Rick Aidekman-The Crazy World of NYC Landlords

This entry is part 6 of 14 in the series Rick Aidekman and the crazy world of NYC Landlords

Rick Aidekman and the Crazy World of NYC Landlords continues.  When we first met Dracula, he was under immense pressure from the City of New York.  The then Brooklyn District decided, and rightfully so, that the City of New York wasn’t dealing effectively with the unfortunately too many problem landlords.    Landlords could accumulate 100s of violations on a property and, unless they were of the type that were a concern of immediate safety issues, or lack of heat and hot water, the City did little to force the Landlords to make repairs.   Thus, many of the worst Landlords simply ignored the violations.    However, in the case of Dracula, the loss of a child’s life, as previously described, falling down an open elevator shaft, was too much for the City and the tenants to bear.    Owning more than a dozen large buildings with over 1,000 tenants in the aggregate, the attention came Dracula’sway.    The City went to court to force him to make repairs.   As he dragged it out so as not to spend money, the City, due to the strong press reaction to the child’s death and the branding of him as Dracula, pushed hard.   The Court appointed receivers in his properties under a little used provision of the City laws.    This was the step that put a proverbial nail in Dracula’s coffin.      Although the receiver that was appointed was far better than most, he used all the cash flow to make repairs that were years past due.   Dracula’s cash flow was finished.    There was never enough money left to pay his mortgage obligations and he was sinking fast.    To compound the situation, the Brooklyn DA decided to set an example and did something that was truly never done before.   She went after him criminally for the building repair violations.     An additional desire of the DA was to get Dracula to divest himself of all his residential properties.    A lot of tenant’s lives were about to change for the better.

Now forced into a bad situation through his own neglect, there was only one out and that was for him to try and sell the buildings.  

Not many owners of multi-family properties were interested in purchasing properties that were subject to a City appointed receiver.   Receivers make good money and don’t want to lose their fees, especially on so many properties at one time.   As I mentioned in a prior article, we heard about the situation and felt that we could be the right guys at the right time to be the buyers.   We had a strong belief, as did our investors, that doing the right thing by the tenants was not only the correct moral imperative but was also a good way to take failing properties and turn them into successful properties.   Not in the short term, but the long term.   We were in it for the long term.

We arranged for a tour of the properties and decided that we were interested in eight of the buildings.   We felt that we could arrange with our investors to put together a fair offer and a substantial budget for repairs and improvements, enough to make the buildings solid investments for the long term.   Also, as said before, we had good banking relationships and knew that one or two of the banks we dealt with were comfortable enough to provide first mortgage loans on the understanding that we were going to turn the properties around.     Now came the hard part.   

Make a deal with Dracula, not easy as you would expect;

Make a deal with the City to allow the removal of the receiver and give us control;

And, get the tenants to believe that we were the “good guys” who really meant to make their buildings not only habitable, but buildings that they would be proud of as their homes.

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