Two New York City apartment buildings’ costs and revenue
In order to help readers better understand how landlords keep their rental buildings in the black — or why they fall into the red — Vital City asked real estate companies to share income and expenses for two buildings for calendar year 2024. We agreed not to identify the exact addresses of the two buildings so that companies could share private accounting and loan information.
We chose two buildings, one wholly market-rate and one entirely rent-stabilized, because the regulations, costs and income associated with rent-stabilized and market-rent apartments can differ significantly. However, neither building is intended to be a representative example of a typical market-rate or rent-stabilized building. Each income statement simply represents an overview of one year in the financial life of a real building.
These two buildings also have different ages, sizes and locations: The nearly-100-year-old rent-stabilized building in Inwood is smaller, while the larger market-rate building in Midtown, built in 1962, includes a retail component and amenities. In general, under the Emergency Tenant Protection Act of 1974, rent-stabilized buildings are mostly older pre-war or post-war buildings built before 1974, which makes maintenance and heating more costly. Market rent buildings tend to be either smaller buildings (such as a Brooklyn brownstone) or larger but newer buildings with amenities (such as a high-rise in Long Island City or Hudson Yards). Within and among regulation types, the cost of running a building will vary. The income statements of brand new market-rate buildings would look different, as would buildings with a significant number of affordable units, as would very small buildings, as would coops and condos. Public housing presents its own economic complexities. To reiterate, these are just two snapshots.
Whenever possible, similar account approaches were used to categorize income and expenses for each building. (In one income statement, we have rounded numbers to the nearest dollar; the other includes revenue and expenditures to the cent.) Cassidy Jensen did the reporting for this project.
Murray Hill Market Rent Building
A 1962 market-rent building in Murray Hill
This 198-unit Manhattan elevator building, built in 1962, is made up of market-rent apartments along with a parking garage and a small retail space. It was originally used as a hospital dormitory. A large New York City-based family-owned real estate development company purchased the building in 1994 and has owned it since.
The building was most likely exempt from rent regulation despite its age because it was built as a dorm, not apartments. The building has been free-market since the company purchased it. The company's portfolio includes other older buildings like this one that are fully market-rent along with newer buildings that have a mix of market-rent units and stabilized units. For newer buildings constructed in the last 15 years, developers commonly include 20% to 30% affordable units to qualify for tax breaks.
Unit Mix
198
42 (stu), 151 (1br), 5 (2br)
Highest Rent
$6,700/month
2-Bedroom
Lowest Rent
$3,200/month
Studio
Income
Residential Rent
Rent that would have been collected if all units had been filled with paying tenants. Includes $137,210 in concessions made to renters (for example a month of free rent), and the super's apartment ($72,694).
$9,489,807.00
Vacancies
There were 66 vacant apartments in this building in 2024. Portfolio average is 35%-40% turnover each year.
-$339,490.00
Uncollected Rent
This represents one tenant who was 45 days late on rent as of December 31, 2024. This company doesn't write off bad debt, and this particular building does well at collecting rent on time compared to others in the company's portfolio.
-$3,054.00
Other Income
Income from a retail space and a parking garage.
$260,032.00
Other Revenue
Mostly amenity fees, including gym fees.
$72,652.00
Total Revenue
$9,479,947.00
Expenses
Real Estate Tax
This older building doesn't have any tax abatements. Most newer buildings qualify for tax abatements that lower this cost. New buildings in this company's portfolio tend to include about 25% affordable units to qualify for tax programs.
-$2,275,565.00
Payroll
This represents pay for nine full-time employees, including door staff, cleaners and repair people. Includes benefits and payroll taxes.
-$903,076.00
Repairs and Maintenance
Does not include large capital projects (like the new roof, broken out below)
-$544,390.00
Utilities
Water, sewer, gas and electric. Tenants pay their own electric bills, apart from cooling in the common areas. In 2023, this was $242,071 and in 2022 it was $270,546.
-$249,333.00
Insurance
Increased from $178,024 in 2023 and $162,237 in 2022. Property insurance costs have risen nationwide in recent years.
-$193,695.00
Administrative/Professional
Includes legal fees to take tenants to housing court and accounting services, plus computer software for the leasing office.
-$53,419.00
Property Management
Property management fee is 3% of total revenues. This company manages their own properties instead of paying an outside company.
-$286,120.00
Owner Paid Broker Fees
-$99,018.00
Leasing & Advertising
-$81,221.00
Total Operating Expenses
-$3,885,837.00
Capital Expenses
This is the cost of a 2024 roof replacement. One-time expenses like these are not included in yearly operating cost numbers. Another example: In 2017, a facade replacement cost $6 million. Lenders typically require money for large capital repairs like this to be held in reserve. A new building might require about $300 per unit per year to be set aside.
-$800,000.00
Net Operating Income
$4,794,110.00
Interest Payment
-$2,650,000.00
Net Cash Flow After Debt Service
$2,144,110.00
Inwood Rent-Stabilized Building
A pre-war rent-stabilized building in Inwood
This 75-unit elevator building, built in 1926, is located in Inwood in Manhattan between the Met Cloisters and Inwood Hill Park. It was built as moderate middle-income housing, shortly before the A train was completed. The owner, a 3rd generation family company, purchased the building in 2010. Because it was built before 1974, all its units were rent-stabilized, meaning the New York City Rent Guidelines Board determines how much the rent can be increased each year, or rent-controlled, meaning the rent for tenants or their successors who have lived in a particular unit since 1971 can't exceed a certain maximum amount. New York City has about one million rent stabilized units, generally in buildings of at least six units constructed before 1974 or in newer buildings that receive tax breaks. About 16,000 units are rent controlled. In this building, tenants in rent-controlled apartments either died or left those apartments and those units moved into rent stabilization. Today, all its units are rent-stabilized.
Unit Mix
75
6 (stu), 59 (1br), 10 (2br)
Highest Rent
$2,648/month
2-Bedroom
Lowest Rent
$881/month
1-Bedroom
Income
Residential Rent
All the rent the owners expected to collect, not what was actually collected in cash. $5,199 in rental income came a combination of Section 8 (a voucher program in which the New York City Housing Authority pays a portion of a tenant's rent) and the Senior Citizen Rent Increase Exemption program (a city program for seniors that freezes the tenant's rent and gives the owner a property tax credit to make up the difference).
$1,536,240.12
Vacancies
At the beginning of 2025, there were 10 vacant apartments in this building as owners tried to decide whether to lease the open units. Now two are vacant. Usually, the vacancy rate is closer to 2-4%, depending on the season. Across the company's portfolio, the turnover rate for longer-term rent stabilized units is 5-10% annually.
-$91,703.00
Other Income
Includes interest and other fees.
$13,923.07
Bad Debt
Bad debt is uncollected rent that the owner doesn't expect to collect. This company writes typically writes this debt off about 3 months after those tenants leave (either move out or are evicted). This debt includes one tenant who stopped paying rent in 2019 and moved out in 2023, but the debt was written off in 2024.
-$232,450.98
Total Revenue
$1,226,009.21
Expenses
Real Estate Tax
Taxes have gone down in recent years after the owner successfully challenged tax assessments. Expected taxes were $350,414.48 in 2023 and $355,414.70 in 2022. This building doesn't qualify for abatements.
-$318,406.38
Payroll
-$59,775.64
Repairs and Maintenance
The cost of getting vacant apartments ready to rent again make up $34,261.55 of this number. Last year included a one-time expense of $18,300 for lead testing.
-$244,167.13
Utilities
Includes water and sewer, electric for common spaces, and natural gas for building heating. Tenants separately pay electricity for their units. Decreased from $160,654.39 in 2023, but has increased 27% since 2019.
-$148,161.94
Insurance
Insurance increased from $69,570.47 in 2023 and $63,869.62 in 2022. This real estate company has used the same insurer for years across most of their buildings. Property insurance costs have risen nationwide in recent years.
-$80,575.56
Administrative/Professional
Includes legal fees to take tenants to housing court and accounting services. Also covers permits.
-$32,571.00
Property Management
Property management fee is 6% of collected revenue. A 5-7% management fee is standard for rent stabilized properties. Because rent stabilized buildings have lower revenue, property managers sometimes demand a higher share of it to make projects worthwhile. Property managers may also pursue other strategies to reduce costs on rent stabilized portfolios, such as centralizing property management in one office across a portfolio of multiple buildings, like this company does. This company manages their own properties instead of paying an outside company.
-$90,407.19
Total Operating Expenses
-$974,064.84
Capital Expenses
No major capital expenses were incurred in 2024.
$0.00
Net Operating Income
This number for 2024 should be slightly higher, closer to $300,000 or $400,000, because some 2023 unpaid rents were assigned to 2024 rather than the previous year. In 2023, NOI was $525,006.90.
$251,944.37
Interest Payment
-$456,468.00
Net Cash Flow After Debt Service
-$204,523.63