7 April 1999 Copyright, 1999, Max K. Goff, all rights reserved
I leave for the Middle East tomorrow. Dubai (UAE) and then Cairo. It's a bit over a week this time -- not a terribly long trip. And this time, I've actually had the recommended inoculations, and I'm taking along a couple of diarrhea prescriptions, just in case.Lately I've been looking for an apartment in Manhattan. I have an apartment. A small, but otherwise comfortable two bedroom walk-up in midtown Manhattan. The reason I rented a two bedroom space was to have additional room for my son to live with me, who started college here last fall. Indeed, he did live with me for a time. But at length, he elected to take a room at his dorms - ostensibly to realize a more authentic collegiate experience. I can't blame him for that and in truth am very proud of him and the work the auspicious beginning he's made with his undergraduate work. But that leaves me with an extra bedroom and more rent than I really need to be paying. So I've been looking for an apartment.
The inefficiencies of marketing real estate have always been interesting to me. I think that's one of the big reasons why so many people in this country have made great fortunes in real estate. There doesn't seem to be a truly efficient means of pricing and marketing property such as to eliminate vast discrepancies between the price of a property and its true value. Indeed, the value of a piece of property is very subjective; it's worth whatever a buyer will pay. But with real estate, it is not a simple supply/demand equation that determines how a property is priced nor at what price it will sell. And the rental market is New York City is no different. It's wild.
There are so many players trying to make money from the situation here. Apartment brokers, for example. In order to rent an apartment in Manhattan (or to a great extent in the other boroughs as well) it is often necessary to enlist the services of an apartment or Real Estate Broker. Brokers ask prospective tenants to sign agreements requiring a fee of 15% (sometimes more) of the first year's rent to the broker if the client (the "buyer" in this case) ends up renting an apartment shown to them by the broker. In the case of a $2000 per month apartment, which is about average in Manhattan, that means $3600 brokers fee, plus first and last months rent, plus security deposit, or roughly $9,600 to move into what would be considered a very small one bedroom apartment in any other city in the country. That's Manhattan.
Now it's not always necessary to go through a broker. Rental Agents, or the property management representatives can also rent apartments, or show apartments to prospective renters. Finding such agents is not an easy matter. Brokers advertise aggressively and tend to take a good deal of the available business. And in a sellers market, which is what Manhattan has been for the past several years, even some of the agents are realizing that there is additional money that can be made, by listing their properties exclusively through a broker and then presumably enjoying a kick-back from the broker's fee. Renting in Manhattan is as arduous as buying a piece of property anywhere else.
What does this have to do with technology evangelism? Inefficiency. There are a growing number of online services that, if successful, will start to eliminate some of the inefficiencies from the system and hence bring down the cost of moving into a Manhattan apartment. For example, I signed up with one such service that charged me $79 for 79 days of information. Whenever a new listing hits their database, I get a piece of email that gives me salient property information as well as the phone number for the managing agent. In essence, the broker gets eliminated from the picture by the efficiencies of an online service. Those who are not online will still be forced to pay the high broker fees. Those who are online will have the opportunity to significantly reduce their upfront costs. Which approach is most likely to be successful in the long term?
So I've been looking for an apartment. And today I found the perfect place. I came home, looked around my small two bedroom walkup in midtown Manhattan and came to the realization that I was all ready living in the best apartment for my needs at this point in my life. Yes, the rent is more than I want to pay just now. But I can afford it if I have to. And when you consider all the headaches and costs of moving, especially in the war zone that is Manhattan apartment rentals in the late 1990s, this place starts to look pretty darn good. Besides, I'm planning on starting that Ph.D. this fall, provided CUNY accepts my application. It will take me longer than that to get my ISDN running again after I move. My mother used to say, "You know what you've got. You never know what you're going to get." I think, in this case, I'll take my mother's advice.
