July 14, 2006   >> return to MAI in the news

Manhattan's lord of the lease
By Mark Ellwood

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HIGLIGHTED Manager:
Jerry Weinstein
Founder, President

There's a reason they call him "the rental king". New York City real estate agent Jerry Weinstein is one-man hype machine for the advantages of leasing over buying. As head of Manhattan Apartments Inc., one of the largest residential agencies in the city, he counts on rented apartments for two-thirds of his business. He says the rental market is now the busiest it's been since he started his company 22 years ago. Oh, and he also lives in a luxury New York rental himself. "In the mid 1990s, rental prices were so high it was better to buy but now purchase prices are high and it's smarter to rent," he explains.

Weinstein didn't intend to become the lord high commissioner of leasing. After a stint as a record-store owner, he wound up a high-school teacher in the early 1980s. But in search of some speedy spending money he soon decided on a career change. The fastest option was brokering leased apartments. "As a rental broker, you see money in two weeks but if you get into sales it'll be six months before you see a cheque," he says, laughing. "And most of the people who work in rentals don't want to learn sales."

Quick commissions aside, Weinstein rapidly realised that, for many househunters, renting makes more financial sense than buying. And, assuming high volume, agents can still make big money. So he built his 100-agent, 3,000-landlord company on that basis.

The first point in his pro-rental rant is simple: money isn't working as hard as it might be when it's locked into paying off a mortgage. Returns on investment in the stock market, for example, can be healthier and quicker than a 20-year payback on bricks and mortar. "It's a passive investment since there's nothing one can do to improve the market," he stresses, "Why not take that money and do something more aggressive? I once lived in a condo, sold it to move into a rental, then put the profit I made into my business. My company's worth more than the results I would have gotten from real estate. I expect to increase the value of my business by millions of dollars."

Weinstein's next point is about professions. In the increasingly connected world of telecommuters and home offices, tax breaks on a rented live-work space may be better than for owner-occupiers. It's certainly the case for him, since he often works from home. "If I put money into the business here, I have expenses I can write off," he says.

His next argument centres on the convenience of renting versus buying, particularly in New York: no need to pass co-operative building interviews (in which a board of potential neighbours decide whether to let you in), no need to provide in-depth financial information or cobble together a 50 per cent deposit.

It's impossible to price out the flexibility renting offers in a global marketplace. Snagged a major promotion in Hong Kong and need to leave Manhattan tomorrow? Leaving your rental's a cinch; but finding – and approving – a tenant for that co-op controlled pied-à-terre is a full-time job. "Rentals are easier in, easier out, less money down, a shorter notice to leave, less time to find a place."

And it isn't just a job that might make you want to move out quickly, Weinstein points out; couples living together for the first time should be savvy enough to stick with renting, especially in areas with sky-high rents that encourage couples to cohabit sooner than might be wise, simply to save on monthly outgoings.

Weinstein admits that certain cities are better suited to lifelong rentals than others; New York, is one, as is San Francisco. Both these towns also have unusual real estate laws, such as stabilisation, which keeps rents in some older buildings artificially low. Renting's always a smart move if you live anywhere with such a system. "It's gold," he raves. "If you can get an apartment that's still stabilised, it's a huge advantage. There are limited rent increases and you're guaranteed that the lease will be renewed."

He acknowledges that there's a distinct pro-rental personality. "Rentals are more for the entrepreneurial type," he says. He's a perfect example. Not only did he start his own company, but he took a two-year sabbatical to study yoga and is a long-term martial arts fan. Still, he thinks that even conventional types should rent, at least at first, because it allows them time to gauge a neighbourhood.

There can be unexpected financial advantages, too, as he learnt firsthand. Weinstein recalls once renting a penthouse in a building that converted soon after to condominiums, which allowed him to snap up his pad at a knockdown, insider's price. "Look at a building to see if it has potential upsides," he advises. "What's the status of the lease? Is it a building likely to convert to condos or a co-op?"

The only time you should buy without blinking? "If money is not an issue," Weinstein says. "For people with plenty of money to spend, the financial comparisons don't work."

In other words, if your heart is set on a $5m brownstone off Park Avenue and you don't need to sweet-talk your bank manager to finance it, go ahead and buy. The rest of us, including Weinstein, will keep writing that monthly rent cheque with pride.