A landlord’s eye view of the real estate market and tenant relationships
Owners of smaller apartment buildings offer their perspectives on the current state of the industry
One tenant caused $23,000 in damage to an apartment. Another shot off a gun, sending a bullet through his second-floor apartment into the first-floor tenant’s bedroom.
Those are just a couple of horror stories from two city landlords, one looking to grow his company and the other heading into retirement.
Bill Stergios, 71, of Candia, has been in the real estate business for 45 years. This year, it was advantageous for him to sell two of his three buildings. In all, he had 41 units consisting of 37 apartments and four storefronts.
In 1991, the year the Federal Deposit Insurance Corp. took over five of New Hampshire’s largest banks, he bought 136-142 Orange St., an eight-unit, four-story building, for $61,000. Buildings that had been selling for $800,000 at the height of the market in the late 1980s, dropped in price to around $200,000. That’s when he bought the Orange Street building from New Dartmouth Bank.
“They were rundown and the landlords had taken off,” he said. “It was a dump. I fixed it up and rented it.”
In March, he sold the building for $900,000.
“It still needed work,” he said.
In 1992, he bought a 12-family building at 74 Walnut St. for $84,000. In June, 30 years later, he sold it for $1.5 million.
“I’m getting out now,” he said. “I’m going to be 72 in December and these people are offering crazy prices. I’d be a fool not to take it.”
He’s holding off selling his last building – a 21-unit (four storefronts and 17 apartments) at 150 Bridge St., where Julien’s Corner Kitchen is located.
He’s had offers but said the buyers are looking for a discount. He’d rather that money go into his pocket. Stergios said the building takes in about $25,000 a month with expenses of $5,000 a month “so I’m not in a hurry to sell the place. It generates a good income.” When he does sell it, he expects to get between $3.5 million and $4 million for it.
Asked if he thinks the market is going to crash, Stergios said, “Absolutely.” He said it’s just a matter of time.
“You got these young guys paying exorbitant amounts for these buildings and the banks are financing it, and when the fat hits the fan, you’re going to have another wave of foreclosures,” he said. “It’s just a matter of the vacancy rate going up. I don’t see good things coming, and I don’t have an answer for these tenants who are getting displaced.”
He said the big difference this time is there is a shortage of apartments. “Even though single families are taking a hit because of the mortgage rates, it means people still need to keep renting,” he said, which is one of the reasons he is holding off selling his last building until next year
Richard Keyes, 58, of New Boston, is well on his way to living off his real estate investments when he retires. For now, however, he is still looking to expand his business. He owns eight buildings – seven in Manchester and one in Milford – with a total of 47 apartments. Previously, he was in the U.S. Army for nine years and four years in the reserves. He earned a computer science degree and then worked in the networking equipment field.
He worked full time while building up his real estate business and quit his job a year ago to put all his energy into his business.
After the stock market crashed in 2008, he decided it was time to invest elsewhere. That year, he bought two small buildings that he later sold to buy larger ones. His philosophy, he said, is to renovate an apartment as a tenant leaves. Only once, he said, did he serve all tenants an eviction, and that was last year at 191 Beech St., where the century-old building was in dire shape and infested with bedbugs.
He said he spent $125,000 renovating it. All the tenants found other housing except one family that is now housed in a hotel. Keyes said he tried to work things out with that couple, Glen and Rachel Jones, but instead he maintains they dragged out the eviction process, ultimately appealing to the NH Supreme Court, where they lost.
He said the Beech Street building is not the worst one he’s ever renovated and the tenants weren’t the worst, either. One tenant there, he said, did poke holes in the walls, marked them with obscene gestures and stole the refrigerator after getting an eviction notice. At 412-414 Manchester St., tenants caused $23,000 in damages, he said. They broke windows and kicked in doors. He hadn’t evicted them.
“It was just a rough crowd,” he said.
It was the only time he filed an insurance claim because, he said, it was far beyond the usual wear and tear. “They left three tons of their belongings in the house, and it cost me thousands to remove it all,” he said.
He said he has given up filing police reports when tenants destroy a place. He said he’s given police the names and contact information of the tenants responsible but nothing ever happens. “I guess they have more pressing things,” he said.
When he buys a property, he said, he wants to be certain that it ultimately is a place he wouldn’t mind living in.
He gave a reporter a tour of one apartment he just renovated at 68 Orange St., a nine-unit, three-story brick building he bought in 2019 for $777,000.
One tenant was loading a U-Haul truck with his belongings. Keyes said he increased the rent from $950 to $1,100 and the tenant decided to leave.
The first-floor apartment Keyes just renovated is a one-bedroom. He spent about $6,000 replacing flooring and installing two new efficient gas heaters. When he first bought the building three years ago, he renovated the bathroom, replacing the toilet and vanity, and putting in a new tile floor.
He rented the apartment for $1,150, plus utilities, but now has upped the rent to $1,350 a month, plus utilities. He said the prior tenant (who now works for Keyes and moved into a larger apartment Keyes owns on Conant Street) was paying about $500 a month last year to heat it. The new gas heaters, Keyes said, should reduce that cost to $100 a month, depending on what the price is this year.
Keyes said he didn’t have to replace the heaters – the system was working fine – but he’s looking to the future when he is fully retired and has a management company taking care of all the properties. The new heaters should last for years.
The building’s boulder foundation is a reflection of when it was constructed, 1900. In the cellar – Keyes said it took him four weeks to empty it — he added a coin-operated washer and dryer. The rent includes water, but Keyes said it costs thousands of dollars for each of his buildings. He said the setup isn’t much but now tenants don’t have to go to a laundromat.
He will have no problem renting it out. He received 100 inquiries, he said, and has settled on a handful of potential tenants and will decide after vetting them. Keyes said he has minimum salary requirements because if they don’t make enough money, they won’t be able to pay the rent. He verifies employment, checks references, does credit and background checks and calls the prior landlord.
He said he has only evicted one tenant he vetted; the others, he said, were tenants who came with the buildings when he bought them.
Landlords getting squeezed
Bill Stergios said the only real problems he had with tenants was when he got his first building in 1977. His grandmother left his mother a building at 225 Cedar St. which was worth about $10,000. His mother gave him the building, which was a nine-family, and he could use it “to buy other buildings or you can just sell it and piss the money away and be a bum,” he said.
Stergios was 26 at the time and had graduated in 1974 from the University of Miami with a degree in biology. There was an ongoing recession, he said, and no one was hiring.
He chose to use the Cedar Street building as collateral to buy a property at 345 Union St.
“When people ask me what education I have, I say I graduated from the University of Cedar Street. That’s where I learned all about life,” he said.
He taught himself carpentry and fixed up the buildings and rented them out. “I was never a slumlord,” he said.
In 1986, he sold his two original properties and made about $200,000. “I thought I was rich,” he said. He still had a six-family at 239 Lake Ave. where he lived. He married that year, however, and moved to Candia where he built his own home.
When the market crashed, however, Stergios jumped right back in, buying up properties at rock bottom prices.
Over the years, he said he’s had both good and bad tenants, he said. Now he has good tenants because he screens them, he said.
Stergios gained notoriety in 1994 when he and his then-wife founded The Landlord Connection, a company that helps landlords find out if a prospective tenant had ever been evicted. Immediately, he said, they ran afoul of NH Legal Assistance which, he said, called it “The Blacklist.”
“We weren’t a blacklist. We were a credit reporting agency.” Soon, he found himself in Concord talking with an investigator with the Attorney General’s Office who was looking into whether what he was doing was legal. It was.
They obtained the names of those evicted from all the district courts across the state. The issue tenants had with it was that the list didn’t say why a person was evicted even when some said they were evicted because they complained about the condition of the apartments owned by slumlords. He said they talked with court personnel who told him that 99 percent of the time if someone is evicted it is for nonpayment.
The Landlord Connection remained in business until last August, when Stergios’ ex-wife – who took over the business when they divorced – closed it.
Today, Stergios said, there are still evictions for nonpayment but most are renovation evictions.
“It’s awful and I empathize with the tenants,” he said. “They’re not renovating the apartments. They’re just painting a little and renting it out for $400 or $500 a month more. How long can it go, I don’t know.”
Keyes, who renovates his apartments but also has upped rents upon buying a new building, said what is happening is a matter of supply and demand; demand is high for housing and the supply is low.
He said small landlords like himself, those with four to eight-unit buildings, are getting squeezed as well. He said reassessments raised his property taxes by 35 percent. He, too, was hit with increased heating, electricity and water costs. He said he had no choice but to put in individual electric meters at his Beech Street building and not include utilities in the rent because of the huge electric rate hikes.
It’s been a rough couple of years for landlords, he said. When the pandemic hit in 2020, there was a 15-month moratorium on evictions and, he said, many landlords didn’t receive any rent until a year after the moratorium started.
“By that time, many tenants were able to not pay for months, moved out and left the landlord with no means to recoup their losses,” he said.
He said while there were millions of dollars in Paycheck Protection Program and stimulus programs, he didn’t qualify for any grants or forgivable loans because he never took a paycheck and kept investing back into his company while working another job.
He said the Emergency Rental Assistance Program helped, and he did get back rent for some people but he couldn’t collect for those who hadn’t paid but were no longer tenants.
Keyes said more people took advantage of the system than didn’t and used the rental assistance money for uses other than rent.
When the checks first went out, he said, “it was like a free-for-all.” He found empty cardboard boxes for TVs and items from Walmart piled outside his apartment buildings.
“All the people I had in the program took the money and didn’t pay rent,” he said. “I just feel like it doesn’t work the way it should.”
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