Rick Aidekman and the Crazy World of NYC Landlords

This entry is part 4 of 14 in the series Rick Aidekman and the crazy world of NYC Landlords

Rick Aidekman presents the Crazy world of NYC Landlords
I feel compelled to tell a few more stories about the Dracula Landlord before getting into the Devil, the Reptile and others equally bad, but who didn’t get tagged with headline grabbing names in the newspapers.
Rick Aidekman and his partner first met Dracula through another owner, who was equally abusing his tenants through a failure to make repairs. He was smart enough to sell out his residential assets before he got in the same deep trouble that Dracula found himself. We purchased only one property from this owner, who I will refer to as Mr. P. The building we bought from him was in Flatbush, Brooklyn, the same area as most of Dracula’s main assets. Mr. P’s building was quite large, with over 100 apartments, a block from Prospect Park, at a subway stop and just off Flatbush Avenue. It had potential, if the property were improved, repairs made, and tenants treated properly. Our objective was not to push tenants out, but through normal attrition, if we renovated the vacant units and upgraded the building systems, we could attract a more middle-income tenant, that liked the location. In the meantime, we would maintain the living conditions for the mostly lower-middle income tenants. We felt we were paying a fair price and the opportunity for an upside was there, if we followed our plan. There was one major surprise coming, but I will discuss that after I mention one item that through me for a loop at the closing. Everything went fine at the closing, both attorneys were well prepared, the Fannie Mae loan was secured based upon our escrowing substantial funds to upgrade the building. Fannie Mae, a federal government supported lender, did not loan to this seller, or Dracula. This was an advantage to us, because Fannie Mae and the other federally supported lender, Freddi Mac gave more favorable interest rates and larger loans than local banks (the only institutions to finance Dracula and others like him). We were able to work with Fannie Mae because we took good care of our properties, putting the necessary money into improvements and treating the tenants with respect (hard to believe that so many Landlords didn’t and had very little consequences for years for their behavior.)
So as we completed the closing, Mr. P, the seller, approached me and asked for a favor. He seemed to have dealt fairly with us, so I said, ‘Sure, what can I do for you?” He said “As you know, the broker on this deal is a woman and I owe her a large fee for bringing you to the table as the Purchaser. The problem is that I won’t deal with a woman, so I need you to tell her that I am only paying her half the fee.” I was stunned and could only say “What? I can’t do that.” I literally turned and walked away.
His attorney did the deed and she got 70% after they talked. I was now getting deeper into the world of the property owners that I will need to deal with to grow our business, as this was the nature of the owners in this arena. It only got worse from there.
We closed and took control of the property, only to find out, we had been taken on a major issue. The property was the headquarters for not one, but two major drug operations. The Owner paid them both a ton of cash (in green) to stay out of the building whenever we were scheduled to tour the property and for a month prior to the closing to play it safe that we wouldn’t show up unannounced.

My partner and I were not prepared to deal with real drug dealers. We had a few petty guys in a number of other properties (we only had a couple of buildings at this time). This required help, so I went to a friend who was in sales for Pinkerton Detectives.
He advised us to simply put an armed guard in the lobby and require identification from those entering the property that they lived there. Also, require that when someone had a guest, we would require the tenant to come downstairs to get them and bring them up to their apartment. The theory here was that we would find out that some of the dealers were not legal tenants and we could evict them, and that in any event, the hassle to come down and pick up their buyers and that buyers wouldn’t want to provide id to the guard, would make the dealers throw up their hands and go somewhere else.
Well, the advice didn’t quite work out that well. Within 30 minutes, the dealers came out with baseball bats and broomsticks and frightened off the guard. Now what. Pinkerton told us to make the guard an armed guard, a few dollars more per hour, but this guard wouldn’t be frightened off. I am sure that nobody would be shocked to learn that the dealers had guns to. So, say goodbye to the armed guard.
Next step was two armed guards and a Pinkerton car outside within another guard during peak dealer hours. This took us about three weeks, but it worked, sort of. The dealers left but opened shop at the building directly across the street. This time in a small retail store. They paid the owner some cash and did not interfere with the tenants living in the building. We had a bit of a victory, but it took about two years before the owner across the street regretted his deal and cooperated with the police to evict them from the store. It taught us a lesson that upgrading a building, is part of a tenant/owner/community effort. We held the property for about 7 years and did quite well with it. A couple of things that need mention are that the drug dealers left with the people living in about 6 other apartments who were their “street” workers. Also, the tenants that remained loved what we did as we made their lives better through providing a safer environment, a better maintained property and ultimately a better neighborhood as other real estate entrepreneurs started to invest in the community.
My parting words on this part of the story is that one of the tenant leaders, a single mother with three young girls stopped me once in the lobby and told me the following. “When I go to work, I take the subway, which is above ground and passes right by our property. I used to bow my head in shame that I lived in this building. Now when we pass by, I lift my head in pride and I say I LIVE IN THAT BUILDING.”

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