At 68, Aisha is a native New Yorker figuring out her exit strategy. In 2014, she moved to a rent-stabilized apartment in Brooklyn's Sheepshead Bay neighborhood. She pays $1,485 a month for a one-bedroom on a librarian’s salary. But Aisha, who asked that we withhold her last name to avoid problems with her landlord, figures it’s only a matter of time before her rent goes up beyond what she can afford. “It’s just not economically feasible,” she said, about staying in the city long-term. “I can live here but I can’t travel or do anything more than pay rent and just survive.” Even her financial adviser agreed, telling her, "Pray that you don’t get sick."
So when she recently received a letter in the mail from a company called Metro Tenant Advisors inviting her to an “important tenant association meeting” on Monday to discuss buyout strategies, she decided to go. “I didn’t know anything about buyouts,” she said. The letter seemed prescient. In two years, she figured she would be ready. “I thought they were connected with the building," she added.
In a city where tenant buyouts have become standard operating procedure for many landlords of rent-regulated buildings, Metro Tenant Advisors is seeking what would seem to be a natural role in that transaction — that of a middleman.
Over the years, buyouts have developed their own lore, with some resulting in multimillion-dollar hauls for tenants. In one instance, real estate developer Tishman Speyer paid $25 million in 2015 to two tenants to vacate a small apartment building on a Hudson Yards site where they were seeking to build an office tower.
Benjamin Landy, who started Lease Buyout Advisors in 2018, has laid claim to being the first company in New York City to represent tenants in buyouts. In the past, buyouts have typically been handled by either the tenants themselves or attorneys. According to Landy, the latter are not suited for real estate negotiations. "They don’t understand the economics of a buyout," he said. "It’s a different skillset. I would never represent someone on a legal case. My expertise is getting tenants as much money as possible."
Although there is no way to track the number of buyouts, Landy said business is booming. He currently has over 150 clients across the city, he said. He closes one buyout every week, for amounts ranging from $7,000 to "hundreds of thousands."
Metro Tenant Advisors, which launched in January with five employees, is the new player in the industry. The company's founder Robert Sedaghatpour has cited the ramp up in tenant protections and anti-harassment regulation as having a dampening effect on buyouts. For brokers like himself, the world of buyout negotiations is "much easier to navigate than a landlord approaching a building, building-wide, and unnecessarily disturbing some tenants," he told amNewYork last month.
Both companies say they do not charge any upfront fees, but they charge a commission for closed buyouts, 18 percent for Lease Buyout Advisors, and 15 percent for Metro Tenant Advisors. That's more than double the standard 6 percent commission a real estate broker gets for selling an apartment, although considerably less than what some high-profile attorneys charge. In the Tishman Speyer case, the well-known tenant lawyer who brokered the buyout took home one-third of the payment.
The meeting by Metro Tenant Advisors on Monday was held in Flatbush, inside the small brightly-lit conference room of a co-working space. The event, which was the company's fourth to date, drew about 10 participants, almost all of whom were black, except for one elderly white man. Sedaghatpour was low-key but friendly in his approach. He told them that buyouts were not for everyone. He also dispelled certain myths about what matters in buyouts. The size of your apartment? Yes. How long you’ve there? No.
After identifying myself as a reporter, Sedaghatpour declined to answer any questions, although an employee said the company employs licensed real estate brokers. The company did not immediately respond to an emailed list of questions.
Afterwards, Aisha said she came away feeling empowered, and said she was surprised to learn from Sedaghatpour that as a tenant she had rights. "They're advocates," she said about the company before correcting herself. "I mean, advisors." During the presentation, she made sure to take copious notes. She even asked Sedaghatpour if he could send her a copy of his Powerpoint slides. He said no. But as helpful as she found him, she said she doubted she would ask him to negotiate a buyout on her behalf. Fifteen percent? That seemed too much.
Like other people, she’s heard stories about buyouts. One person who she knew lived in a rent-controlled unit received $100,000 and used the money to purchase a condo in the same neighborhood. “In her case, it was a win win,” she said.
Aisha does not know if her landlord is interested in buying her out, although her building was recently purchased by a new owner who has been renovating vacated units. It was a good sign, she figured. She found out about the new ownership after she was instructed to pay her rent online, a process she objected to and which involved several phone calls to the management office. "I don't do online payments," she explained. What would she do if her landlord offered her a buyout tomorrow? "I would ask if they can honor my two year lease and negotiate with me in 2022," she said.
"It certainly would be retirement money to..." Her voice trailed, before she firmly added, "It certainly would help me get out of New York."