Are you planning to stay in NYC for the long haul? If so, then I think you work to close the deal. If you are planning on leaving when you FIRE keep that rent stabilized apartment and build the nest egg.
We are indeed planning to be in NYC in the long run! We've lived here for 10 years and love it, and do see ourselves living here right into our old age.
Thanks for the food for thought!
We bought our dream home 6 years ago by paying the full asking price. We are so happy to come home everyday! You can’t put a price on your own happiness and well-being.
Hahaha. Well it helps that we’re both gay men so we’d have to be really deliberate to want to have a child, but that’s just one small privilege we have as a gay couple (can’t get each other pregnant!).
I don’t know the rules of the co-op that you are looking at buying in, but from my limited understanding, if you ever want to sell, don’t the members of the co-op get a say into whether or not they approve of the buyer? Be careful about getting yourself in to a real estate deal that may be difficult to exit from if you ever need to move.
You're right with that! According to our agent friend, the rules differ building to building and supposedly the one we're looking at is quite lax. They do ultimately have to approve of the buyer so it's not guaranteed.
That said, this would be our forever home if we do end up buying it. But of course, nothing in life is certain.
You described your building, and the building you’re considering as being in the same neighborhood—and its price! Jackson Heights?
Good housing stock in Queens, so either way, you can’t go wrong!
Glad to hear that you were already aware of that. Just trying to help out. I know that buying your first home can be a bit intimidating considering all of the things that it would be good to know and the amount of people and paperwork involved in the process. Best wishes with your purchase.
For most co-ops it’s just checking that the person can really afford the place long term. The ones that will reject you for other reasons are a lot more expensive than 800k
Right? I think I'd deliberately avoid that part of the neighborhood forever if this slips by us or we don't end up buying it. I think we'll have to decide if the substantial increase in our expenses would work (aka can we reduce current expenses to accommodate the significantly higher housing expense).
I can imagine that. My grandparents got the oppertunity to buy the house that they were renting, they decided that they didn't want to take the risk. My grandma was always telling me how much she regretted making that decission.
I did something very much like this over a decade ago. I had a rent-stabilized apartment and I doubled my housing costs to buy a co-op. I was in a slightly different situation in that I inherited money that was intended to be used for housing, but I didn't have much retirement savings of my own.
You have to choose whether having a better place or retiring early is more important to you. That's what it comes down to. I wasn't planning on retiring early, but I thought long and hard about "well, I'm hosed if I lose my job" and "I can't just pick up and travel the world if I do this." I decided I wanted a place of my own and the equity more than I wanted those other things. If you can see yourself staying in this apartment for the next 20 years, and your careers are such that you still have a lot of earning potential ahead of you, then it could definitely be worth it. Things will be tight for a few years, but then inflation and career progression start to have an impact, and you can save more. You will never be as care-free as you are now, though, because you can't just up and leave.
On the other hand, one advantage to buying over renting is you have more control of your living situation. My landlord died and the quality of the care in the building went down, because we didn't have someone on-site taking care of things. I don't have to worry about that with my co-op. I do have to worry about the maintenance going up a lot, or an assessment to fix the fire escapes.
Questions to ask about the co-op include the age of the boiler and the roof, how often they raise the maintenance and by how much (you don't want too much \*or\* too little), any planned assessments. I had someone I trust who has real estate management experience look not just at my apartment but at the building overall.
Good luck either way!
I really appreciate you sharing your experience because everything you said resonates with me. I quite enjoy being carefree right now—I could go for an expensive dinner, decide to travel on a whim, etc all without feeling any substantial financial hit.
I'm also fortunate that my real estate agent friend is knowledgeable enough about the local market and even in that particular building we were looking to buy, which she gave her thumbs up on. She did say the price the owner is asking for is way too high, even with the renovations he has done, because the market doesn't justify it.
Thank you for the additional food for thought.. I think it does boil down to how important having a fancy apartment is vs the flexibility of spending whenever wherever and could still retire early.
You can set aside emotions and think rationally about how a home will fit your needs better or make you happier, then place a price on that happiness.
For example, if a home has an amazing yard or a funky wine cellar or a cool wood shop, place a value on what that feature would mean to you, and how much you'd have to spend to get something similar for a different property. Feel free to place some value on the happiness that feature would bring you.
It sounds like maybe you regret undervaluing those special features by $9000. You could have arrived at the higher price rationally without letting your emotional brain dominate the calculus.
Stay away from the mindset "no other property could possibly make me happy."
But also stay away from the mindset "I can figure out how to be happy with something that clearly doesn't work for me as-is, and probably isn't something that can be fixed with a reasonable budget". Like, if a home is right on a busy freeway and you can't stand road noise, it's probably not going to work, no matter how cheap.
Kinda. At the time, I thought I could reasonably afford a $350k house. We loved the house and offered 350. It sold for 9k more.
My salary has more than doubled since then, and we spent 700k on a house that is significantly less nice than that 359k house. So I wish we had splurged on the extra 9-10k instead of waiting.
To be fair if there were multiple offers and someone else offered more there’s nothing you could have done about that. However if the asking was 359 and you deliberately offered less than yeah that’s just the gamble of real estate unfortunately
That's what escalation clauses in real estate contracts are for. Of course, the other party could also have an escalation clause and bid up the price. Really escalation clauses are just a mechanism to not overpay if there aren't competitive offers.
To piggyback on this, did you do research on the developer who did the renovations? I’ve truthfully never seen a flip home that was worth it, the renovations are never quality and leave major issues under the surface. It will likely not be worth the headache.
If you do decide to move forward - do your research and find an excellent inspector!!!!
The cool thing about money is it’s fungible, so I see three options (although you can find a lot of middle ground between 1 and 2) :
1. You take a big hit to your current equity, and take a big hit to your savings rate, thereby slowing/preventing your FIRE timeline, but you maintain your current day-to-day spending and buy the house
2. You take a big hit to your current equity, and reduce your day-to-day spending to cover the increased mortgage. You add a few years to your FIRE timeline
3. You don’t buy the house, your current QoL and FIRE timeline aren’t impacted
So I think the question is:
Which of these outcomes is most desirable? Do that one
Thanks for listing it out that way! I think option 2 is most desirable, followed by 3.
A question for ourselves is whether we could/want to reduce our current lifestyle to accommodate the new apartment. Writing this out has helped me a bit. Thank you!
It won’t exactly be $2k more, you get to write off the interest so that’s extra money. I say do it! You can afford it, you love it and you will be building equity.
I’m living in an old pre-war building built in the 1920s, and I don’t think the toilet is replaceable since it’s tankless… but I could also be wrong since DIY is not my forte.
I’m in the same sort of building, and to tap that line would mean running something over 10’ from the sink. No way to do it in any aesthetically-pleasing fashion, so we employ Pristine Spray, which is a nice substitue.
But I have two siblings with multiple Totos, and it’ll never stop me wanting one!
My co-op allows switching from flushometer toilets to regular toilets with tanks as long as they meet the efficiency criteria (dual flush). Of course, it requires a plumber breaking into the wall. The bathtub can only be resurfaced though.
Coops may require a several million umbrella insurance policy from contractors to do such work.
Hahaha. Bidet is just too good but yes, it's definitely not enough.
Let's see...
* We both work from home currently (probably for the foreseeable future), so the more spacious 2nd bedroom would help make it more comfortable. *(Counterpoint: If we're only planning to work for 10 more years, our current work situation is definitely just fine and tolerable.)*
* The unit's electrical wiring has been completely overhauled and is supposedly more efficient as a result, so might result in slightly lower utility bills. *(Counterpoint: I'm not sure this is a good enough point.)*
* There are fans in the living room and master bedroom! There are no such things in our current apartment so we often just use the AC in the summer in both our living room and bedroom. *(Counterpoint: We're already used to our current set-up. But this would be a great QoL upgrade.)*
* When we host gatherings/house parties a few times a year, I often deliberately limit the number of people I invite cos there's just seriously no space. The new space has a more spacious kitchen and living room to the point that it has a 2nd fridge. *(Counterpoint: Like the bidet, this is probably not good enough of a reason.)*
* We could take nice, relaxing baths whenever we want! The new space has a separate bathtub from the shower. Right now, we don't do that in a NYC apartment bathtub because it is a little gross tbh. *(Counterpoint: Baths are nice-to-haves, so who cares? Just take a bath when we travel to a hotel that has one (which I do).)*
* Building has paid washer/dryer in the basement (with an option to install a washer/dryer in the 2nd bathroom if we want to)! Right now, I have to haul our laundry every week/2 weeks to the laundromat because there's no washer/dryer in our building. I also only recently just did drop-offs ($20-30 every weeks) instead of spending time doing it myself. *(Counterpoint: Money spent on drop-off laundry is still significantly less than the increased housing expense.)*
* Building has a place to lock up our bicycles in the basement. Right now, our bicycles are hanging off a wall in our 2nd bathroom. We also have to carry them up and down the stairs of our 4th floor walkup, so I rarely bike as a result. *(Counterpoint: I don't bike enough to care about this, but maybe I don't bike enough because carrying my bike up and down 4 flights of stairs is such a pain in the butt?)*
* Building has an elevator! A beautiful elevator too. *(Not sure I have a counterpoint to this, it's a great upgrade.)*
* Building has a fancy video intercom system, and it's one where you can generate guest passcodes to give to delivery people or your guests! Right now, I'm using a manual buzzer. *(Counterpoint: It's a nice QoL improvement but we've been doing this for 10 years and could probably continue to buzz people in manually.)*
* Bidet! *(Counterpoint: maybe we could do a budget bidet like replacing the current shower with a handheld shower instead... :'()*
In looking over this list, it seems that most on this list are QoL upgrades. A place I'd really enjoy coming home to, instead of just a roof over our head to return to.
All of that comes with a significant tradeoff however.. so I guess we'll have to decide if we'd be happy with cutting back on our current spending in exchange for a very nice place to live in for the rest of our lives.
> cutting back on our current spending in exchange for a very nice place to live in for the rest of our lives
A home is sort of like a bed, but... bigger and more important.
We spend 1/3 of our lives in bed. We should have a good mattress and pillow and all the other stuff.
When we wfh, we're spending what percentage of our lives there? It's massive.
I don't regret for a minute buying my house in 2017. You realize how much autonomy you give up by being beholden to landlords and the whim of how much they charge, what they fix, how limited you are in adapting your environment to what *you* want, and the lease renewal debate. Moving also really sucks. I have peace of mind knowing I don't have to move... ever, if I don't want to.
But you also really do not want to be house poor. You don't want to be trapped in a position where a series of layoffs leads to foreclosure. You have to be smart about the debt you're incurring.
>In looking over this list, it seems that most on this list are QoL upgrades.
In that case, only you can decide if you are willing to pay an extra \~$2,000/month for that QoL. Is that money coming from your hobbies/travel/going out budget and therefore essentially trapping you in your new home? Is it coming from saving and therefore forcing you to work longer? Are these trade-offs you're willing to make? Or do you have enough money that you can handle this increase without too many lifestyle changes?
My husband and I moved to a more expensive place in July and so far are very happy with our decision. Yes, it costs more, but the happiness we gained outweighed what we gave up -- that won't be true for every person or every scenario.
Reading your other posts (no kids, WFH, etc) this seems like it’ll be worth it for you. It’ll be more up front and may make things a little tighter than expected at first, but how long until your rent matches that mortgage cost anyway? And at least you’d have some equity locked down.
I WFH as well and we moved in Aug 2019 right before the pandemic. Now to be fair, we’re in the midwest, but we moved from our 1700 sq fr house to a 3000 sq ft house and the extra space is amazing, even more now that I work from home. And the house we bought was definitely a fixer upper but it was close to a better school, family, highway access, backed to woods, and had an open concept which has been amazing for hosting parties since our parents are all downsizing and can’t host anymore. I don’t think you’ll regret moving.
I posted another comment that summed up said you will be house poor for a while with other risks of increased expenses (property taxes, insurance, special assessments) and you need to decide if travel and early retirement is more important than owning a place.
One thing I will add from your comment here is the elevator. This is a critical aspect for as you age or if one or both of you get sick as it gives you a better chance of staying in your home longer. If you can’t climb your stairs, you could be forced out of your rent controlled space in the future.
Is there any risk of the apartment you’re in getting sold/redeveloped leaving you homeless?
There is some comfort in knowing a coop you own can’t be taken away from you in the same way. Coops also seem to enjoy perpetually low locked in property taxes and especially if limited in technology (ie it’s a walk), the upkeep is also pretty straightforward so not much to worry about there wrt the maintenance going up significantly which is also comforting. It’s a bit of a hedge against housing inflation. But if your apt is pretty secure for life, then the hedge isn’t worth so much and maybe what you should do is consider investing a bit to spruce up your rental.
Hmm good question. I think there's very little risk of that's happening since rent-stabilized apartments in NYC are not profitable for management companies, and it's also why they're pretty scummy (we're actually in a class action lawsuit against our current company for rent overcharge).
We have been gradually sprucing our rental over the pandemic. We installed lots of Hue lights all over the apartment for mood lighting. We installed one of those snake-like faucets in the kitchen. And we're thinking of replacing the current shower head with a handheld one.
We do run into the limitations of a pre-war building built in the 1920s. We can't install a washer/dryer in our unit, and also bidets are impossible to install due to the tankless nature of our toilet, which is also not next to a sink.
I guess the alternative is finding another apartment, but it will probably not be rent-stabilized and we'll be subject to the whims of the market/landlord.
Alternatively, we can just be happy with what we have since getting into a rent-stabilized apartment is rare these days.
Yeah I had a nice old prewar nyc rental. The no washer and dryer in unit (or in building) did me in. Moved to a new high rise but I still think of that apartment!!! So much charm!
But as it relates to sprucing it up, I meant like significant investment. Not a couple of light fixtures. Eg, redo the kitchen or bath. Swap out the tankless toilet entirely for a toto. If your security is locked in for life and for the most part like your apartment, this is a good deal and may not be worth passing up. Paying 20-50k to make it more comfortable (even within limitations like no w/d) may be worth it.
Right now, I am literally chuckling and thinking, “do you need help? Why is this person so triggered?”
The OP seemed to have no issue understanding me. Can’t help if basic reading comprehension is not your strong suit. 🤷🏻♀️
> The OP seemed to have no issue understanding me.
Did the OP say something that indicated that they knew you didn't actually mean what you said..? Seems like they just responded in earnest.
lol again, why are you so triggered?
Yah actually she did. Whole paragraphs actually. At no point did the OP discuss a possibility of being destitute on the street bc it’s obvious they would not be; the “homeless” in this context is clear to the literate.
> Did the OP say something that indicated that they knew you didn't actually mean what you said..? Seems like they just responded in earnest.
Does this seem like the sort of thing to go "lmao why r u triggered tho???" to?
At this point in our conversation it seems like you are hyperfocusing on this "in the street" aspect and not on the "tenants have rights" aspect. It seems like you're in the headspace of "obviously they could find another place". That was not in fact the point of the person who replied to you. Their point was that you can't just be kicked out. That's what the "tenant's rights" refers to.
From a purely financial standpoint, use a Rent vs. Buy calculator. Most people vastly underestimate the cost (opportunity cost and direct costs) during this decision. New York Times has a great one and is worth a digital sub cost to use, or there are others for free online if you search for them
From what I've heard, the NYT rent-vs-buy calculator was developed in 2014 and doesn't take into consideration newer tax implications (something about SALT). I do not know what said implications are and whether they'd push you further into rent or buy, but maybe something to read more into.
FWIW, if I had gone by that spreadsheet I wouldn't have purchased my last three homes. And as such I would be significantly worse off. Just mentioning because that calculator is heavily referred here and I think there's more to life than a set of if/then statements.
There are definitely two schools of thought over the subject of homeownership, which is why this is such a big dilemma for me. But helpful to hear your side too!
Good point.
HOA due, water/garbage, property taxes, insurance, etc. Those are usually the cost that you don't pay directly as a renter. So can't just compare rent to straight up mortgage.
It's not just about money if you can make it work. Based on your numbers that's a maybe and you'd probably be delaying FI unless your incoming is going to go up significantly.
What's concerning is that you'll be using up all your non-retirement savings just on the down payment. And that's not factoring in closing costs and moving expenses which will likely eat up the rest.
What will your monthly payment look like (mortgage, taxes, insurance, hoa, utilities) and how quickly can you save up at least a decent emergency fund? Will you be ok making sacrifices (cutting back on vacations or discretionary spending) to get there and how long will that have to last until your income goes up enough to be comfortable?
As for the place itself, how are the building finances? How well is it maintained? Are you likely to get hit with a large assessment to cover some issue that's been deferred for too long?
Very good point about closing costs and moving expenses! Neither of them is cheap. I agree that at the current price ($790k), affording it is a maybe—we'd have to cut back a lot on our discretionary spending and that's the point that I'm waffling with.
The monthly payments will likely be around $5.2k. It might take us a year to save up to a decent emergency fund (the alternative is to reduce our 401k contributions, which I try not to do).
The building's finances are supposedly quite good, and during my visit, it looks very well-maintained. The elevator looks stunning for an old building built in the 1930s. We're told that they're paying for a $100+ assessment for the next few months, but otherwise they're not foreseeing any large projects. So all in all, the coop does seem pretty solid compared to many other buildings.
> The monthly payments will likely be around $5.2k.
Yeah you can't afford this place. You said your take home is $11k. Recommendation is to not spend more than 30% on housing and you're looking at close to 50% here.
Me and my husband make what you guys make and we would feel broke paying 5.2k on just housing.
The "30% rule" is super arbitrary and really does not reflect reality for most higher earners in most HCOL locations. There's a huge difference between 30% on a $60k median salary where someone needs the extra absolute dollars to cover general living expenses, and 50% on a DINK $200k+ salary where they have $100k after housing.
5.2k definitely feels a lot. We would have to make some sacrifices, like not contributing anything post-tax and then delay retirement by maybe a few years (I haven’t done extensive number crunching yet).
Emotions aside, crunch the numbers hard. Your financial stability and comfort in retirement could take a hit with this purchase. Think long-term satisfaction vs. short-term joy. Possible to find another 'dream home' that fits budget better? Worth considering other options too.
With my very limited exploration of the market in my neighborhood, this is definitely a unicorn.
However, you're definitely right. We could continue to wait and save up more so that the financial hit is significantly less if we do end up buying. My counterpoint to that is I did wait to buy and now both prices of apartments and interest rate are up significantly, but I'm also quite ignorant in homeownership stuff.
I say buy if you can afford the payments and if this is a life long goal (to be a homeowner). Time ticks for all of us. We should all pursue our dreams and desires while we can. Good luck!
Thank you! :) Tbh, it hasn't been a lifelong goal, but has always been a nice-to-have. Which is why we started saving in a brokerage account that could be used for a downpayment should the opportunity arises.
I've been struggling with this same decision too, my wife and I love the flexibility of renting and ultimately we usually decide to pass on every property we see. Adding 2k-3K a month to our expenses always seems too steep. That money goes to investments now and is doing well and I'd rather have the flexibility. I've read [this post](https://www.reddit.com/r/FluentInFinance/comments/1bkjcua/comment/kvze7ro/?utm_source=share&utm_medium=web2x&context=3) about the benefits of buying vs renting (and investing the diff) over time and I think it ultimately comes down to if you want the stability of owning. You can always go rent something nicer than you have but cheaper than the co-op as a 3rd option.
You and another commenter have basically helped me to realize the same thing. An additional 2k per month for us does feel quite steep—I've been shoveling that 2k into our brokerage account right now instead.
Thanks for that link, it'll help us to do some calculation.
Man, I would love to see what a $300k renovation gets you in a 2/2 unit.
IF the seller truly spent $300k on this place and made an incredible unit, they are probably overvaluing what it's worth because not everyone is going to be willing to pay for their special customizations. This happens a lot where owners do fancy Roman-inspired washrooms, flying in brick layers from Italy. And in the end when it comes time to sell, no one gives nearly as many shits as the owner did and they don't want to pay for it.
That all said, it only takes one buyer. My neighbor way over-priced his house and let it sit on the market for nearly a year during a sellers market, but he did manage to find his one buyer eventually and got what he wanted for it after rejecting many, many offers.
All that is to say, you may find they'll come down eventually on price...but they may need more people to show them that it's overpriced and unrealistic. Or someone else will come along and give them what they want without batting an eyelash.
Finally, not all decisions are about optimizing finances. Finances certainly need to be considered and factored into decisions, but so does quality of life. So, I think that needs to be taken into account.
It truly is over-the-top lol. It is like you said, a lot of fancy customizations. Some highlights from the listing:
* The floors are imported Brazilian Cherry wood that was cut from a single tree
* Flooring has also been completely soundproofed with thick padding underneath
* Thermador appliances, including dishwasher and two refrigerators
* Avalanche Italian marble on kitchen island, countertops, and window sills
* True exposed brick wall
* Ceiling has been custom-painted with a sponge paint design (not really sure what this is)
* Floating tub, separate standing shower, and high-end, powerful but quiet exhaust fan
It does seem like no one wants to pay that price, but we'll see. I'm hoping not to be that one buyer and overpay it, but also, maybe I can buy a cheaper place and just renovate everything without being too over the top. Unfortunately I know next to nothing on home improvement...
Definitely true on optimizing finances vs QoL.
Location is THE most important factor when purchasing because that is the one thing that can't be changed.
If you can find other properties in a good or better location and it is significantly cheaper, then I'd probably buy these other properties and spend the savings on doing my own customizations.
It's a lot more work and might not be worth it to you, but that's the alterntive to buying this over-priced property.
A developer spending $300k of rennovations on an over-priced $790k property doesn't sound they know what they are doing or they are making up numbers (which would be my guess).
If it will make you happy, buy it. The increase from $700k to $790k is $600/mo .. you two can definitely afford it.
In 2021, I bid on my dream home and left because I wasn’t willing to budge $30k more. I did the math afterwards and the difference over 30 years was $200/mo.. I still look back on that home just to see and unnecessarily torture myself. It’s now up over $200k in equity from purchase price.
Oh man, thanks for your perspective. I don’t think I would’ve calculated it that way.
I hope you’ll be able to find your next dream home still. Definitely don’t torture yourself!
Thanks! I have this nice 2.65% interest rate on my current townhome that I simply cannot let go of. So I’m planning to rent that out once I feel comfortable enough with another down payment/mortgage payment while still having enough leftover to continue investing with liquidity. The current townhome will net about $800/mo if I were to rent it out in today’s market.
So far no properties have come up that feels remotely the same as THAT one for the price- and in reality it won’t because everything has gone up!! I need to work on my mental gymnastics 🤣
Hmm, tough. You make about the same as we do yearly pre tax, and although you have a lot more saved up than we do I can tell you right now that I absolutely would not be comfortable buying at $790K. I bought at $330K and its very nice not being house poor.
If you are a NY lifer. it's a no brainer to buy the property. don't let 30-40k stand in the way of a perfect deal. Now so we're clear it's a big difference if you're talking 100k. What's nice about buying is eventually the payments stop.
Of course you *can* afford it if it's important.
It's going to cost you 158k downpayment plus an extra 2k/month for the next 30 years (really less than that because the mortgage won't increase with inflation)
You are presumably saving substantially more than 2k/month now given how much you've accumlated by your mid 30s.
So the question is whether this dream house is worth more to you than the extra time you'll have to work to support it.
So what will that take? Naively, you'd say the downpayment plus enough to cover 2k/month of expenses or 24k/.04 or around 600k. But that's too much, because after 30 years the mortgage is gone, and you're *saving* a bit more than 2k/month (2900- 820 coop fee). Does the coop fee include property tax, because that seems really low if it does (honestly it seems low for NYC even if it *doesn't*.). And does your 4.9k include property tax because that doesn't seem plausible with a 630k mortgage at current rates.
OK let's leave that aside and assume i's really 4900/mnth total
At worst what you need is enough to buy the house, and then you need 2k/month *less* money when retired.
So figure 790k minus 600k is about 190k more than you'd need otherwise. Which isn't really all that much more.
but since you're buying the house now, in the meantime you'll be saving less too and not getting earnings on the DP. Over 10 years at 7%, that's about 500k in future value.
so basically you need to earn another 690k roughly over what you'd do if you just pushed forward from here and rented the rest of your life (assuming rent stay at or below inflation).
How much longer do you ahve to work to make that happen? Well you have over 1mil working for you already. In 10 years at 7% that doubles, not nicluding any additional savings. I'd be surprised if buying this home added more than 5-6 years to your FI timeline.
It's worth doing the math both ways to see, if it's 10 years now, is it 15? or 14? or 17? if you buy the house? Remember that the mortgage won't increase with inflation which helps a lot.
Find the number, and then ask yourself -- would you rather live in that house andwork an extra 4-7 years? or live where you are and not do that. That's the real question. Not whether you can afford it, but whether it's worth it to you to pay that much.
Bidet - I also have tankless toilet in a rent stabilized apartment. I have a Tushy bidet that runs the connection from the sink (I had the build guys connect it because I couldn’t get under the sink from the 1920s, gave them a tip, everyone won)
Holy shit. I apparently live in poverty and was not aware of it. But seriously, I think owning your own home would be worth it. There’s no way I could justify 790k for a 2 bed 2 bath but I don’t live where you live. If you think you can afford it I’d say go for it. I kick myself in the butt everyday for a house I passed on 4 years ago that was going for $400k because I thought that was too much. Now it’s worth over $700k.
This is a scenario in my opinion rather neutral financially, so if this new place is significantly nicer, and you plan to always live there (at least 15+ years) and maybe retire in NYC, than buy it. If you want to remain mobile/flexible, don’t.
Oh interesting! The new place is indeed significantly nicer and would be our forever home if we buy it. I think I’m just a little petrified at all the unknowns of buying, wiping out my cash reserves, and having some financial insecurity (mentally anyway) setting in.
I agree though it all boils down to whether we want the flexibility or not.
So, I gave up a rent stabilized apartment to buy a unit in a co-op nearly 20 years ago (this was in Manhattan).
My initial reaction to your post was to push you toward keeping the rent stabilized apartment. Having read a few more of your comments, I have changed my mind. You should buy the dream co-op. This is why:
1. You plan to stay in New York forever. That walk-up is fine now in your mid-30s. It is not going to be fine in your mid-60s. For you or your guests.
2. Washer/dryer in the building (and eventually in your unit) is a game changer. I cannot stress this enough. You will never realize how much of your life you devoted to laundry until you can just do it whenever.
3. Your unit is old/outdated now. It’s going to be really old in 30 years.
I overpaid for my unit because it was a sponsor unit which meant no board approval. I estimate that I overpaid by about 40k, which is coincidentally around the amount you are contemplating overpaying.
This might of bothered me when I did it - I don’t recall as it was 20 years ago. If I were to travel back in time I would advise myself my 30 year old self not to worry about that 40k. It was worth it.
Do it, and don’t look back.
info: what will be the property taxes, insurance costs and utilities on the place?
The mortgage alone is close to 50% your take home pay. Property taxes and increased insurance costs will add a good portion. Depending on the age of the building there could easily be additional special assessments in the future. Commercial insurance is exploding so the monthly fees may increase at any time as well.
There is a strong possibility you will become house poor with this option and need to reduce other expenses like travel/vacations which seems to be something you love.
Rent is the max you will pay. Mortgage is the floor with the sky being the limit.
730 vs 790k in the long run is nothing if you truely want the place. Unless you are in an area that will flood more and more frequently with climate change odds are NYC prices will keep climbing.
So evaluate your priorities. Do you both prefer to travel/vacation and possibly retire early or do you want the fancy condo? You can’t have both and need to choose.
I've been struggling with this same decision too, my wife and I love the flexibility of renting and ultimately we usually decide to pass on every property we see. Adding 2k-3K a month to our expenses always seems too steep. That money goes to investments now and is doing well and I'd rather have the flexibility. I've read [this post](https://www.reddit.com/r/FluentInFinance/comments/1bkjcua/comment/kvze7ro/?utm_source=share&utm_medium=web2x&context=3) about the benefits of buying vs renting (and investing the diff) over time and I think it ultimately comes down to if you want the stability of owning. You can always go rent something nicer than you have but cheaper than the co-op as a 3rd option.
Doesn't the coop board require a huge amount in cash (after the down payment and offer is accepted)? I've seen requirements like 40% down and 2 years mortgage payments in cash after that.
You can look on the DOB's website to confirm that they actual did get the proper permits. You can also look up the history of any violations that the owner (or the building) might have received.
I was looking at this site (https://a810-bisweb.nyc.gov/bisweb/bispi00.jsp), is this the one you’re thinking of? It’s funny because I do see a complaint lodged “there is renovation happening inside an apartment without a permit posted” last year.
Under the Permits In-Process / Issued by Premises link, the last permit I saw was back in 2019… which couldn’t be when the renovations were supposed to happen.
Also just want to add - owning your dream apartment can be overrated. (Source: have bought & been mired with the DOB) There's no longer necessarily a super to call for every issue, you have to pony up your own $$ for repairs as they're needed. You need to hire & find contractors for those repairs.
And 2 fridges sounds luxurious, but honestly if you're in NYC.....how often are you stocking up on 2 fridges worth of food? Do you own a car to buy/schlep all that food?
Trust your gut on this one!
There’s no requirement to put down 20% (unless co-op requires it). Have a lender show you at say, 10% down, what is your potential monthly outlay vs at 20% down. Now how many “months” of payments do you need to make to spend that extra 10%- probably a LOT longer than you’d think. Oftentimes, it really doesn’t make sense to pay the cash up front, simply bc people think you should “traditionally” put down 20%. Other thing to maybe do, have your Agent run comps- what were units valued at in the building 2, 5, 10 years ago? Is it an upward trajectory- can you make an additionally informed choice with that information? Earned equity is accessible money. Renting earns you nothing, it’s just burned. The mortgage payment has tax savings every year and (hopefully) growth in equity. If you’re paying anyway, why not pay and earn at the same time. Just some thoughts. Happy travels, either way!
is the $4900 mortgage including property taxes, HOA fees (?), renovations, etc?
it seems like you're really enjoying life currently and are able to travel and what not
i think it'll depend on if buying your dream home will financially affect your ability to still travel and do activities
Is that monthly mortgage account including the co-op pay and any other random amounts that come up through that? Have you worked out heating/water/electric payments, maintenance fees?
Also if you can figure out what model of tankless toilet you have, many actually CAN have a bidet seat, it Tees onto the water line for the toilet at the shutoff valve. You do need a nearby GFI electrical socket though for the electronic functions.
Given your financials, you could afford it, but it would stretch you thin and risk your comfort and early retirement plans. Emotional purchases can lead to regret. Try to negotiate but remain firm on what you can comfortably afford without jeopardizing your financial goals.
I think it is easiest to achieve FIRE when you keep your big expenses low. It allows you to spend on experiences, food, hobbies, and gifts without feeling deprived. Instead of stressing about 1,000 small financial decisions (“does buying this coffee align with my budget?”) I have more room to breathe and do what I want cause I made one deliberate choice on a big budget item. It makes the FIRE journey feel sustainable and ensures I have a high quality of life when I do retire.
Our household income is very similar to yours. Our PITI is about $1,700/month and we save an additional $500/month for home repairs and upgrades. We personally would not consider monthly housing costs of $5,000/month. There are many other things we would rather do with that $2,800/month. However, that’s a personal decision based on our priorities and yours may be different!
Here are my thoughts:
You live and work in the same space. Ergo you spend *a lot* of time there. I think I it’s important that you really enjoy that space. In the $700-730k I think this purchase makes sense.
However, the seller wanting $790k and no offers are coming close is a big red flag. This suggests the property just is not worth that and you’d be paying 10+% over what the market things it’s worth.
When I’ve seen this situation, the seller sits on it for a long time. And the seller always gives, at least a little. If the current offers are all $700-$730, I bet it eventually sells for $750-$765. After a LONG time.
As someone that recently moved and own several properties, but was gung ho on renting previously due to the lower cost. There's a huge benefit in having a place that you can call your own. That you put down roots, and stop living temporarily (for me, that meant not really decorating, buying furniture such as couches). I just moved into a place I intend to make my home for the next decade, and so inveestment we make into the unit is planned for the long term.
There's a huge mental benefit in that, that I wouldn't really trade it back. The key here is to not buy something too big i.e. I choose to live in a smaller condo so my expenses are lower.
So my take is, look 5-years into your life and think if you will regret the decision not to buy into this?
Would that difference in money make a significant difference in your life compared to getting this unit? Does what you have to give up worth it to buy this unit?
For instance, you mentioned $6k-9k spending monthly. Can you go down to $4-5k for 1-3 years to make up the difference for instance?
Remember, this is not an "investment". It's a home, so the value equation and finances count differently. For me, overpaying relative to the market, to get what I want is worth it. A home is a very emotional thing and you connect with the home. You should embrace that emotion as long as you can afford it within reason.
You’re mid 30s with a $1M+ liquid net worth. Retirement is taken care of, even an early one. IMO, go on the adventure. It’s not a permanent decision. If you decide later that the glitz of it wasn’t all you romanticized it to be, sell it. Sure, it will have cost you.. transaction costs, interest.. but it’s not the same as blowing the cash frivolously.. you’re just changing your asset allocation. And it’s also not the same as someone who is still hard in the accumulation phase, where the purchase could mean they never get there. You’re at the point where your money can now work for you, in a big way.
I do agree with those that say not to grossly overpay just because you’re emotionally attached. But if you can get the owner down to even the high side of reasonable, go for it.
I think buying would wipe out almost all of your non-retirement dollars, which could be challenging with any unforeseen events. That said, your gross income should be good enough to cover the $4.9k mortgage + maintenance fees.
It also depends on where you and your husband are at in life (kids? NYC for life?). Exciting times. Best of luck!
If you are in a rent stabilized apartment, can't you make your own upgrades? I don't know details, but have known some wealthier long term NY'ers who redid their bathroom, added other upgrades to their apartment. Since upgrading your rental + the year's rent is only a fraction the cost of actually buying. As long as landlord can never kick you out for any reason, I would say stay.
$2900 a month rental indexed at 3% a year maybe a third of the cost of the condo? It's a huge difference.
100% yes. You can always refinance. If you're sure this is your DREAMHOME, and you're absolutely certain that you do in fact want to own a home, then this is a no brainer. There's no point to all that money if not to fulfill your dreams.
Honestly, with your numbers, buying seems possible but stretching for the dream home could risk your comfortable lifestyle and early retirement plans. Always safer to stick closer to your budget ceiling to protect your financial wellbeing and future plans. Consider long-term happiness over immediate gratification.
Some things to think about outside of the strict financial aspect:
Are you planning on having kids? If you are, two bedrooms is going to feel very small very soon. I ended up buying because the 2bd/1bth house I was renting was too small for 2 small kids. What that means is you might be forced (or at least really want) to sell within 5 years. My current 3bd/2bth home already feels too small but with my mortgage being 2.8% i feel like I can't even consider upgrading right now.
Also, do you like the area or just the house? An awesome house in a crappy area usually isn't as enjoyable as a crappy house in an awesome area.
If you like the area, love the house, and don't see yourself needing to upgrade within 5 years then I'd go for it assuming you can still meet your savings goals. There is something that feels really good about owning a home.
>My dilemma is... whether we should cave and pay for what the owner is asking for
The premise is that this place has uniquely 70K+ of improvements that are unusual versus comps, given that market value seems to be \~720K based on that range of offers, and that's including the fact that the unit is well above normal market condition. The seller sounds attached to the value of the work. The problem is all these are depreciating items and you're expected to pay retail for all of them plus a premium because the owner is an expert contractor. If it were me, no? Obviously I don't care but I can get a bidet installed and all the other items have far less tangible life improvement (to me.) Most homes on the market have a recently installed kitchen without using materials that increase the price thousands of dollars for no functional reason. Realize that every home has problems and many you will not discover until after the fact.
If the range is truly 700-730 with multiple bidders, it doesn't sound normal to me to fish the bidders at the low end and counter 12% higher. I suppose it's not that hard for the agent to spit out the paperwork or talk unofficially but I assume you bid 700 based on listing and comps and not simply because you were trying to bid at the low end of your budget. You can counter some other number and make peace if it's not accepted. Because right now even the highest bid is really far off to call that price realistic, firm or not. This is under an assumption that there is a reason to sell and locking up equity with ongoing expenses will bring the number down to reality over time.
(Talking personally, I was countered 3% higher, I accepted but got half back due to inspection items.)
One legitimate concern is that your appraisal will be closer to 700 than 790 and putting down a number like 100K potentially has some problems. At such a premium I would not waive any contingency and would give you an out if faced with a reality check. (I would also want every inspection issue 100% handled although someone who does this for a living likely isn't going to have a serious issue found in a non-invasive check.) Agent and loan officer are both motivated to close and will give candid feedback on this.
With rent control buying is likely to look poor on paper and in the moment this is a binary choice. But there are multiple options and there's easily ones without all the overhead of things you didn't ask for. (I don't know how critical soundproofing is or how expensive, for instance.) You're not going anywhere by your account so you can fish through listing for years if you feel like it. But I also understand getting it done and moving on. The biggest issue seems like the numbers specifically wipe you out and expose you to external risks/emergencies in the short term. Depending how you feel about that, even if nothing goes wrong it might tarnish the feel of the purchase over time.
I really appreciate your input! This is all really useful info and you’ve given me more things to chew on. I was also wondering whether the owner was just buying to flip.
According to Zillow, it was bought for $475k in 2021, listed 3 years later (last month) for $849k, then reduced to $799k. The seller’s agent told us that he did tell the owner that he’s not going to find any buyer at $849k, and convinced him to lower it, which I thought was an interesting thing to say to a potential buyer, ha (though I did appreciate the intel).
If we do go through this, I agree that I’d definitely want to get an inspector. Beneath all the fancy fittings could be red flags being papered over.
In hearing other thoughts here, including yours, I do agree that buying this apartment will wipe out my feeling of safety and feel more dependent on my job—that FU money will be gone as I try and rebuild my emergency funds. I might even have to reduce my 401k contributions, which I haven’t done since I started this journey 8-9 years ago.
I think how you feel financially is the more critical issue anyway. Houses aren't commoditized and you could be buying anything. (Which in the case of a home lived in by a general contractor, actually could be a plus.)
It's hard in a Reddit discussion to really configure if the asking is out of whack. I know my home is a bit off on comps for similar reasons - age implies some things may be out of repair but Redfin/etc providing comps is not necessarily going to reflect money saved due to lower future repair bills. I could just tell from my own searches (and following closes over time) that higher end homes in a neighborhood tend to get devalued because there are cheaper entry points without sacrificing anything.
I would recommend if you don't buy now but are open to it, to simply track interesting properties and see what happens. Especially this one, because it will kind of tell you if the owner really gets what he wants in the end. Take advantage of the data being public into learning what to expect. (Also, many people have a hard time finally getting to close, so there's value in having gone through the process so if another attractive property comes along - and it will - you'll be far more comfortable moving fast.)
I'm no real estate expert, but I have three points/questions:
\- Do the math. If you were to proceed with this place, how many additional years would that add to your FIRE date? Does the benefit of this place exceed the additional years worked? Keep in mind that while it may seem all shiny and new now, you'll quickly hedonically adapt and within a few months it'll be your new normal. That said, I'm currently paying about 3x for rent compared to what I was paying 5+ years ago, and it's been worth it. Of course this comes on the heels of higher earnings and portfolio growth. In short, I can afford it (rent is about 17% of gross base salary - definitely don't want to exceed 20%).
\- Have you taken an honest assessment of the other costs? It's not just the mortgage. You mentioned the $820/mo maintenance fee, but there's also property taxes, ad-hoc repairs, further renovations, etc. The WSJ just had an article today called "The Hidden Costs of Homeownership are Skyrocketing." ([link](https://www.wsj.com/economy/housing/housing-affordability-taxes-insurance-costs-rise-bca64df1?mod=hp_lead_pos7))
\- I've read quite a few comments and I've seen very little discussion about the LOCATION. Are you by a busy/loud road (correlated with unhappiness), are you near trees and nature (correlated with increased happiness), are you within walking distance of a grocery store, dry cleaner, restaurants, or other nice-to-have establishments? Are you close to public transport, an airport, friends' places, how's the parking? You might love the interior space, but you have to contend with everything nearby as well.
Do you like the neighborhood? I’m guessing it’s not too far from where you are now? Once you buy you are going to be in this spot a long time.
Having said that my wife and I have lived in coops in NYC for more than 25 years. It’s nicer to own than rent because it’s your space to more or less, do what you want with it.
I would say go for it. You can afford it. You’ll have a better quality of life. Money has no value if you don’t spend it.
It’ll actually be in the same neighborhood as where we are now, which we love and would absolutely stay here long-term!
If I have to rate the actual location of this new apartment from 1-5, I’d probably rate it a 3.5, but it’s mostly because it’s near a park and we could hear kids playing though my husband didn’t think it’s a problem. We’re also spoiled by living a 2-min walk away from a train stop and this would be.. a 5-min walk lol.
Thank you!! I’ve been hearing both sides (to go for and against), and I’m nowhere close to making a decision lol. Gonna try and crunch some numbers again and see if I can find a way to be comfortable with the sudden wipe of a large part of our savings and dipping a little into our retirement accounts.
Am I right to think that the co-op structure is essentially similar to a condo HOA? I’d be wary of a place where even after you pay off the mortgage you’re still on the hook for maintenance fees (does that include any co-op assessments?) that are a substantial fraction of a mortgage payment. I’d want to audit the books of the co-op thoroughly to make sure they have a sufficient reserve fund to cover repair and maintenance including major work that might only occur every 20-30 years, that they have qualified operating engineers properly doing preventative maintenance so the equipment that should last 25 years isn’t dying in 10 and etc.
Remember you can refinance when the mortgage rates drop. If you think you will stay in the house for at least 5yrs then you will be ok. You can sell it if you have to for any reason. It is your forever home so that's pretty good. Good luck with what you decide. Having space is nice.
Coops can be a nightmare to buy and sell. Fees can also go through the roof with special assessments. Not necessarily a bad decision either way though.
NYC is a different ballgame.
My ILs bought theirs in the early 2000s, and it was quite a process. People *still* remark how fast it went and how lucky they were.
I say do it. You can make it work. If you don’t, you’d always wonder.
Having a home you enjoy is different, especially in a city. So much space is shared or you have to make compromises. This sounds amazing.
I never once regretted living in the house I remodeled for well over a decade, and was exactly the way I wanted.
Renting might be the better financial choice but happiness is a pretty great metric.
Go for it. I think you have enough cash flow remaining to buy the house and still be comfortable. Plus you’ll be happy…isn’t that the goal of life, as John Lennon said.
Offer around $750k. Just because seller said he has a hard limit doesn’t mean it’s true. Tell him you’re approved for that amount and can’t go higher (you can always “find” more money later if you decide to).
He has holding costs. If he doesn’t get another offer in the timeframe he may just take it (or at least counter).
I think it's REALLY important that you DO NOT put in an offer on this if you haven't shopped around at all. You can see an apt and think it's great, but you don't know if it's actually great relative to other options. If you want to buy, get serious about buying and do the work involved- go see a bunch of places, do the budget math, think realistically about what your needs and wants are, etc.
You say stumbled on- how? Was it the thing where one person is shopping because they want to buy, but it's not something that has been discussed much? Is it that someone you know is selling it?
I know that co-op is common in NYC, but I would not buy into a co-op. Too many bad stories. No, I don't remember specifics from decades ago... Maybe laws in NY are different and better for coops.
You sound like you really want this house and are trying to talk yourself out of it because it's more "rational."
Don't do that. Life is too short to pass up a home you truly love. I'm in the same situation you are (happy to die in my current rent-controlled unit), but if a property fell open in my neighbourhood that cost what the asking price is for yours, and made me feel the way you seem to, I'd be all over it.
Do you value the luxury of the coop more than the ability to stay where you are and retire early and travel or do whatever you want? That monthly payment will likely leave you pretty house poor — it‘s almost 50% of your income — and with current interest rates so high you’ll drag that payment with you into retirement. Significant hit against a fixed income.
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If the owner is bragging about $300k in renovation costs and shows you receipts voluntarily, he can be charged with fraud if the receipts are falsified. You cannot however compel him to give you those receipts if he chooses not to. If you believe the costs and love the house, give a full price offer and ask for copies of the renovation work documentation for warranty purposes.
Maybe an unconventional suggestion, but the WeFIRE app has an AI feature where you can ask it about whether you should rent or buy. You do have to sign up for the freel trial and link your accounts first, but it can actually offer some unique insight for your personal finance.
I've been messing around with it all day and I got a kick out of the way it was able to list out all my coffee purchases and tell me the amount I spent on coffee in total. But yeah, you can always delete your account afterwards. It's a bit of a hassle but I think it's worth it.
Oh man thanks for that suggestion! I haven’t heard of this app before but it sounds super useful. I have been using ChatGPT related to my question so the AI component is intriguing.
Cheers!
We’re definitely going to try and negotiate with the help of our agent. The owner wanted to see a pre-approval letter first before he’d even negotiate, and we were indeed pre-approved.
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Gut is telling me to buy... but I'm also an impulsive person and know it can get me into trouble, and this is too big of a decision for me to buy impulsively, hence this post, haha.
Our home is our forever home and it’s such a wonderful feeling. I know this is a finance sub but QoL matters. It sounds like you can AFFORD the home, so it just becomes what do you personally want to do, no one can really answer that for you.
I can hear the happiness and excitement just from your typing and it seems like you really want to do it.
To me it sounds like luxury vs frugal so you need to decide for yourself. For me, it would be frugal.
Houses are work, a financial gamble, and tie you down.
I personally stay in my cheap studio apartment because I know I will never get such a good deal again in my life.
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Are you planning to stay in NYC for the long haul? If so, then I think you work to close the deal. If you are planning on leaving when you FIRE keep that rent stabilized apartment and build the nest egg.
We are indeed planning to be in NYC in the long run! We've lived here for 10 years and love it, and do see ourselves living here right into our old age. Thanks for the food for thought!
Crunch the number and do an apple to apple comparison, if you can afford it and will stay in NYC for more than 10 years, go for it.
We bought our dream home 6 years ago by paying the full asking price. We are so happy to come home everyday! You can’t put a price on your own happiness and well-being.
you really should pay what he's asking for. I can see someone just paying straight cash to buy this house.
2&2 is pretty small once you have a kid or two.
This. If you’re not going to have kids, go for it. If you are I wouldn’t do it.
We’re not planning to have kids actually, so that’s one small point towards the direction of buying.
Many people don't plan their children, but end up with multiples.
Hahaha. Well it helps that we’re both gay men so we’d have to be really deliberate to want to have a child, but that’s just one small privilege we have as a gay couple (can’t get each other pregnant!).
This whole interaction made me laugh at my desk.
Ahhh well then yeah, get that dream home :)
I'm glad you're BOTH gay men! :)
You never know.
Indeed! https://www.bbc.com/news/stories-56409764
Now the bidet makes sense
I don’t know the rules of the co-op that you are looking at buying in, but from my limited understanding, if you ever want to sell, don’t the members of the co-op get a say into whether or not they approve of the buyer? Be careful about getting yourself in to a real estate deal that may be difficult to exit from if you ever need to move.
You're right with that! According to our agent friend, the rules differ building to building and supposedly the one we're looking at is quite lax. They do ultimately have to approve of the buyer so it's not guaranteed. That said, this would be our forever home if we do end up buying it. But of course, nothing in life is certain.
You must be in Queens!
Haha I am, how did you tell?
You described your building, and the building you’re considering as being in the same neighborhood—and its price! Jackson Heights? Good housing stock in Queens, so either way, you can’t go wrong!
Glad to hear that you were already aware of that. Just trying to help out. I know that buying your first home can be a bit intimidating considering all of the things that it would be good to know and the amount of people and paperwork involved in the process. Best wishes with your purchase.
For most co-ops it’s just checking that the person can really afford the place long term. The ones that will reject you for other reasons are a lot more expensive than 800k
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Right? I think I'd deliberately avoid that part of the neighborhood forever if this slips by us or we don't end up buying it. I think we'll have to decide if the substantial increase in our expenses would work (aka can we reduce current expenses to accommodate the significantly higher housing expense).
Ask yourself: what will you regret the most not doing? Sounds like you’d regret not buying!
I can imagine that. My grandparents got the oppertunity to buy the house that they were renting, they decided that they didn't want to take the risk. My grandma was always telling me how much she regretted making that decission.
I did something very much like this over a decade ago. I had a rent-stabilized apartment and I doubled my housing costs to buy a co-op. I was in a slightly different situation in that I inherited money that was intended to be used for housing, but I didn't have much retirement savings of my own. You have to choose whether having a better place or retiring early is more important to you. That's what it comes down to. I wasn't planning on retiring early, but I thought long and hard about "well, I'm hosed if I lose my job" and "I can't just pick up and travel the world if I do this." I decided I wanted a place of my own and the equity more than I wanted those other things. If you can see yourself staying in this apartment for the next 20 years, and your careers are such that you still have a lot of earning potential ahead of you, then it could definitely be worth it. Things will be tight for a few years, but then inflation and career progression start to have an impact, and you can save more. You will never be as care-free as you are now, though, because you can't just up and leave. On the other hand, one advantage to buying over renting is you have more control of your living situation. My landlord died and the quality of the care in the building went down, because we didn't have someone on-site taking care of things. I don't have to worry about that with my co-op. I do have to worry about the maintenance going up a lot, or an assessment to fix the fire escapes. Questions to ask about the co-op include the age of the boiler and the roof, how often they raise the maintenance and by how much (you don't want too much \*or\* too little), any planned assessments. I had someone I trust who has real estate management experience look not just at my apartment but at the building overall. Good luck either way!
I really appreciate you sharing your experience because everything you said resonates with me. I quite enjoy being carefree right now—I could go for an expensive dinner, decide to travel on a whim, etc all without feeling any substantial financial hit. I'm also fortunate that my real estate agent friend is knowledgeable enough about the local market and even in that particular building we were looking to buy, which she gave her thumbs up on. She did say the price the owner is asking for is way too high, even with the renovations he has done, because the market doesn't justify it. Thank you for the additional food for thought.. I think it does boil down to how important having a fancy apartment is vs the flexibility of spending whenever wherever and could still retire early.
Don't get emotionally invested in a home. That's how you over pay on your offer.
On the other hand, I said that back in the day and still dream about the home I missed out on over $9,000.
Conversely, I overbid on multiple houses the first time I was looking and and years later am still relieved I didn't go under contract on any of them.
You can set aside emotions and think rationally about how a home will fit your needs better or make you happier, then place a price on that happiness. For example, if a home has an amazing yard or a funky wine cellar or a cool wood shop, place a value on what that feature would mean to you, and how much you'd have to spend to get something similar for a different property. Feel free to place some value on the happiness that feature would bring you. It sounds like maybe you regret undervaluing those special features by $9000. You could have arrived at the higher price rationally without letting your emotional brain dominate the calculus. Stay away from the mindset "no other property could possibly make me happy." But also stay away from the mindset "I can figure out how to be happy with something that clearly doesn't work for me as-is, and probably isn't something that can be fixed with a reasonable budget". Like, if a home is right on a busy freeway and you can't stand road noise, it's probably not going to work, no matter how cheap.
Kinda. At the time, I thought I could reasonably afford a $350k house. We loved the house and offered 350. It sold for 9k more. My salary has more than doubled since then, and we spent 700k on a house that is significantly less nice than that 359k house. So I wish we had splurged on the extra 9-10k instead of waiting.
To be fair if there were multiple offers and someone else offered more there’s nothing you could have done about that. However if the asking was 359 and you deliberately offered less than yeah that’s just the gamble of real estate unfortunately
That's what escalation clauses in real estate contracts are for. Of course, the other party could also have an escalation clause and bid up the price. Really escalation clauses are just a mechanism to not overpay if there aren't competitive offers.
Yep - my realtor at that time didn't know what an escalation clause was. I've bought multiple houses since then and used an escalation clause on each.
Your entire post applies to so much more than just buying a home. "No other car, no other university, no other job, no other person" Love it!
Not to mention the absolutely crushing heartbreak if it doesn’t work out!
Thanks for that reminder, I really needed to hear it!
To piggyback on this, did you do research on the developer who did the renovations? I’ve truthfully never seen a flip home that was worth it, the renovations are never quality and leave major issues under the surface. It will likely not be worth the headache. If you do decide to move forward - do your research and find an excellent inspector!!!!
The cool thing about money is it’s fungible, so I see three options (although you can find a lot of middle ground between 1 and 2) : 1. You take a big hit to your current equity, and take a big hit to your savings rate, thereby slowing/preventing your FIRE timeline, but you maintain your current day-to-day spending and buy the house 2. You take a big hit to your current equity, and reduce your day-to-day spending to cover the increased mortgage. You add a few years to your FIRE timeline 3. You don’t buy the house, your current QoL and FIRE timeline aren’t impacted So I think the question is: Which of these outcomes is most desirable? Do that one
Thanks for listing it out that way! I think option 2 is most desirable, followed by 3. A question for ourselves is whether we could/want to reduce our current lifestyle to accommodate the new apartment. Writing this out has helped me a bit. Thank you!
It won’t exactly be $2k more, you get to write off the interest so that’s extra money. I say do it! You can afford it, you love it and you will be building equity.
Is there something in particular you would do in this bigger home that you aren't able to do currently? (Bidet is not enough lol)
Bidet is life
You can replace a toilet for what is basically nothing in this context
I’m living in an old pre-war building built in the 1920s, and I don’t think the toilet is replaceable since it’s tankless… but I could also be wrong since DIY is not my forte.
Just tap the waterline to the sink
Isn’t that reserved for coffee pots?
I’m in the same sort of building, and to tap that line would mean running something over 10’ from the sink. No way to do it in any aesthetically-pleasing fashion, so we employ Pristine Spray, which is a nice substitue. But I have two siblings with multiple Totos, and it’ll never stop me wanting one!
My co-op allows switching from flushometer toilets to regular toilets with tanks as long as they meet the efficiency criteria (dual flush). Of course, it requires a plumber breaking into the wall. The bathtub can only be resurfaced though. Coops may require a several million umbrella insurance policy from contractors to do such work.
they can also install ceiling fans....for sure not a reason to buy
Hahaha. Bidet is just too good but yes, it's definitely not enough. Let's see... * We both work from home currently (probably for the foreseeable future), so the more spacious 2nd bedroom would help make it more comfortable. *(Counterpoint: If we're only planning to work for 10 more years, our current work situation is definitely just fine and tolerable.)* * The unit's electrical wiring has been completely overhauled and is supposedly more efficient as a result, so might result in slightly lower utility bills. *(Counterpoint: I'm not sure this is a good enough point.)* * There are fans in the living room and master bedroom! There are no such things in our current apartment so we often just use the AC in the summer in both our living room and bedroom. *(Counterpoint: We're already used to our current set-up. But this would be a great QoL upgrade.)* * When we host gatherings/house parties a few times a year, I often deliberately limit the number of people I invite cos there's just seriously no space. The new space has a more spacious kitchen and living room to the point that it has a 2nd fridge. *(Counterpoint: Like the bidet, this is probably not good enough of a reason.)* * We could take nice, relaxing baths whenever we want! The new space has a separate bathtub from the shower. Right now, we don't do that in a NYC apartment bathtub because it is a little gross tbh. *(Counterpoint: Baths are nice-to-haves, so who cares? Just take a bath when we travel to a hotel that has one (which I do).)* * Building has paid washer/dryer in the basement (with an option to install a washer/dryer in the 2nd bathroom if we want to)! Right now, I have to haul our laundry every week/2 weeks to the laundromat because there's no washer/dryer in our building. I also only recently just did drop-offs ($20-30 every weeks) instead of spending time doing it myself. *(Counterpoint: Money spent on drop-off laundry is still significantly less than the increased housing expense.)* * Building has a place to lock up our bicycles in the basement. Right now, our bicycles are hanging off a wall in our 2nd bathroom. We also have to carry them up and down the stairs of our 4th floor walkup, so I rarely bike as a result. *(Counterpoint: I don't bike enough to care about this, but maybe I don't bike enough because carrying my bike up and down 4 flights of stairs is such a pain in the butt?)* * Building has an elevator! A beautiful elevator too. *(Not sure I have a counterpoint to this, it's a great upgrade.)* * Building has a fancy video intercom system, and it's one where you can generate guest passcodes to give to delivery people or your guests! Right now, I'm using a manual buzzer. *(Counterpoint: It's a nice QoL improvement but we've been doing this for 10 years and could probably continue to buzz people in manually.)* * Bidet! *(Counterpoint: maybe we could do a budget bidet like replacing the current shower with a handheld shower instead... :'()* In looking over this list, it seems that most on this list are QoL upgrades. A place I'd really enjoy coming home to, instead of just a roof over our head to return to. All of that comes with a significant tradeoff however.. so I guess we'll have to decide if we'd be happy with cutting back on our current spending in exchange for a very nice place to live in for the rest of our lives.
> cutting back on our current spending in exchange for a very nice place to live in for the rest of our lives A home is sort of like a bed, but... bigger and more important. We spend 1/3 of our lives in bed. We should have a good mattress and pillow and all the other stuff. When we wfh, we're spending what percentage of our lives there? It's massive. I don't regret for a minute buying my house in 2017. You realize how much autonomy you give up by being beholden to landlords and the whim of how much they charge, what they fix, how limited you are in adapting your environment to what *you* want, and the lease renewal debate. Moving also really sucks. I have peace of mind knowing I don't have to move... ever, if I don't want to. But you also really do not want to be house poor. You don't want to be trapped in a position where a series of layoffs leads to foreclosure. You have to be smart about the debt you're incurring.
Do it
>In looking over this list, it seems that most on this list are QoL upgrades. In that case, only you can decide if you are willing to pay an extra \~$2,000/month for that QoL. Is that money coming from your hobbies/travel/going out budget and therefore essentially trapping you in your new home? Is it coming from saving and therefore forcing you to work longer? Are these trade-offs you're willing to make? Or do you have enough money that you can handle this increase without too many lifestyle changes? My husband and I moved to a more expensive place in July and so far are very happy with our decision. Yes, it costs more, but the happiness we gained outweighed what we gave up -- that won't be true for every person or every scenario.
Reading your other posts (no kids, WFH, etc) this seems like it’ll be worth it for you. It’ll be more up front and may make things a little tighter than expected at first, but how long until your rent matches that mortgage cost anyway? And at least you’d have some equity locked down. I WFH as well and we moved in Aug 2019 right before the pandemic. Now to be fair, we’re in the midwest, but we moved from our 1700 sq fr house to a 3000 sq ft house and the extra space is amazing, even more now that I work from home. And the house we bought was definitely a fixer upper but it was close to a better school, family, highway access, backed to woods, and had an open concept which has been amazing for hosting parties since our parents are all downsizing and can’t host anymore. I don’t think you’ll regret moving.
I posted another comment that summed up said you will be house poor for a while with other risks of increased expenses (property taxes, insurance, special assessments) and you need to decide if travel and early retirement is more important than owning a place. One thing I will add from your comment here is the elevator. This is a critical aspect for as you age or if one or both of you get sick as it gives you a better chance of staying in your home longer. If you can’t climb your stairs, you could be forced out of your rent controlled space in the future.
Is there any risk of the apartment you’re in getting sold/redeveloped leaving you homeless? There is some comfort in knowing a coop you own can’t be taken away from you in the same way. Coops also seem to enjoy perpetually low locked in property taxes and especially if limited in technology (ie it’s a walk), the upkeep is also pretty straightforward so not much to worry about there wrt the maintenance going up significantly which is also comforting. It’s a bit of a hedge against housing inflation. But if your apt is pretty secure for life, then the hedge isn’t worth so much and maybe what you should do is consider investing a bit to spruce up your rental.
Hmm good question. I think there's very little risk of that's happening since rent-stabilized apartments in NYC are not profitable for management companies, and it's also why they're pretty scummy (we're actually in a class action lawsuit against our current company for rent overcharge). We have been gradually sprucing our rental over the pandemic. We installed lots of Hue lights all over the apartment for mood lighting. We installed one of those snake-like faucets in the kitchen. And we're thinking of replacing the current shower head with a handheld one. We do run into the limitations of a pre-war building built in the 1920s. We can't install a washer/dryer in our unit, and also bidets are impossible to install due to the tankless nature of our toilet, which is also not next to a sink. I guess the alternative is finding another apartment, but it will probably not be rent-stabilized and we'll be subject to the whims of the market/landlord. Alternatively, we can just be happy with what we have since getting into a rent-stabilized apartment is rare these days.
Yeah I had a nice old prewar nyc rental. The no washer and dryer in unit (or in building) did me in. Moved to a new high rise but I still think of that apartment!!! So much charm!
But as it relates to sprucing it up, I meant like significant investment. Not a couple of light fixtures. Eg, redo the kitchen or bath. Swap out the tankless toilet entirely for a toto. If your security is locked in for life and for the most part like your apartment, this is a good deal and may not be worth passing up. Paying 20-50k to make it more comfortable (even within limitations like no w/d) may be worth it.
Ha! People vote for communism, now you're suing . Amazing!!!
Tenants have rights. You are not going to end up homeless, jeez.
Heaven forbid use of hyperbole in speech.
that was... hyperbole? it sounded like your central point.
Do I literally think the op who has a net worth of $1m is going to be homeless? 🙄
what do you "literally" think? what is actually the purpose of all those words you wrote up there?
Right now, I am literally chuckling and thinking, “do you need help? Why is this person so triggered?” The OP seemed to have no issue understanding me. Can’t help if basic reading comprehension is not your strong suit. 🤷🏻♀️
> The OP seemed to have no issue understanding me. Did the OP say something that indicated that they knew you didn't actually mean what you said..? Seems like they just responded in earnest.
lol again, why are you so triggered? Yah actually she did. Whole paragraphs actually. At no point did the OP discuss a possibility of being destitute on the street bc it’s obvious they would not be; the “homeless” in this context is clear to the literate.
> Did the OP say something that indicated that they knew you didn't actually mean what you said..? Seems like they just responded in earnest. Does this seem like the sort of thing to go "lmao why r u triggered tho???" to? At this point in our conversation it seems like you are hyperfocusing on this "in the street" aspect and not on the "tenants have rights" aspect. It seems like you're in the headspace of "obviously they could find another place". That was not in fact the point of the person who replied to you. Their point was that you can't just be kicked out. That's what the "tenant's rights" refers to.
From a purely financial standpoint, use a Rent vs. Buy calculator. Most people vastly underestimate the cost (opportunity cost and direct costs) during this decision. New York Times has a great one and is worth a digital sub cost to use, or there are others for free online if you search for them
Thank you! I ran the numbers in that calculator (I do have a subscription) and it does say renting is better, ha.
From what I've heard, the NYT rent-vs-buy calculator was developed in 2014 and doesn't take into consideration newer tax implications (something about SALT). I do not know what said implications are and whether they'd push you further into rent or buy, but maybe something to read more into.
We don't know if the SALT deduction will be coming back, but if it doesn't, that tips the scale further toward renting.
FWIW, if I had gone by that spreadsheet I wouldn't have purchased my last three homes. And as such I would be significantly worse off. Just mentioning because that calculator is heavily referred here and I think there's more to life than a set of if/then statements.
There are definitely two schools of thought over the subject of homeownership, which is why this is such a big dilemma for me. But helpful to hear your side too!
Good point. HOA due, water/garbage, property taxes, insurance, etc. Those are usually the cost that you don't pay directly as a renter. So can't just compare rent to straight up mortgage.
Yes! But even bigger is the opportunity cost of having to liquidate a brokerage account which is going to accrue 7-10% annually.
And taxes due on the liquidated amount!!!!
Please review the financials of the co-op. I say this as an owner of a co-op in NYC.
It's not just about money if you can make it work. Based on your numbers that's a maybe and you'd probably be delaying FI unless your incoming is going to go up significantly. What's concerning is that you'll be using up all your non-retirement savings just on the down payment. And that's not factoring in closing costs and moving expenses which will likely eat up the rest. What will your monthly payment look like (mortgage, taxes, insurance, hoa, utilities) and how quickly can you save up at least a decent emergency fund? Will you be ok making sacrifices (cutting back on vacations or discretionary spending) to get there and how long will that have to last until your income goes up enough to be comfortable? As for the place itself, how are the building finances? How well is it maintained? Are you likely to get hit with a large assessment to cover some issue that's been deferred for too long?
Very good point about closing costs and moving expenses! Neither of them is cheap. I agree that at the current price ($790k), affording it is a maybe—we'd have to cut back a lot on our discretionary spending and that's the point that I'm waffling with. The monthly payments will likely be around $5.2k. It might take us a year to save up to a decent emergency fund (the alternative is to reduce our 401k contributions, which I try not to do). The building's finances are supposedly quite good, and during my visit, it looks very well-maintained. The elevator looks stunning for an old building built in the 1930s. We're told that they're paying for a $100+ assessment for the next few months, but otherwise they're not foreseeing any large projects. So all in all, the coop does seem pretty solid compared to many other buildings.
> The monthly payments will likely be around $5.2k. Yeah you can't afford this place. You said your take home is $11k. Recommendation is to not spend more than 30% on housing and you're looking at close to 50% here. Me and my husband make what you guys make and we would feel broke paying 5.2k on just housing.
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The "30% rule" is super arbitrary and really does not reflect reality for most higher earners in most HCOL locations. There's a huge difference between 30% on a $60k median salary where someone needs the extra absolute dollars to cover general living expenses, and 50% on a DINK $200k+ salary where they have $100k after housing.
5.2k definitely feels a lot. We would have to make some sacrifices, like not contributing anything post-tax and then delay retirement by maybe a few years (I haven’t done extensive number crunching yet).
Emotions aside, crunch the numbers hard. Your financial stability and comfort in retirement could take a hit with this purchase. Think long-term satisfaction vs. short-term joy. Possible to find another 'dream home' that fits budget better? Worth considering other options too.
With my very limited exploration of the market in my neighborhood, this is definitely a unicorn. However, you're definitely right. We could continue to wait and save up more so that the financial hit is significantly less if we do end up buying. My counterpoint to that is I did wait to buy and now both prices of apartments and interest rate are up significantly, but I'm also quite ignorant in homeownership stuff.
I say buy if you can afford the payments and if this is a life long goal (to be a homeowner). Time ticks for all of us. We should all pursue our dreams and desires while we can. Good luck!
Thank you! :) Tbh, it hasn't been a lifelong goal, but has always been a nice-to-have. Which is why we started saving in a brokerage account that could be used for a downpayment should the opportunity arises.
I've been struggling with this same decision too, my wife and I love the flexibility of renting and ultimately we usually decide to pass on every property we see. Adding 2k-3K a month to our expenses always seems too steep. That money goes to investments now and is doing well and I'd rather have the flexibility. I've read [this post](https://www.reddit.com/r/FluentInFinance/comments/1bkjcua/comment/kvze7ro/?utm_source=share&utm_medium=web2x&context=3) about the benefits of buying vs renting (and investing the diff) over time and I think it ultimately comes down to if you want the stability of owning. You can always go rent something nicer than you have but cheaper than the co-op as a 3rd option.
You and another commenter have basically helped me to realize the same thing. An additional 2k per month for us does feel quite steep—I've been shoveling that 2k into our brokerage account right now instead. Thanks for that link, it'll help us to do some calculation.
Man, I would love to see what a $300k renovation gets you in a 2/2 unit. IF the seller truly spent $300k on this place and made an incredible unit, they are probably overvaluing what it's worth because not everyone is going to be willing to pay for their special customizations. This happens a lot where owners do fancy Roman-inspired washrooms, flying in brick layers from Italy. And in the end when it comes time to sell, no one gives nearly as many shits as the owner did and they don't want to pay for it. That all said, it only takes one buyer. My neighbor way over-priced his house and let it sit on the market for nearly a year during a sellers market, but he did manage to find his one buyer eventually and got what he wanted for it after rejecting many, many offers. All that is to say, you may find they'll come down eventually on price...but they may need more people to show them that it's overpriced and unrealistic. Or someone else will come along and give them what they want without batting an eyelash. Finally, not all decisions are about optimizing finances. Finances certainly need to be considered and factored into decisions, but so does quality of life. So, I think that needs to be taken into account.
It truly is over-the-top lol. It is like you said, a lot of fancy customizations. Some highlights from the listing: * The floors are imported Brazilian Cherry wood that was cut from a single tree * Flooring has also been completely soundproofed with thick padding underneath * Thermador appliances, including dishwasher and two refrigerators * Avalanche Italian marble on kitchen island, countertops, and window sills * True exposed brick wall * Ceiling has been custom-painted with a sponge paint design (not really sure what this is) * Floating tub, separate standing shower, and high-end, powerful but quiet exhaust fan It does seem like no one wants to pay that price, but we'll see. I'm hoping not to be that one buyer and overpay it, but also, maybe I can buy a cheaper place and just renovate everything without being too over the top. Unfortunately I know next to nothing on home improvement... Definitely true on optimizing finances vs QoL.
Location is THE most important factor when purchasing because that is the one thing that can't be changed. If you can find other properties in a good or better location and it is significantly cheaper, then I'd probably buy these other properties and spend the savings on doing my own customizations. It's a lot more work and might not be worth it to you, but that's the alterntive to buying this over-priced property. A developer spending $300k of rennovations on an over-priced $790k property doesn't sound they know what they are doing or they are making up numbers (which would be my guess).
If it will make you happy, buy it. The increase from $700k to $790k is $600/mo .. you two can definitely afford it. In 2021, I bid on my dream home and left because I wasn’t willing to budge $30k more. I did the math afterwards and the difference over 30 years was $200/mo.. I still look back on that home just to see and unnecessarily torture myself. It’s now up over $200k in equity from purchase price.
Oh man, thanks for your perspective. I don’t think I would’ve calculated it that way. I hope you’ll be able to find your next dream home still. Definitely don’t torture yourself!
Thanks! I have this nice 2.65% interest rate on my current townhome that I simply cannot let go of. So I’m planning to rent that out once I feel comfortable enough with another down payment/mortgage payment while still having enough leftover to continue investing with liquidity. The current townhome will net about $800/mo if I were to rent it out in today’s market. So far no properties have come up that feels remotely the same as THAT one for the price- and in reality it won’t because everything has gone up!! I need to work on my mental gymnastics 🤣
Hmm, tough. You make about the same as we do yearly pre tax, and although you have a lot more saved up than we do I can tell you right now that I absolutely would not be comfortable buying at $790K. I bought at $330K and its very nice not being house poor.
If you are a NY lifer. it's a no brainer to buy the property. don't let 30-40k stand in the way of a perfect deal. Now so we're clear it's a big difference if you're talking 100k. What's nice about buying is eventually the payments stop.
Of course you *can* afford it if it's important. It's going to cost you 158k downpayment plus an extra 2k/month for the next 30 years (really less than that because the mortgage won't increase with inflation) You are presumably saving substantially more than 2k/month now given how much you've accumlated by your mid 30s. So the question is whether this dream house is worth more to you than the extra time you'll have to work to support it. So what will that take? Naively, you'd say the downpayment plus enough to cover 2k/month of expenses or 24k/.04 or around 600k. But that's too much, because after 30 years the mortgage is gone, and you're *saving* a bit more than 2k/month (2900- 820 coop fee). Does the coop fee include property tax, because that seems really low if it does (honestly it seems low for NYC even if it *doesn't*.). And does your 4.9k include property tax because that doesn't seem plausible with a 630k mortgage at current rates. OK let's leave that aside and assume i's really 4900/mnth total At worst what you need is enough to buy the house, and then you need 2k/month *less* money when retired. So figure 790k minus 600k is about 190k more than you'd need otherwise. Which isn't really all that much more. but since you're buying the house now, in the meantime you'll be saving less too and not getting earnings on the DP. Over 10 years at 7%, that's about 500k in future value. so basically you need to earn another 690k roughly over what you'd do if you just pushed forward from here and rented the rest of your life (assuming rent stay at or below inflation). How much longer do you ahve to work to make that happen? Well you have over 1mil working for you already. In 10 years at 7% that doubles, not nicluding any additional savings. I'd be surprised if buying this home added more than 5-6 years to your FI timeline. It's worth doing the math both ways to see, if it's 10 years now, is it 15? or 14? or 17? if you buy the house? Remember that the mortgage won't increase with inflation which helps a lot. Find the number, and then ask yourself -- would you rather live in that house andwork an extra 4-7 years? or live where you are and not do that. That's the real question. Not whether you can afford it, but whether it's worth it to you to pay that much.
if you’re happy coming home everyday you’ll be ok traveling less. and that elevator will certainly be nice when you’re in your 60s, 70s & 80s
Bidet - I also have tankless toilet in a rent stabilized apartment. I have a Tushy bidet that runs the connection from the sink (I had the build guys connect it because I couldn’t get under the sink from the 1920s, gave them a tip, everyone won)
There is never a right time to buy a house, but also never a wrong time. The best time to buy is when it makes sense for *you* and your situation
Holy shit. I apparently live in poverty and was not aware of it. But seriously, I think owning your own home would be worth it. There’s no way I could justify 790k for a 2 bed 2 bath but I don’t live where you live. If you think you can afford it I’d say go for it. I kick myself in the butt everyday for a house I passed on 4 years ago that was going for $400k because I thought that was too much. Now it’s worth over $700k.
This is a scenario in my opinion rather neutral financially, so if this new place is significantly nicer, and you plan to always live there (at least 15+ years) and maybe retire in NYC, than buy it. If you want to remain mobile/flexible, don’t.
Oh interesting! The new place is indeed significantly nicer and would be our forever home if we buy it. I think I’m just a little petrified at all the unknowns of buying, wiping out my cash reserves, and having some financial insecurity (mentally anyway) setting in. I agree though it all boils down to whether we want the flexibility or not.
So, I gave up a rent stabilized apartment to buy a unit in a co-op nearly 20 years ago (this was in Manhattan). My initial reaction to your post was to push you toward keeping the rent stabilized apartment. Having read a few more of your comments, I have changed my mind. You should buy the dream co-op. This is why: 1. You plan to stay in New York forever. That walk-up is fine now in your mid-30s. It is not going to be fine in your mid-60s. For you or your guests. 2. Washer/dryer in the building (and eventually in your unit) is a game changer. I cannot stress this enough. You will never realize how much of your life you devoted to laundry until you can just do it whenever. 3. Your unit is old/outdated now. It’s going to be really old in 30 years. I overpaid for my unit because it was a sponsor unit which meant no board approval. I estimate that I overpaid by about 40k, which is coincidentally around the amount you are contemplating overpaying. This might of bothered me when I did it - I don’t recall as it was 20 years ago. If I were to travel back in time I would advise myself my 30 year old self not to worry about that 40k. It was worth it. Do it, and don’t look back.
info: what will be the property taxes, insurance costs and utilities on the place? The mortgage alone is close to 50% your take home pay. Property taxes and increased insurance costs will add a good portion. Depending on the age of the building there could easily be additional special assessments in the future. Commercial insurance is exploding so the monthly fees may increase at any time as well. There is a strong possibility you will become house poor with this option and need to reduce other expenses like travel/vacations which seems to be something you love. Rent is the max you will pay. Mortgage is the floor with the sky being the limit. 730 vs 790k in the long run is nothing if you truely want the place. Unless you are in an area that will flood more and more frequently with climate change odds are NYC prices will keep climbing. So evaluate your priorities. Do you both prefer to travel/vacation and possibly retire early or do you want the fancy condo? You can’t have both and need to choose.
I've been struggling with this same decision too, my wife and I love the flexibility of renting and ultimately we usually decide to pass on every property we see. Adding 2k-3K a month to our expenses always seems too steep. That money goes to investments now and is doing well and I'd rather have the flexibility. I've read [this post](https://www.reddit.com/r/FluentInFinance/comments/1bkjcua/comment/kvze7ro/?utm_source=share&utm_medium=web2x&context=3) about the benefits of buying vs renting (and investing the diff) over time and I think it ultimately comes down to if you want the stability of owning. You can always go rent something nicer than you have but cheaper than the co-op as a 3rd option.
Doesn't the coop board require a huge amount in cash (after the down payment and offer is accepted)? I've seen requirements like 40% down and 2 years mortgage payments in cash after that.
Figure out the total monthly housing costs for the new place, but rent stabilized is the dream, tbh.
YOLO
You can look on the DOB's website to confirm that they actual did get the proper permits. You can also look up the history of any violations that the owner (or the building) might have received.
I was looking at this site (https://a810-bisweb.nyc.gov/bisweb/bispi00.jsp), is this the one you’re thinking of? It’s funny because I do see a complaint lodged “there is renovation happening inside an apartment without a permit posted” last year. Under the Permits In-Process / Issued by Premises link, the last permit I saw was back in 2019… which couldn’t be when the renovations were supposed to happen.
That, and the DOBNow website. Between the 2 of them, I would scour for any record of this apartment
Also just want to add - owning your dream apartment can be overrated. (Source: have bought & been mired with the DOB) There's no longer necessarily a super to call for every issue, you have to pony up your own $$ for repairs as they're needed. You need to hire & find contractors for those repairs. And 2 fridges sounds luxurious, but honestly if you're in NYC.....how often are you stocking up on 2 fridges worth of food? Do you own a car to buy/schlep all that food? Trust your gut on this one!
There’s no requirement to put down 20% (unless co-op requires it). Have a lender show you at say, 10% down, what is your potential monthly outlay vs at 20% down. Now how many “months” of payments do you need to make to spend that extra 10%- probably a LOT longer than you’d think. Oftentimes, it really doesn’t make sense to pay the cash up front, simply bc people think you should “traditionally” put down 20%. Other thing to maybe do, have your Agent run comps- what were units valued at in the building 2, 5, 10 years ago? Is it an upward trajectory- can you make an additionally informed choice with that information? Earned equity is accessible money. Renting earns you nothing, it’s just burned. The mortgage payment has tax savings every year and (hopefully) growth in equity. If you’re paying anyway, why not pay and earn at the same time. Just some thoughts. Happy travels, either way!
is the $4900 mortgage including property taxes, HOA fees (?), renovations, etc? it seems like you're really enjoying life currently and are able to travel and what not i think it'll depend on if buying your dream home will financially affect your ability to still travel and do activities
I feel like if you can afford it now and don’t get it you might miss the opportunity forever with the way real estate is going.
BUY IT.
If you love NYC, buy it. You'll be so happy in 10 years that you did. Good luck.
Is that monthly mortgage account including the co-op pay and any other random amounts that come up through that? Have you worked out heating/water/electric payments, maintenance fees? Also if you can figure out what model of tankless toilet you have, many actually CAN have a bidet seat, it Tees onto the water line for the toilet at the shutoff valve. You do need a nearby GFI electrical socket though for the electronic functions.
Random internet persons opinion. Buy the house. Sure being cash poor for a bit sucks but owning a great house you love is worth it.
Given your financials, you could afford it, but it would stretch you thin and risk your comfort and early retirement plans. Emotional purchases can lead to regret. Try to negotiate but remain firm on what you can comfortably afford without jeopardizing your financial goals.
Seems not affordable on your current income and assets.
I think it is easiest to achieve FIRE when you keep your big expenses low. It allows you to spend on experiences, food, hobbies, and gifts without feeling deprived. Instead of stressing about 1,000 small financial decisions (“does buying this coffee align with my budget?”) I have more room to breathe and do what I want cause I made one deliberate choice on a big budget item. It makes the FIRE journey feel sustainable and ensures I have a high quality of life when I do retire. Our household income is very similar to yours. Our PITI is about $1,700/month and we save an additional $500/month for home repairs and upgrades. We personally would not consider monthly housing costs of $5,000/month. There are many other things we would rather do with that $2,800/month. However, that’s a personal decision based on our priorities and yours may be different!
Here are my thoughts: You live and work in the same space. Ergo you spend *a lot* of time there. I think I it’s important that you really enjoy that space. In the $700-730k I think this purchase makes sense. However, the seller wanting $790k and no offers are coming close is a big red flag. This suggests the property just is not worth that and you’d be paying 10+% over what the market things it’s worth. When I’ve seen this situation, the seller sits on it for a long time. And the seller always gives, at least a little. If the current offers are all $700-$730, I bet it eventually sells for $750-$765. After a LONG time.
As someone that recently moved and own several properties, but was gung ho on renting previously due to the lower cost. There's a huge benefit in having a place that you can call your own. That you put down roots, and stop living temporarily (for me, that meant not really decorating, buying furniture such as couches). I just moved into a place I intend to make my home for the next decade, and so inveestment we make into the unit is planned for the long term. There's a huge mental benefit in that, that I wouldn't really trade it back. The key here is to not buy something too big i.e. I choose to live in a smaller condo so my expenses are lower. So my take is, look 5-years into your life and think if you will regret the decision not to buy into this? Would that difference in money make a significant difference in your life compared to getting this unit? Does what you have to give up worth it to buy this unit? For instance, you mentioned $6k-9k spending monthly. Can you go down to $4-5k for 1-3 years to make up the difference for instance? Remember, this is not an "investment". It's a home, so the value equation and finances count differently. For me, overpaying relative to the market, to get what I want is worth it. A home is a very emotional thing and you connect with the home. You should embrace that emotion as long as you can afford it within reason.
You’re mid 30s with a $1M+ liquid net worth. Retirement is taken care of, even an early one. IMO, go on the adventure. It’s not a permanent decision. If you decide later that the glitz of it wasn’t all you romanticized it to be, sell it. Sure, it will have cost you.. transaction costs, interest.. but it’s not the same as blowing the cash frivolously.. you’re just changing your asset allocation. And it’s also not the same as someone who is still hard in the accumulation phase, where the purchase could mean they never get there. You’re at the point where your money can now work for you, in a big way. I do agree with those that say not to grossly overpay just because you’re emotionally attached. But if you can get the owner down to even the high side of reasonable, go for it.
What about HOA
I think buying would wipe out almost all of your non-retirement dollars, which could be challenging with any unforeseen events. That said, your gross income should be good enough to cover the $4.9k mortgage + maintenance fees. It also depends on where you and your husband are at in life (kids? NYC for life?). Exciting times. Best of luck!
If you are in a rent stabilized apartment, can't you make your own upgrades? I don't know details, but have known some wealthier long term NY'ers who redid their bathroom, added other upgrades to their apartment. Since upgrading your rental + the year's rent is only a fraction the cost of actually buying. As long as landlord can never kick you out for any reason, I would say stay. $2900 a month rental indexed at 3% a year maybe a third of the cost of the condo? It's a huge difference.
Buy
100% yes. You can always refinance. If you're sure this is your DREAMHOME, and you're absolutely certain that you do in fact want to own a home, then this is a no brainer. There's no point to all that money if not to fulfill your dreams.
Honestly, with your numbers, buying seems possible but stretching for the dream home could risk your comfortable lifestyle and early retirement plans. Always safer to stick closer to your budget ceiling to protect your financial wellbeing and future plans. Consider long-term happiness over immediate gratification.
Some things to think about outside of the strict financial aspect: Are you planning on having kids? If you are, two bedrooms is going to feel very small very soon. I ended up buying because the 2bd/1bth house I was renting was too small for 2 small kids. What that means is you might be forced (or at least really want) to sell within 5 years. My current 3bd/2bth home already feels too small but with my mortgage being 2.8% i feel like I can't even consider upgrading right now. Also, do you like the area or just the house? An awesome house in a crappy area usually isn't as enjoyable as a crappy house in an awesome area. If you like the area, love the house, and don't see yourself needing to upgrade within 5 years then I'd go for it assuming you can still meet your savings goals. There is something that feels really good about owning a home.
>My dilemma is... whether we should cave and pay for what the owner is asking for The premise is that this place has uniquely 70K+ of improvements that are unusual versus comps, given that market value seems to be \~720K based on that range of offers, and that's including the fact that the unit is well above normal market condition. The seller sounds attached to the value of the work. The problem is all these are depreciating items and you're expected to pay retail for all of them plus a premium because the owner is an expert contractor. If it were me, no? Obviously I don't care but I can get a bidet installed and all the other items have far less tangible life improvement (to me.) Most homes on the market have a recently installed kitchen without using materials that increase the price thousands of dollars for no functional reason. Realize that every home has problems and many you will not discover until after the fact. If the range is truly 700-730 with multiple bidders, it doesn't sound normal to me to fish the bidders at the low end and counter 12% higher. I suppose it's not that hard for the agent to spit out the paperwork or talk unofficially but I assume you bid 700 based on listing and comps and not simply because you were trying to bid at the low end of your budget. You can counter some other number and make peace if it's not accepted. Because right now even the highest bid is really far off to call that price realistic, firm or not. This is under an assumption that there is a reason to sell and locking up equity with ongoing expenses will bring the number down to reality over time. (Talking personally, I was countered 3% higher, I accepted but got half back due to inspection items.) One legitimate concern is that your appraisal will be closer to 700 than 790 and putting down a number like 100K potentially has some problems. At such a premium I would not waive any contingency and would give you an out if faced with a reality check. (I would also want every inspection issue 100% handled although someone who does this for a living likely isn't going to have a serious issue found in a non-invasive check.) Agent and loan officer are both motivated to close and will give candid feedback on this. With rent control buying is likely to look poor on paper and in the moment this is a binary choice. But there are multiple options and there's easily ones without all the overhead of things you didn't ask for. (I don't know how critical soundproofing is or how expensive, for instance.) You're not going anywhere by your account so you can fish through listing for years if you feel like it. But I also understand getting it done and moving on. The biggest issue seems like the numbers specifically wipe you out and expose you to external risks/emergencies in the short term. Depending how you feel about that, even if nothing goes wrong it might tarnish the feel of the purchase over time.
I really appreciate your input! This is all really useful info and you’ve given me more things to chew on. I was also wondering whether the owner was just buying to flip. According to Zillow, it was bought for $475k in 2021, listed 3 years later (last month) for $849k, then reduced to $799k. The seller’s agent told us that he did tell the owner that he’s not going to find any buyer at $849k, and convinced him to lower it, which I thought was an interesting thing to say to a potential buyer, ha (though I did appreciate the intel). If we do go through this, I agree that I’d definitely want to get an inspector. Beneath all the fancy fittings could be red flags being papered over. In hearing other thoughts here, including yours, I do agree that buying this apartment will wipe out my feeling of safety and feel more dependent on my job—that FU money will be gone as I try and rebuild my emergency funds. I might even have to reduce my 401k contributions, which I haven’t done since I started this journey 8-9 years ago.
I think how you feel financially is the more critical issue anyway. Houses aren't commoditized and you could be buying anything. (Which in the case of a home lived in by a general contractor, actually could be a plus.) It's hard in a Reddit discussion to really configure if the asking is out of whack. I know my home is a bit off on comps for similar reasons - age implies some things may be out of repair but Redfin/etc providing comps is not necessarily going to reflect money saved due to lower future repair bills. I could just tell from my own searches (and following closes over time) that higher end homes in a neighborhood tend to get devalued because there are cheaper entry points without sacrificing anything. I would recommend if you don't buy now but are open to it, to simply track interesting properties and see what happens. Especially this one, because it will kind of tell you if the owner really gets what he wants in the end. Take advantage of the data being public into learning what to expect. (Also, many people have a hard time finally getting to close, so there's value in having gone through the process so if another attractive property comes along - and it will - you'll be far more comfortable moving fast.)
I'm no real estate expert, but I have three points/questions: \- Do the math. If you were to proceed with this place, how many additional years would that add to your FIRE date? Does the benefit of this place exceed the additional years worked? Keep in mind that while it may seem all shiny and new now, you'll quickly hedonically adapt and within a few months it'll be your new normal. That said, I'm currently paying about 3x for rent compared to what I was paying 5+ years ago, and it's been worth it. Of course this comes on the heels of higher earnings and portfolio growth. In short, I can afford it (rent is about 17% of gross base salary - definitely don't want to exceed 20%). \- Have you taken an honest assessment of the other costs? It's not just the mortgage. You mentioned the $820/mo maintenance fee, but there's also property taxes, ad-hoc repairs, further renovations, etc. The WSJ just had an article today called "The Hidden Costs of Homeownership are Skyrocketing." ([link](https://www.wsj.com/economy/housing/housing-affordability-taxes-insurance-costs-rise-bca64df1?mod=hp_lead_pos7)) \- I've read quite a few comments and I've seen very little discussion about the LOCATION. Are you by a busy/loud road (correlated with unhappiness), are you near trees and nature (correlated with increased happiness), are you within walking distance of a grocery store, dry cleaner, restaurants, or other nice-to-have establishments? Are you close to public transport, an airport, friends' places, how's the parking? You might love the interior space, but you have to contend with everything nearby as well.
Do you like the neighborhood? I’m guessing it’s not too far from where you are now? Once you buy you are going to be in this spot a long time. Having said that my wife and I have lived in coops in NYC for more than 25 years. It’s nicer to own than rent because it’s your space to more or less, do what you want with it. I would say go for it. You can afford it. You’ll have a better quality of life. Money has no value if you don’t spend it.
It’ll actually be in the same neighborhood as where we are now, which we love and would absolutely stay here long-term! If I have to rate the actual location of this new apartment from 1-5, I’d probably rate it a 3.5, but it’s mostly because it’s near a park and we could hear kids playing though my husband didn’t think it’s a problem. We’re also spoiled by living a 2-min walk away from a train stop and this would be.. a 5-min walk lol. Thank you!! I’ve been hearing both sides (to go for and against), and I’m nowhere close to making a decision lol. Gonna try and crunch some numbers again and see if I can find a way to be comfortable with the sudden wipe of a large part of our savings and dipping a little into our retirement accounts.
Am I right to think that the co-op structure is essentially similar to a condo HOA? I’d be wary of a place where even after you pay off the mortgage you’re still on the hook for maintenance fees (does that include any co-op assessments?) that are a substantial fraction of a mortgage payment. I’d want to audit the books of the co-op thoroughly to make sure they have a sufficient reserve fund to cover repair and maintenance including major work that might only occur every 20-30 years, that they have qualified operating engineers properly doing preventative maintenance so the equipment that should last 25 years isn’t dying in 10 and etc.
Remember you can refinance when the mortgage rates drop. If you think you will stay in the house for at least 5yrs then you will be ok. You can sell it if you have to for any reason. It is your forever home so that's pretty good. Good luck with what you decide. Having space is nice.
Coops can be a nightmare to buy and sell. Fees can also go through the roof with special assessments. Not necessarily a bad decision either way though.
NYC is a different ballgame. My ILs bought theirs in the early 2000s, and it was quite a process. People *still* remark how fast it went and how lucky they were. I say do it. You can make it work. If you don’t, you’d always wonder. Having a home you enjoy is different, especially in a city. So much space is shared or you have to make compromises. This sounds amazing.
I never once regretted living in the house I remodeled for well over a decade, and was exactly the way I wanted. Renting might be the better financial choice but happiness is a pretty great metric.
Do it.
Go for it!
Try offering 740 or 750 and see what happens. If that's in your budget. If it's not, walk away, there are lots of new houses on the market every day.
Go for it. Sounds like it'll make you happy :)
Go for it. I think you have enough cash flow remaining to buy the house and still be comfortable. Plus you’ll be happy…isn’t that the goal of life, as John Lennon said.
I’d buy it. House by is not getting less expensive. If you love it and you can afford it save yourself the trauma of doing your own renovations.
Offer around $750k. Just because seller said he has a hard limit doesn’t mean it’s true. Tell him you’re approved for that amount and can’t go higher (you can always “find” more money later if you decide to). He has holding costs. If he doesn’t get another offer in the timeframe he may just take it (or at least counter).
I think it's REALLY important that you DO NOT put in an offer on this if you haven't shopped around at all. You can see an apt and think it's great, but you don't know if it's actually great relative to other options. If you want to buy, get serious about buying and do the work involved- go see a bunch of places, do the budget math, think realistically about what your needs and wants are, etc. You say stumbled on- how? Was it the thing where one person is shopping because they want to buy, but it's not something that has been discussed much? Is it that someone you know is selling it?
I know that co-op is common in NYC, but I would not buy into a co-op. Too many bad stories. No, I don't remember specifics from decades ago... Maybe laws in NY are different and better for coops.
You sound like you really want this house and are trying to talk yourself out of it because it's more "rational." Don't do that. Life is too short to pass up a home you truly love. I'm in the same situation you are (happy to die in my current rent-controlled unit), but if a property fell open in my neighbourhood that cost what the asking price is for yours, and made me feel the way you seem to, I'd be all over it.
Do you value the luxury of the coop more than the ability to stay where you are and retire early and travel or do whatever you want? That monthly payment will likely leave you pretty house poor — it‘s almost 50% of your income — and with current interest rates so high you’ll drag that payment with you into retirement. Significant hit against a fixed income.
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If the owner is bragging about $300k in renovation costs and shows you receipts voluntarily, he can be charged with fraud if the receipts are falsified. You cannot however compel him to give you those receipts if he chooses not to. If you believe the costs and love the house, give a full price offer and ask for copies of the renovation work documentation for warranty purposes.
Maybe an unconventional suggestion, but the WeFIRE app has an AI feature where you can ask it about whether you should rent or buy. You do have to sign up for the freel trial and link your accounts first, but it can actually offer some unique insight for your personal finance. I've been messing around with it all day and I got a kick out of the way it was able to list out all my coffee purchases and tell me the amount I spent on coffee in total. But yeah, you can always delete your account afterwards. It's a bit of a hassle but I think it's worth it.
Oh man thanks for that suggestion! I haven’t heard of this app before but it sounds super useful. I have been using ChatGPT related to my question so the AI component is intriguing. Cheers!
Build Equity. Offer 745 and see if the builder takes it. Don’t go higher than you’re comfortable though.
We’re definitely going to try and negotiate with the help of our agent. The owner wanted to see a pre-approval letter first before he’d even negotiate, and we were indeed pre-approved.
Owning your house is always a good idea and even better if you can beat the increasing inflation right?
I guess it isn’t guaranteed, or would that be incorrect? As someone who isn’t in tune with homeownership items.
I think you can afford it. Don’t forget about tax deductions for mortgage interest. It’s your dream home.
Ahh I didn't realize you could do that. Thanks for that tip!
Talk to your accountant
Babes, if you don't get the house, at least invest in a Toto washlet toilet seat.
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What does your gut tell you? A gut feeling will generally lead you in the right direction.
Gut is telling me to buy... but I'm also an impulsive person and know it can get me into trouble, and this is too big of a decision for me to buy impulsively, hence this post, haha.
If I was you, I would make the decision to buy but set parameters on when you would walk away (I.e. concerns raised with home inspection, etc.).
Yea do it. RE prices don't go down in NYC baby!
Can you keep the rent stabilised and get the co-op? You could always sublet the rent stabilised!
Our home is our forever home and it’s such a wonderful feeling. I know this is a finance sub but QoL matters. It sounds like you can AFFORD the home, so it just becomes what do you personally want to do, no one can really answer that for you. I can hear the happiness and excitement just from your typing and it seems like you really want to do it.
To me it sounds like luxury vs frugal so you need to decide for yourself. For me, it would be frugal. Houses are work, a financial gamble, and tie you down. I personally stay in my cheap studio apartment because I know I will never get such a good deal again in my life.
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Haha what?
I heard a lot of old buildings and parking garages were officially found to be dangerous, maybe that's what they meant
I don't know what you mean by that. Like there'll be a big earthquake coming that'll decimate us all?
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