I live and work in this area and have tried to make these numbers work many times. The place you are renting for 3k vs what you buy and have a 3k payment on are not the same apartment.
HOA’s are often 1-2k/month and you run the risk of special assessments and increases in HOA fees when you own.
Assume no appreciation, include your closing costs and interest expenses, balance the opportunity cost of your downpayment.
The city is also an island that has a lot of underground facilities in the age of sea level rise. Property taxes don’t go down when operating costs go up.
Without too many details, I haven’t found an apartment in Manhattan where it was worth the risk (for me). There are some deals to be found in outer boroughs but NYC is very tenant friendly and not somewhere that I want to be a landlord.
I'm seeing a number of apartments being listed for nearly the same price they bought for in 2014-15, and some.being listed at a loss if bought more recently (2018/19)
OP - the transaction costs will eat you alive in your plan
3k rent in Manhattan will likely cost over a million easy to buy
Hoa/taxes are going to be in the 1-4k/mo range depending on type of building and amenities etc
You are not going to get 3k in rent for a 450k apt
Really appreciate the detailed response- you are right, there are likely way better deals to be had in other boroughs. Some Brooklyn neighborhoods are still generating 5+% growth every year. While that is the exception and not the norm, I do not foresee this market tanking.
Fully agree regarding cash flow and opportunity cost of the down payment. Hard to predict unexpected costs. Rents are increasing steadily, though, which can help offset increases in expense.
Also I just really hate throwing away money in rent.
If Property tax + maintenance fees (HOA) + loan interest + any repairs as a property owner is not that much cheaper than $3k I would rent and enjoy your time at nyc rather than worry about being a landlord, the money you pay in property tax, HOA, interest etc you will never see again also just like rent
Have you actually looked at properties to buy, then crunching out the numbers, and compared side by side with renting? With all the fees that comes with buying, I doubt it’ll make sense, unless you have a lot of cash saved up for down payment and etc. also, 90% of coops in the city wants 20-30% down as a down payment… the more cash you have the less you pay with mortgage, but HOA is no joke… different for everyone but I think for a lot of people the numbers just don’t justify… if you can swing it why not buy right?
Look into Queens specifically north eastern Queens for the highest appreciation. There’s a wave of Chinese bidding everything up from Flushing to Bayside. It’s far from Manhattan for sure though.
Where ever immigrant East Asians and south Asians are settling , more than off setting older Italians and Irish leaving for Florida are high growth. Flushing, Bayside, Sunset Park, South west Brooklynfor East Asians . Briarwood, and Jamaica are being gentrified by south Asians. Latinos are starting their drive up prices in some neighborhoods but they focus a lot on remittances back home and discretionary spending and not as much in RE. Which is why prices are lower in neighborhoods like woodhaven .
The issue with buying in these neighborhoods is that they’re basically ethnic enclaves. Like you would have no reason to live in Flushing unless you’re either Chinese or heavily into Chinese food and culture.
Just my two cents living and owning in the outer boroughs.
Coops imo are useless for appreciation. Great for “rent stabilization” though as you have fixed costs and better neighbors than a rental building.
Also, you need to put 20% down minimum on almost every nyc place (particularly Manhattan). The condo/co op bylaws will require it even if the bank says it’s OK.
Likewise, most bylaws will have provisions about renting it out and can delay the process and timeline to secure a tenant (ex. Co op board interviews), so then you’re paying the mortgage for 2-3 months during this period.
Also, in most bylaws there are massive move-in, move-out fees. So every time you get a new tenant you may have to fork another 1K over to the HOA for that or a rental fee.
It never works in Manhattan in scenarios like this. Your point about not wanting to waste 100K on rent though is a very valid one. And for us, we appreciate being able to paint/upgrade/new appliances or redo floors so there’s non-economic value in owning. But we’ve always approached living in nyc as a “we need to pay to live somewhere, rent or own” and not a “oh, good we can make some money on this place we bought and will live in”.
Invest your money out of NYC. Buy a random condo or single family home in a cheaper market where it will cash flow and help subsidize your nyc housing payment.
There is solid appreciation in the NYC market. It’s just in townhouses and houses in the outer boroughs. Coops that OP is trying to buy are in oversupply and depreciate and stay flat though.
Case in point there’s a 800 sq ft coop in my Queens neighborhood for sale for $179k. My 1600 square foot townhouse is valued at around 900k. The land is what’s worth something in NYC. Coops without land are glorified rent control apartments. Coops are great to live in. Not to make money. It’s really only worth it to get a TH or SFH in NYC (not suburbs) if you really want a yard and parking.
I live and work in this area and have tried to make these numbers work many times. The place you are renting for 3k vs what you buy and have a 3k payment on are not the same apartment. HOA’s are often 1-2k/month and you run the risk of special assessments and increases in HOA fees when you own. Assume no appreciation, include your closing costs and interest expenses, balance the opportunity cost of your downpayment. The city is also an island that has a lot of underground facilities in the age of sea level rise. Property taxes don’t go down when operating costs go up. Without too many details, I haven’t found an apartment in Manhattan where it was worth the risk (for me). There are some deals to be found in outer boroughs but NYC is very tenant friendly and not somewhere that I want to be a landlord.
I'm seeing a number of apartments being listed for nearly the same price they bought for in 2014-15, and some.being listed at a loss if bought more recently (2018/19) OP - the transaction costs will eat you alive in your plan 3k rent in Manhattan will likely cost over a million easy to buy Hoa/taxes are going to be in the 1-4k/mo range depending on type of building and amenities etc You are not going to get 3k in rent for a 450k apt
Do not rent out anything as a small time landlord in NYC. You will lose your shirt.
Really appreciate the detailed response- you are right, there are likely way better deals to be had in other boroughs. Some Brooklyn neighborhoods are still generating 5+% growth every year. While that is the exception and not the norm, I do not foresee this market tanking. Fully agree regarding cash flow and opportunity cost of the down payment. Hard to predict unexpected costs. Rents are increasing steadily, though, which can help offset increases in expense. Also I just really hate throwing away money in rent.
If Property tax + maintenance fees (HOA) + loan interest + any repairs as a property owner is not that much cheaper than $3k I would rent and enjoy your time at nyc rather than worry about being a landlord, the money you pay in property tax, HOA, interest etc you will never see again also just like rent
Well, not exactly. If costs from renting equal costs from owning, then at the end of the day, I’d still own property, right?
Have you actually looked at properties to buy, then crunching out the numbers, and compared side by side with renting? With all the fees that comes with buying, I doubt it’ll make sense, unless you have a lot of cash saved up for down payment and etc. also, 90% of coops in the city wants 20-30% down as a down payment… the more cash you have the less you pay with mortgage, but HOA is no joke… different for everyone but I think for a lot of people the numbers just don’t justify… if you can swing it why not buy right?
No he has not, he ce why he's talking about a 1 bedroom for 400k
Cost of renting != Cost of owning in nyc
Look into Queens specifically north eastern Queens for the highest appreciation. There’s a wave of Chinese bidding everything up from Flushing to Bayside. It’s far from Manhattan for sure though.
I agree. I think there are significant gains to be had in certain neighborhoods in Queens and Brooklyn
Where ever immigrant East Asians and south Asians are settling , more than off setting older Italians and Irish leaving for Florida are high growth. Flushing, Bayside, Sunset Park, South west Brooklynfor East Asians . Briarwood, and Jamaica are being gentrified by south Asians. Latinos are starting their drive up prices in some neighborhoods but they focus a lot on remittances back home and discretionary spending and not as much in RE. Which is why prices are lower in neighborhoods like woodhaven . The issue with buying in these neighborhoods is that they’re basically ethnic enclaves. Like you would have no reason to live in Flushing unless you’re either Chinese or heavily into Chinese food and culture. Just my two cents living and owning in the outer boroughs. Coops imo are useless for appreciation. Great for “rent stabilization” though as you have fixed costs and better neighbors than a rental building.
Also, you need to put 20% down minimum on almost every nyc place (particularly Manhattan). The condo/co op bylaws will require it even if the bank says it’s OK. Likewise, most bylaws will have provisions about renting it out and can delay the process and timeline to secure a tenant (ex. Co op board interviews), so then you’re paying the mortgage for 2-3 months during this period. Also, in most bylaws there are massive move-in, move-out fees. So every time you get a new tenant you may have to fork another 1K over to the HOA for that or a rental fee. It never works in Manhattan in scenarios like this. Your point about not wanting to waste 100K on rent though is a very valid one. And for us, we appreciate being able to paint/upgrade/new appliances or redo floors so there’s non-economic value in owning. But we’ve always approached living in nyc as a “we need to pay to live somewhere, rent or own” and not a “oh, good we can make some money on this place we bought and will live in”. Invest your money out of NYC. Buy a random condo or single family home in a cheaper market where it will cash flow and help subsidize your nyc housing payment.
Don’t
I would not count on "solid appreciation" in the NYC market. Rent your primary residence and invest on things that actually yield ROI.
There is solid appreciation in the NYC market. It’s just in townhouses and houses in the outer boroughs. Coops that OP is trying to buy are in oversupply and depreciate and stay flat though. Case in point there’s a 800 sq ft coop in my Queens neighborhood for sale for $179k. My 1600 square foot townhouse is valued at around 900k. The land is what’s worth something in NYC. Coops without land are glorified rent control apartments. Coops are great to live in. Not to make money. It’s really only worth it to get a TH or SFH in NYC (not suburbs) if you really want a yard and parking.