The Net Operating Income Paradox

New York has been prohibitively expensive, from its Gilded Age days as a feast for the senses to the 1970s, when the Big Apple devolved into an urban jungle where even sewer rats feared to tread, through the “I heart NY” era of the 1980s, and all the way to today. New Yorkers are also famously confrontational, especially when they think someone is trying to cause them financial harm. In this context, it makes perfect sense why New York’s affordable housing developments are not affordable for anyone, not for landlords and not for tenants. Tenants are angry that rents are going up while the condition of the buildings is not getting noticeably better and, in some cases, is even getting worse. Meanwhile, people whose hobby is to complain about the mismanagement of public funds are having a field day. Landlords insist that they do not have enough money to get financing to make needed upgrades, but some reports say otherwise. What is really going on with affordable housing landlords? If you are an affordable housing landlord, and you need more funds and less media negativity, contact a Bronx real estate attorney.

Why Can’t Affordable Housing Landlords Afford to Borrow Money for Upgrades?

The net operating income (NOI) of a residential building is the income that the landlord gets in rent payments, both from residential tenants and from businesses that rent spaces in the building, minus the operating costs, such as fuel, insurance, maintenance, and payroll for the landlord’s employees who work in the building. Banks consider a building’s NOI when they decide whether to issue a loan that the landlord has applied for. Government entities consider the NOI when determining which subsidies, if any, to award to the project. Investors also look at the NOI when they decide how much, if anything, to invest in the building.

If you are just measuring the NOI of affordable housing buildings in New York, the situation looks promising. The NOI has increased in most parts of New York City over the past decade. The only parts of the city where it has not increased are the poorest neighborhoods.

Of course, the NOI does not give you a complete picture of an affordable housing landlord’s financial situation. It only includes the operating expenses, but it does not include other financial obligations such as income taxes and installment payments on outstanding debts. When you consider all the financial obligations that affordable housing landlords are facing, there is considerably less money to go around. This explains why, even though the rents in affordable housing units have increased 17 percent in the past ten years, most affordable housing landlords cannot afford to make the upgrades that their buildings need.

Schedule a Confidential Consultation With a Bronx Real Estate Attorney

A real estate lawyer can help you if you are struggling financially as a social housing landlord, even though your NOI paints a rosy picture.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

nytimes.com/2025/06/18/nyregion/nyc-landlords-rent-stabilization.html