MONEY real estate

NYC Apartment Building Will Have Separate Door for Lower Rent Tenants. What’s Up With That?

Rich door and poor door
New Yorkers are calling it the "poor door." Sarina Finkelstein—Marcus Lindström/Bronxgebiet/Getty Images

A new luxury high-rise on the Upper West Side of Manhattan will include a separate entrance for tenants in "affordable" housing units.

New York City has approved plans for a new luxury high-rise on the Upper West Side of Manhattan that will include a separate entrance for tenants in “affordable” housing, reports the New York Post. Even the conservative Post manages to see the class angle, calling this a plan for a “poor door.” (The quotation marks are the Post‘s.)

This controversy has been roiling in New York for a while. The Daily Mail unearths a 2013 quotation in a real-estate trade paper from the developer of another project (not the one on the West Side) defending separate entrances. It’s one for the ages:

‘No one ever said that the goal was full integration of these populations,’ said David Von Spreckelsen, senior vice president at Toll Brothers. ‘So now you have politicians talking about that, saying how horrible those back doors are. I think it’s unfair to expect very high-income homeowners who paid a fortune to live in their building to have to be in the same boat as low-income renters, who are very fortunate to live in a new building in a great neighborhood.’

Let’s keep the rich and not-so-rich in separate boats. Nice. You can make arguments for what the developers are doing here—here’s one—but, wow, that’s not it.

If you don’t live in New York and you aren’t familiar with the crazy real estate market here, this story might need a little translation. Your questions answered:

If the developers don’t want to mix different tenants, why include “affordable” units at all?

Because they are getting subsidies—pretty valuable ones—to build them.

There is not enough of any kind of housing in NYC, but housing for people with low-to-middle incomes is especially scarce. The long-term answer to that is to build lots more housing, and there’s a case to be made that building in NYC should just be a lot easier than it is. The fear on the other side is that new construction will mostly go to the luxury end of the market.

One stop-gap has been to encourage developers to encourage builders to include various kinds of affordable units in their projects. There may be tax benefits passed on to buyers of condos in buildings with affordable units, for example. The Upper West Side project, developed by a group called Extell, got zoning rights to build more units, says the blog West Side Rag, and Extell can sell those rights to other nearby developers.

West Side Rag also says the developer argues that, since the affordable units are in a separate part of the building, it legally must have its own entrance. That could have been avoided had the affordable units been mixed throughout the building. But this particular high-rise offers coveted views, including of the Hudson River. Spreading the units around would presumably have meant giving up some prime spots to affordable units, cutting profits for the developer.

What’s “affordable”?

To qualify for these units, a tenant would need to earn less than 60% of the area’s median income, adjusted for family size, says West Side Rag. For a family of four, that’s about $52,ooo a year. That’s twice the Federal poverty line and above the median U.S. household income, though making ends meet in NYC on that much, with a couple of kids, isn’t easy. That family could rent a two bedroom under this program for about $1,100 a month. So yeah, New York’s version of affordable is different than in other places.

MONEY Citigroup

Here’s Why Citigroup Is Shelling Out $7 Billion

It wasn't just investors who were hurt when banks turned lousy mortgages into toxic bonds

+ READ ARTICLE

You could be forgiven for not caring — or perhaps not even noticing — that Citigroup agreed yesterday to pony up $7 billion to settle a Justice department inquiry into its mortgage business. More than five years after the financial crisis, the legal process of holding banks accountable can feel about as urgent as a rerun of Law & Order.

But it’s worth spending a few minutes remembering what actually happened — and who got hurt.

The government’s case against Citigroup is about harms to investors who bought pieces of mortgage “pools” that Citi created. But since investors who buy mortgage securities aren’t exactly Joe and Jane Mainstreet, the whole thing can seem almost victimless. The financial press also tends to overlook the human costs and focus on the money: What does the $7 billion hit mean for Citigroup’s share price? (So far, investors seem happy to at least know the bill.) Who gets the money? (Mostly the government, but $2.5 billion will go to consumer relief, like mortgage modifications.) And who is paying? (Shareholders, basically. No individuals from the banks are paying up—at least in this settlement.)

So it’s easy to forget that actual homeowners were hurt, too. Citigroup was one link in a chain that turned home loans into investment products. At one end, there were the original mortgage lenders (including such fine operation as Countrywide). Citigroup would buy mortgages from the originators and then pool the loans together to create securities that other investors could buy. One of the bank’s jobs was to make sure that the mortgages in the pool were up to snuff.

Citigroup hired outside companies to check on this. The companies would look at a sample of the loans and see if any of them didn’t fit guidelines, or if valuations of the homes the mortgages backed looked squishy. The news Citigroup got back wasn’t pretty. One Citigroup trader looked at the reports produced and wrote in an email (one for the ages) that “we should start praying… I would not be surprised if half of these loans went down.” Nevertheless, Citigroup went ahead and created securities out of the loans. These securities went south, touching off the Great Recession.

But things didn’t work out terribly well for the individual borrowers, either. Citigroup and institutions like it helped stoke mortgage originators’ appetite to lend to just about anybody and everybody, in many cases based on unrealistic valuations. The damage from this includes borrowers who ended up overstretched and put on the road to foreclosure, and more broadly any home buyer who bought into a increasingly inflated market.

Let’s not forget that part.

TIME real estate

You’re Not the Only One Who’s Having Trouble Paying Rent

Condo Towers Rise From Boston to Los Angeles in U.S. Rebound
The EVO condominium building stands in downtown Los Angeles on June 23, 2014. Patrick T. Fallon—Bloomberg/Getty Images

Average rents in big cities rose more than 5% in the 12-month period ending in June 2013, while wages rose a measly 1%

Rent prices are going up in cities across the country even as wages stagnate, making it ever harder to afford to live in big cities.

In the 25 largest rental markets in the country, rents rose faster than wages, according to the latest data published by the real estate website Trulia.

Miami, New York, Dallas and Phoenix and 21 other big cities saw average rent increases of 5.5% in June compared with the same month last year. Meanwhile, annual average wages increased nationwide just 1.0% in 2013 compared with 2012, according to the Bureau of Labor Statistics.

The two data sets reflect slightly different time periods, but the trend is clear, said Jed Kolko, chief economist at Trulia: affordability is worsening.

“Wage data is up one percent,” said Kolko. “Rent is rising at a pace much faster than that.”

San Francisco had the highest median rent for 2-bedroom apartments, at $3,550, according to Trulia, while Miami residents paid the highest percentage of their wages on rent for an average 2-bedroom, or 62% of wages. New Yorkers paid 56% of their wages on rent, while on the other and of the spectrum, St. Louis residents forked out just 24%.

Rents are soaring in smaller cities like Denver (10.8% increase) and Atlanta (8.6% increase) as well.

San Francisco saw the highest increase in rents in June compared with last year at 13.8%.

MONEY home improvement

4 (Mostly) Cheap and Easy Ways to Green Up Your Grass

Greening up the grass
Jason Schneider

Brown patches and weeds getting you down this summer? To keep your turf lush and thick, try some of these cost-effective tactics.

Does it feel like the grass really is greener in other people’s yards? Summer’s heat and low rainfall are tough on turf, so neighbors sporting lush lawns this time of year probably have better species of grass, higher-quality topsoil, and automatic irrigation. You, too, can have all that—for perhaps $10,000 or more—with a complete lawn replacement. Or you can try more affordable approaches to keeping your existing grass verdant.

Mow smarter

“Taller grass holds more moisture and stays greener than short grass,” says Mark Schmidt, principal scientist at John Deere. “Plus, it shades the soil, helping to keep the roots wet.” Set your mower deck to three inches (or as high as it will go). Also, inspect the grass right ­after mowing. Jagged tears indicate that the blade is dull, and these wounds sap moisture from the plants. Get a replacement blade for $10 to $40 or take your mower for a tune-up ($75 to $200), which includes blade sharpening.

Do not feed the plants

When a lawn turns brown, it’s not dead—it’s just gone dormant to save energy for cooler, wetter times. You may be tempted to apply fertilizer and weed control, but if not done right, those chemicals can burn a heat-stressed lawn, says Oregon State University horticulture professor Alec Kowalewski.

Water on schedule

Dragging around the hose and sprinklers to hydrate parched grass may do more harm than good. “Coming in and out of dormancy can kill the lawn,” says John Stier, a playing-field consultant to several National Football League teams. “So don’t water unless you’re going to be superconsistent about watering all season long.” That’s probably not realistic with manual efforts, so either let nature take its course or go for automatic irrigation, a $2,000 to $4,000 expense for which there really isn’t a good low-cost workaround. To maximize your investment, ask the installer to arrange sprinkler heads into zones based on the quirks of your property so that shady, sunny, poorly drained, and sloped areas can get programmed for their own watering needs. Opt for a rain sensor too (around $150), which will override sprinklers when Mother Nature provides irrigation for free.

Aerate in autumn

Whether or not you irrigate, think of lawn restoration as a multi­season project. In the fall, plan to aerate—cutting hundreds of holes to loosen the soil—and top with compost and a mix of grass seed bred for your climate ($500 to $1,000 to hire out the job). Repeat for several seasons, and you’ll gradually improve the soil and grass type, making your lawn more drought-resistant, and yours the greener side of the fence.

MONEY Food & Drink

Grill Without Getting Grilled By Your Landlord

This guy is not doing it right. Anthony Saint James—Getty Images

Grilling is a key Fourth of July tradition, but renters are generally left out of the fun. Here's how to take your grilling indoors without sacrificing taste in the process.

This Friday, millions of people across the country will take to the backyard and celebrate their independence by grilling up burgers, hot dogs, and other all-American fare. But, like every year, one group will feel left out of the fun: renters.

Landlords just aren’t big on their tenants having cookouts. In a Rent.com survey, 60% of respondents stated they were barred from having a grill on their property, and more than 25% said they lacked a common area for grilling. Even those that do have access to a shared grill aren’t in the clear. Almost half complained their neighbors never seemed to clean up after themselves, listing a dirty grill as their primary peeve.

Luckily, renters don’t have to give up on their cheeseburger and bratwurst dreams. Thanks the to magic of indoor grilling, you can whip of a Fourth of July feast to remember in the comfort (and air conditioning) of your own home. Here are five tips from Sur La Table’s Sephi Coyle, director of culinary programs, on how to get the tastiest results.

Invest In a Good Cast-Iron Grill Pan
The key to indoor grilling is achieving consistent high heat, and to do that, you need a good grill pan. Coyle says a quality piece of cast-iron will cook everything quickly and efficiently, and even leave those trademark grill marks on your food. Perhaps best of all, a decent grill pan (also known as a griddle or skillet) shouldn’t cause to much pain to your wallet. Slate’s J. Bryan Lowder says a decent model will set you back between $40 and $80.

Don’t Be Afraid To Use The Oven
As anyone who has ever grilled before knows, underdone is preferable to overdone. Coyle recommends a light touch on the grill, followed by a trip to the oven for any still-undercooked food. That’s going to taste a lot better than outright burning your patties on the griddle in an effort to get them fully cooked.

Keep Adding Flavor
You can add flavor before, during, and after grilling, and Coyle says you should do all three. Marinate food before putting it on the grill, and then use a brush to baste items while they’re cooking. Eating Well has a chart with different marination times depending on what you’re grilling, and also offers a few marinade recipe suggestions.

After you’re done, serve up your stuff with some serious condiments. Coyle suggests pesto, salsa verde, or the classic BBQ sauce. Serious Eats taste tested 16 different sauces and picked three winners: Bull’s-Eye Original, TJ’s Bold & Smoky, and Stubb’s original BBQ. Match your meat with one of these top picks and you’re guaranteed a successful cook-out (or in this case, cook-in).

Pick The Right Oil
When grilling, you don’t want the cooking oil contaminating your food’s flavor. Coyle says the trick is to use vegetable or canola oil since both have a neutral flavor and high smoking point, the latter of which will give you a better sear.

Make Sure To Have The Tools You Need
Just because you’re grilling indoors doesn’t mean you don’t need much of the same equipment that an outdoor grill requires. You’ll want some tongs, a spatula, and silicone pastry brushes for marinating. The Sweethome, a review site for household products, has listings for the best BBQ tongs and spatula, and Amazon lists a number of highly rated brushes for under $10.

Happy grilling!

TIME real estate

Here’s Why Your Landlord Keeps Raising the Rent

Views Of Austin And San Antonio As Cities Bear The State's Financial Burden
A building stands under construction Austin, Texas,. U.S., on Friday, June 6, 2014. Bloomberg—Bloomberg via Getty Images

Turns out the rent really is too damn high

If you dread writing your first-of-the-month check, you’re not alone.

Apartment rents are continuing to rise rapidly across the country as landlords pushed through big hikes over the past year, even as household income remain squeezed.

The average monthly rent for an apartment rose to $1,099 in the second quarter of 2014, up 3.4% over the 12-month period ended in June, according to data from the real-estate research firm Reis. The second quarter was the 18th consecutive quarter of rent increases.

The ever-spiraling rental prices are because tight mortgage-lending standards keep younger people in the rental market longer, particularly in urban areas. With vacancies at just 4.1%, rental supply is tight — and as a result, average rents have increased 14% since the end of 2009.

In San Francisco, San Jose, Calif. and Seattle, rent growth exceeded 6% in the past year, and even cities like Charleston, S.C. and Nashville, Tenn.—cities not associated with high rents—saw growth of about 5% over the same period.

New York City was the most expensive rent market with an average rent of $3,152/month, with San Francisco the second most expensive.

Meanwhile household income stagnated in 2012 at $50,017, well below 2007′s peak of $55,627, adjusting for inflation, the Wall Street Journal reports, making it harder for renters to afford their apartments.

Maybe it really is time to vote for the Rent Is Too Damn High Party, the mostly New York-based political party that’s as frustrated with landlords as you are.

MONEY home prices

WATCH: Foreign Buyers Push U.S. Home Prices Higher

From Russia, Canada, the Middle East and elsewhere, international buyers are moving in.

MONEY buying a home

7 Ways to Get Your Kid Out of Your Basement

College students slacking off and living in parents' basement
Adam Crowley—Getty Images

If your child is one of the 14% of millennials who have moved back in with their parents, here are some tips to nudge him (or her) out the door.

For most of us, leaving the nest was a rite of passage. We went to college, and then proudly headed out into the world to make our own way, while our parents turned our old room into another guest bedroom.

However, for a significant percentage of young adults, that rite of passage is now all about returning to the roost rather than flying solo. According to Gallup research, 14% of millennials (24-to-34-year-olds) have moved back in with their parents. The homeownership rate for those under age 35 was 36.2% in the first quarter of 2014, down from a historical high of 43.1% at the end of 2005, according to Census data. According to numerous economic reports on millennials, this is attributed to a weak job market, high cost of living, significant college debt, and other factors.

These kids, as well as any adult children who have decided to move back in with mom and pop are lovingly referred to as “boomerang kids.” Clearly the analogy is obvious.

For Mom and Dad, who would love to have the ‘kids across the hall’ become the ‘kids across town,’ here are seven pointers you might want to consider:

Start Charging Rent

Cut off the free ride. Yes, it sounds harsh, but you may be doing both you and your kid a favor. Managing money and a monthly budget is something that is not learned in school, and it is certainly not learned hanging out in your parent’s converted attic for free. Give your boomerang kids a real estate reality check. If the free ride comes to a screeching halt and they are paying rent, they will probably want to do it in their own apartment, closer to (or with) their friends, near downtown or a closer drive to their office. Charge rent and enforce it. Once they start getting that first-of-the-month monetary wake up call, it might shock their system enough to have them consider alternative arrangements. If they’re going to have a landlord no matter what, they’re likely to consider a new, more independent situation.

Collect Monthly Payments

Here’s another way to give them a foot out the door – but still a leg up. Start charging them monthly payments now. Let them know that they will have to come up with the monthly equivalent to local rents each month for the next six months. At the end of the six months, you will give them back all the money when they move out. That does three things: You teach them budgeting skills, you incentivize them to move, and you give them a financial helping hand on move-out day.

Be A Strict Landlord

No parties, no loud music, no guests after 10:00 pm. Keep the house rules strict. At some point, your kid is going to want to have a little independence, and some fun too. Living with a strict landlord may just be the incentive he or she needs to find a place of their own.

Set A Deadline…and Stick To It

If you can sense that your boomerang kid is riding out his or her free meal ticket under your roof as long as they can, help them visualize when that ride will end. Create a deadline for them to move out and stick to it, no matter what. It’s likely you never intended to have kids under your roof for more than two decades, so your children need to respect that…and they need to get on with their own lives. Even in a world where millennials are underemployed compared to their Gen X, Y and Baby Boomer counterparts, there are still plenty of ways for them to make a living that enables them to live with a roommate or two or three…elsewhere.

Help Them Get Organized and Overcome The Mental Hurdle

After all the financial aspects are considered, one of the biggest hurdles to making a big move is mental: it just feels overwhelming. So many things to do, buy and organize before it can actually happen. Your child may just need the expertise of someone who’s moved multiple times in their lives to talk them down off the “I’m too overwhelmed and can’t do this” ledge. Map out all the necessities and then make a list of the “nice to haves down the road” so they can see what’s an immediate need, and what can be done over the coming weeks and months.

Gift or Loan Them The Down Payment

Trulia’s latest survey showed that 50% of millennials surveyed plan go to their parents for help with the hefty down payment that’s required to purchase a home in today’s housing market. If you want your adult child up and out of your basement, consider giving them the financial head start now they need to form their own household and be independent.

Buy A Multi-Unit Investment Property

I am a huge proponent of purchasing multiunit properties, such as a duplex or triplex, because they are great investments. In the case of your “failure to launch” millennial, slot them into one of the units of your new property and rent out the others. The rental income is likely to cover much of the costs of ownership, and you’ll have a built-in property manager in the building to keep an eye on things. Plus, your boomerang kid is learning valuable management skills at the same time. It can be an investment property for you, and solve the “son or daughter is still in my basement” problem, all at the same time.

 

More on Financial Independence

4 Ways to Lighten Your Kid’s Debt Load

Is Living with Mom and Dad Starting to Cramp Your Style? Take These Steps to Independence

Taking Five Years to Earn a B.A. is Common—And Costly. Here’s How To Get Out in Four

MONEY Ask the Expert

Should I Pay Off Loans or Save for a Down Payment?

140605_AskExpert_illo
Robert A. Di Ieso, Jr.

Q: Should I use savings to pay off car loans or make a down payment? — Carmella F., Pittsburgh

A: The first line of business is to make sure you have enough savings for an emergency fund, a minimum of four months if both spouses are working, six months if one isn’t, says Pittsburgh financial planner Diane Pearson.

Paying off the $30,000 in two car loans you told us you have would deplete your savings. Not only does that leave you vulnerable to unforeseen expenses, plowing money into assets that only lose value as they age doesn’t make sense, says Pearson. When applying for a mortgage, banks would prefer to see $30,000 in savings plus car loans over no savings and vehicles owned free and clear.

MONEY Odd Spending

6 Crazy Things You Could Do If You Owned an Entire Town

Swett, South Dakota
If you've got $399,000, you could be the new owner (or mayor or president or generalissimo) of the 6-acre town of Swett, S.D. Eric Ginnard—AP

If you dreamed of plunking down $399,000 to buy Swett, S.D., and turning it into a wild party destination filled with girls in bikinis, that idea's already been taken.

Two hours southeast of Rapid City, S.D., the nearly abandoned town of Swett, which consists of 6.16 acres, a handful of buildings, and a population total of 2, recently went on the market. Coldwell Banker, which has the listing, describes the property as “a popular place for pheasant hunting” and highlights the town’s lone functioning business:

The Swett Tavern has had many updates, including a new horseshoe shaped bar, coolers, grill, insulation, camera system. Very clean, open, and updated, the bar also has an extra party room, plus a stage area.

The tavern—and the entire town—is listed for the asking price of $399,000. Presumably a new owner would want to keep the tavern running as the rough-and-tumble road house-type biker bar that it is.

But that’s hardly the only option if you decided to spring for a whole town. As these previous examples of towns for sale show, what you can do as mayor (or president or generalissimo or any title you prefer) is limited only by what your imagination can dream up and your budget can handle.

Outpost for Controversial Religious Sect
When the eight-person town of Scenic, S.D., went up for sale in 2011, the 46-acre property—which included a saloon, post office, and two jails, all closed—was purchased by an unusual buyer. The Phillipines-based Iglesia Ni Cristo religious sect paid $700,000 for the town, $100,000 below asking and well below the onetime listing price of $3 million.

The sect, which has become the third-largest religious denomination in the Philipines and has expanded rapidly in the Americas, is sometimes referred to as the “Cult of Manalo,” after Felix Manalo, the man who claimed to be a prophet when founding the group in 1914. The sect insists it’s the true church established by Jesus Christ—who is considered one of many prophets—and is known for its anti-Catholic stance. “The church is focused on the end times, believes Manalo is a prophet and considers the Catholic Church apostate,” the Associated Press summed up.

Thus far, the church group hasn’t done anything with the property, but many people assume that at some point it will be used for a church camp, or group retreats, or perhaps something bigger. On July 27, Iglesia Ni Cristo will celebrate a grand centennial in the Philippine Arena, the new 51,000-person domed venue built by the sect in the city of Victoria.

Movie Tour Location
Granted, this isn’t something you can do with any old town you buy, but abandoned villages and ghost towns are frequently used as film sets, and when the movie studio’s business is done, the locations are sometimes put up for sale. For instance, Henry Mill Village, an abandoned string of old mill homes near Hildebran, N.C., served as District 12, the bleak coal-mining home town of the main characters in “The Hunger Games.”

Henry Mill Village went up for auction in 2012 with a listed price of $1.4 million, but no bids were accepted. The owner is reportedly still interested in selling the property, which currently hosts Hunger Games Unofficial Fan Tours. The two-hour tour includes games of “archery tag” and the chance to reenact film scenes in costume, at a cost of $50 per person.

Centerpiece of Breastaurant Empire
In 2012, Doug Guller, founder of Bikinis Bar and Grill chain of “breastaurants,” purchased an abandoned town near Fredericksburg, Texas, and renamed it (what else?) Bikinis, Texas. At the time, Eater reported the plans for the town as follows:

“We want it to be a big playground,” self-appointed mayor Guller told Eater Austin by spotty cell phone today while surveying his new rural domain. Think: less food, more booze. “We’re going to have some live music and put in a dance hall.”

Sure enough, the vision sure to make many a teenage boy drool appears to be becoming a reality. The entire town is available to rent for private events, and the main venue, a 600-person dance hall and bar known as (what else?) Guller Hall, plays host to a series of concerts this summer.

Ghost Town (with Bar and Liquor License)
Marketing an abandoned town you purchase as a ghost town to attract tourists seems to be the easiest, most natural business use of a dilapidated group of vacant properties. As an added bonus, the old gold mining town of Seneca, Calif., was posted for sale at Craigslist last winter, complete with “a liquor license for the old shack bar that’s still there.” An offer of $240,000 on the property was reportedly accepted in February.

Publicity for Coffee Brand
Bidding on the town of Buford, Wyo., started at $100,000 in 2012, before it eventually sold for $900,000. The Vietnamese buyers renamed the town PhinDeli Town Buford, after their coffee brand. Last fall, the owners opened a new business in the town, which of course was a coffee shop. The hope, according to one Wyoming newspaper, is that the town near Cheyenne will “become the American hub for PhinDeli-brand coffee.”

Quaint European Village Retreat
It seems as if Europe is awash in adorable, if abandoned, hamlets and villages seeking new owners. One village in France with 19 buildings, tennis courts, and a swimming pool, was listed for around $440,000. Hundreds of vacant hamlets in rural Spain are either for sale or likely to be on the market soon, some with prices in the vicinity of $50,000. Larger abandoned towns—a hill town in Italy with 25 cottages, an entire English village with 2,000 acres, 21 cottages, and a manor house—have occasionally hit the market, sometimes via an eBay listing.

What could new owners do with such properties? As a Forbes post explained, many have been snatched up by Britons, who “convert them into tourist compounds,” serving as private, one-of-a-kind B&Bs, inns, or vacation rentals. Other buyers use them simply as retirement homes or personal vacation houses, with the extra buildings functioning as guest lodging when family and friends come to visit.

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