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Principal, DelShah Capital HOMETOWN:


15 Union Square West

BUILDING BLOCKS How many buildings does DelShah Capital own? We own 25 but we’ll be closing on another four shortly, bringing it to 29. Twenty-four of the 29 are rental buildings with a total of 1,750 units. What are the biggest challenges of being a landlord in the city? The constant rises in real estate taxes as well as dealing with landlord and tenant court. For us, real estate taxes have gone up something between 5 and 12 percent a year over the last four years, which is huge because rents [don’t match up]. And when tenants don’t pay and you have to take them to court, it’s a very lengthy process. In Manhattan, it’s not that bad. In Brooklyn and the Bronx, it can be years. How did you get into real estate? I was 28 or 29 and was very unhappy being a bankruptcy, mergers and acquisitions lawyer, so I decided to quit. My parents had done some investing in affordable housing and I needed something to do, so I started [helping them]. When did you start your company? In 2006. The first two buildings were affordable housing on Staten Island. Then I started buying in Brooklyn and Manhattan.

LANDLORD LIFE What’s been your strangest tenant experience? When I was converting 403 East 90th Street into for-sale co-ops — the building had been turned into co-ops in the 1980s, although the owner kept all the shares and ran it as a rental — one tenant claimed that the [first] coop conversion had been done fraudulently. He had only moved into a free-market apartment in the building about a year and a half previously. He tried to claim that he was entitled to stay there permanently at the rent from [the 1980s]. He litigated that out for two years but ultimately the judge evicted him and gave us a judgment for two years rent. Have you got a tenant horror story? There was a tenant, a single-room-occupancy tenant, who constantly used the sink as their toilet. They would defecate in the sink and then call the super to say that the sink was blocked. That building has since been sold. What do you like most about the job? We do a lot of renovation and redevelopment. It’s very creative to think about how to best position a property for a neighborhood, especially for one that’s undergoing a cultural shift. We recently repositioned a property at the corner of 126th Street and Lenox Avenue in a part of South Harlem that was gentrifying. We [renovated] and increased the rent roll by almost 40 percent. We also installed a bar in the retail space, which became a popular neighborhood watering hole.

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What are the tools of the trade you couldn’t live without? I would say our LexisNexis database. For our rent-stabilized tenants, we search it to make sure that they’re who they’re supposed to be. You’d be surprised what we find. If you’re in a rent-stabilized apartment, it’s supposed to be your primary residence. A tenant in one of our buildings on Chrystie Street had just bought a new home and was continuing to keep his $300-a-month apartment, for instance.

BOTTOM LINE You’re well known for buying troubled debt. Did that expertise come from being an attorney? It did. [That expertise is] less of an advantage now than it was for the last four years. Now the market is very strong so there aren’t as many properties in distressed situations. How did the recession impact your business? It was phenomenal. I bought a lot all throughout 2009 and 2010. We were very active buying non-performing notes. Are you getting more interested in condo projects with your involvement in 22 Renwick Street? [Last year, DelShah acquired the mortgage debt on No. 22 Renwick, a boutique condominium in the Hudson Square neighborhood.] We are only invested in condos for things that have a two-year, in-and-out period. With 22 Renwick, for example, it was 70 percent complete [when we came in]. We’re going to start sales this month. That’s a very short window. You recently bought a package of three-family homes in East New York. What made that deal attractive to you? I wasn’t thrilled about buying those. We were following the bankruptcy of a large office building called Cross Island Plaza in Queens. [The homes] had the same creditors and so we became familiar with them. We ended up not getting Cross Island Plaza, but these houses were going up for auction, and we said we’d take them at a certain price. They sort of fell into our lap at that price. I was kind of hoping that they wouldn’t. It’s going to be a challenge operationally, and it’s not really what we do. Our exit is also very dependent on the housing market as opposed to the rental market. What do you have in the pipeline? We’ll be closing shortly on the Pop Burger building at 58-60 Ninth Avenue and 69 Gansevoort Street. Pop Burger is leaving the space so there’s a possibility to re-lease. We feel very bullish about that leasing market. By Katherine Clarke

Meet the Landlord - TRD April 2013  

Meet the Landlord - TRD April 2013

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