that address. Is there a building there? Does it look like the kind of building described in the listing? Hopefully so. Now this is where the NYC Department of Buildings website comes in handy. Go to the website of the NYC DOB and find the box on the bottom left that says "building info." Type in the number of the building and the street name, including "east" or "west" and the borough. That will pull up all kinds of info about the structure, including what kind of building it is. For instance, my house is listed as a 2-family dwelling. Correct! Legitimate hotels are listed as hotels. Many illegal apartment style hotels will be listed as condos, co-ops, walk up apartments, or elevator apartments. If you see that kind of listing, it means whatever is at that address can not legally operate as a hotel, or even lease an apartment for less than 30 days.
   You should also just be on the lookout for general red flags when dealing with rentals. Is it easy to get in touch with the owner or manager, particularly by phone? If you are only allowed to leave voicemails or send emails/texts, it's probably not a good sign. Also be on the lookout for suspicious English synatx in listing and communications. Of course, not everyone speaks perfect English, but there's a certain strange style of description with many scammers. If you see something advertised as "Charming and cozy apartment in Time Square" your ears should perk up. Why? For one, there's no such thing as "Time Square" though there is a "TimeS Square." Does that seem like a small difference? It's not. Every New Yorker knows it's not "Time Square" and no one advertising a legitimate hotel would ever misspell the most famous attraction in the city. Plus, there's almost no apartment buildings in Times Square, and they certainly aren't charming and cozy. It's an area famous for giant neon billboards after all.
   So that should help you weed out apartment scams and shady hotels. But what about renting apartments direct from the owners?

Issues with Direct Apartment Rentals

   I actually think this is the much safer route to take when renting an apartment. By dealing directly with owners there's a much higher chance that you'll be dealing with someone legitimate and much lower odds of getting scammed into an inferior property than the one you booked. It's much more likely that you'll be dealing with someone renting out a single property and not running a shady business. And these are where the intricacies of the law come into play as well. The top sites for these kinds of rentals are Airbnb, HomeAway, VRBO, and FlipKey. They all provide a range of property types and are slightly different in their booking process. Part of Airbnb's appeal is that you pay up front for the apartment, but Airbnb holds the money is escrow until 24 hours after check-in, so if you want to cancel or have a problem upon arrival there is a seamless way to get money back. Cancellations are often allowed until a week before arrival, though it depends on the hosts policy. They also provide a program for hosts to verify their identities by scanning photo IDs and linking to social media accounts. The biggest downside for Airbnb is that they collect a 6-12% fee on all bookings and it is non-refundable. Homeaway and VRBO are both owned by the same company and specialize more in house rentals. Both have no fees, but have stricter cancellation policies. Homeaway actually requires a written rental contract be signed. Both sites use credit card deposits, so a refund is a little more difficult, but not impossible. They also offer their own streamlined payment system for many properties. FlipKey is owned by TripAdvisor and offers many of the same features, including rental agreements and customized payment mechanisms. All three offer upgrades to more generous protection and insurance programs.
   But the trouble is, many of the apartments on these sites are still illegal. But you might wonder what are the odds of something going wrong just renting an apartment from the owner? Well, there's one major risk and that is that the owner will have been evicted because of breaking the law or lease. For an example, see this story of a New Yorker whose neighbor was evicted for illegal occupancy and some unsuspecting tourists showed up to find the apartment they booked was gone. This happens very rarely but it does happen. There are two ways a host could bring this action upon themselves. The first is the city finds out about it. The city's enforcement agencies don't go trawling through Airbnb looking for listings that are illegal, but they do respond to official complaints made by other residents. NYC's Office of Special Enforcement has recently taken to using data crunching software to coordinate inspections and root out the most flagrant violators of the law. So if you book an apartment and the owner also hosts a multitude of other properties, it's much more likely the city will come down on them. The other issue is the hosts lease or purchase agreement. When someone rents an apartment, purchases a condo, or co-op in New York City, there are all kinds of restrictions on what kind of things the resident can do with their new apartment. Almost no apartment, co-op, or condo building in New York City allows residents to sub-let their unit for less than 30 days. Many don't allow sub-letting at all, or only under long-term, landlord-approved circumstances. So it is entirely possible that a landlord or manager will find out an apartment is being rented out to tourists as a business and move to evict the tenant without the city ever finding out because they violated the terms of their residence.
   Once again, the DOB's website comes in very handy. If you have booked an apartment and want to know if you should be concerned, enter the address in their website and when the buildings records come up, click on "complaints." This will bring up a list of all complaints filed against the building. If there's been a lot of illegal hotel complaints recently, there could be a problem. For example, this building on E. 32nd Street has received a few complaints in the last year about illegal hotel use. That would make me nervous if I was booked into an apartment at that location. But keep in mind, there doesn't need to be any official complaints for a landlord to take action. So in short, I wouldn't book an apartment for my stay that was in an apartment building of any kind. It's a risk, and you'll be breaking the law. I would be especially concerned about an apartment in a heavily-touristed area like Midtown or a building with a number of complaints against it.

Are there any Legal Apartments?

   There are! You will just have to work to find them. On any of the vacation rental websites, look for units in houses. Remember, the owner of single- or two-family houses can rent out all or part of their property. So when you're searching the rental sites, you should be looking out for anything in a townhouse, not in an apartment building. So if you see an apartment listing with doormen, gyms, balconies, views, loft-like features, or elevators. It's probably no good. But if you see something with key words like brownstone, townhouse, garden or other house-like amenities, that means it might be legal. Once again, you can check the address against the DOB's website to make sure it is a one- or two-family home. There is one other thing to look out for with townhouses though. Many of the larger ones in NYC are actually classified as apartment buildings because the house has three or more apartments--for example if a 4-story brownstone had an apartment on each floor. These technically can not be rented out. But searching through various sites I found a number of listings that were in apartment townhouses, but the only other residents were the owners. While this doesn't make the rental technically legal, it does make it extremely unlikely there will be any issues since there are no neighbors to lodge complaints. If I was unsure I would call the owner--remember legitimate owners are easy to reach by phone--and ask if there are any other full-time residents in the building.
   There is one other instance where renting an apartment is legal: when you are sharing the apartment with the permanent tenant. This is a major feature of Airbnb's business. It allows you to limit your search to a private room within a larger residence. A recent study found that almost 40% of Airbnb's listings are for rooms within someone's apartment. This is obviously not an arrangement every traveler is comfortable with, but for those on a budget it's a legal affordable option.
   One note is that these kinds of legal accommodations are most likely to be found a little further away from the core of the city. Midtown features very few residential streets, and nearby areas like the Upper East and West Sides are often dominated by apartment buildings. The most likely spots to find shared or home based apartments is further out, in the mixed-income gentrifying neighborhoods of Upper Manhattan, Queens, and Brooklyn. Neighborhoods like Harlem, Washington Heights, Astoria, Bushwick, Bed-Stuy, or Lefferts Gardens have lots of houses and lots of shared listings. These are true local neighborhoods. They are generally a subway ride from major attractions but they provide a great sense of everyday New York life. So staying in these areas can be positive or negative depending on your taste and itinerary.

What are my Other Options?

   There are a lot of legal hotels that offer suites or kitchenettes designed for families or bigger groups. The AKA chain of hotels offers apartment style rooms. So does the Affinia chain. As do Doubletree Suites, Beacon Hotel, Radio City Apartments, Candlewood and Staybridge Suites, even some of the city's Best Westerns. Many of these provide kitchens and other residential amenities, though they aren't always cheap. I also found the apartments listed on New York Habitat to mostly be apartments in legal hotels or private homes. They make a big point of stating all their listings conform with NYC law and it looks to me that they are largely correct, though I couldn't look at every single listing.
   There are a few legal hostels in New York City too. There is a law against for profit-hostels, though many legislators who object to short-term rentals are trying to overturn the hostel ban. The most longstanding hostel in the city is the Hosetlling International on the Upper West Side. They're a big operation and offer lots of different kinds of accommodation. Recently, there's been more legal hostels opening elsewhere in the city. The American Dream Hostel on 24th Street is legal, as is the new Q4 Hotel in Long Island City, Queens. The Jane Hotel in Greenwich Village also offers private rooms with shared bathrooms. There are some legal budget options out there if you do some research.

Summarize all that Please!

   Basically, don't fall for scams that require you to wire money or pre-pay in non-refundable ways. Don't assume that a listing is legal just because a prominent website or broker advertises it. Rentals in apartment buildings could always go bad if the person renting it out is caught by the city or the building's management. The only safe legal rentals are in private homes or in shared apartments. There are legal hotels that offer suites for bigger groups, and there are some budget hostels available. The easiest advice I can give is just to book a room in a hotel and avoid the stress. But if you're willing to do the hunting you can find legal rentals in New York City.

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