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I am 26 and am looking to move out of my parents' house. I live in Bergen County, NJ. I make $51,000 per year, plus bonuses, which are usually around 10% of my salary. I put 10% of my salary into my 401K. I have no student loan debt, no credit card debt, and I own my car outright, which only has about 46,000 miles on it. I am looking to by a co-op in Fort Lee. The co-op I am looking to buy is for $125,000, and monthly maintenance is about $565 per month, which includes property taxes, heat, and hot water. With a mortgage, property taxes, and insurance, I will be paying less than $1,100 per month for a home. Similar apartments in that complex usually rent for $1,300 or $1,400 per month, so it is a really good deal. My parents say I can stay on their cell phone plan after I move, so I won't have a cell phone bill. Utilities are probably pretty low most of the year. All I will be paying is electric and cooking gas, and $10 per month for a parking sticker. I may not even get a landline and will probably just get basic Verizon Fios. I am a pretty frugal guy. I don't really travel anywhere and I don't spend a lot. I like to get pizza or go to a deli for lunch on weekends, but otherwise plan on eating at home. I pay about $135 per month in car insurance. After I put down a 20% down payment and pay closing costs and buy furniture, I will still have about $20K in the bank, so I think I am in better shape financially than most people. Can I live a decent quality of life on my salary with what expenses are in Bergen County? What do you think is a good budget for me?
Nope can't have a decent QOL.
you forgot to mention your bank account number, SS and favorite color, movie and book.
Shoprite would probably be $200 a month. Whole Foods would probably be $325-350.
Maybe yes, maybe no.
I maintain a list of my favorite products that are substantially cheaper at Whole Foods than they are at either Shop-Rite or Trader Joe's. While most of my shopping is done at Shop-Rite, I also patronize WF, TJ's, and Wegmans, and all of them are cheaper than their competition on certain items, but more expensive on other items.
It behooves everyone to do comparison shopping, and--trust me--if you do, you will get some surprises.
I am 26 and am looking to move out of my parents' house. I live in Bergen County, NJ. I make $51,000 per year, plus bonuses, which are usually around 10% of my salary. I put 10% of my salary into my 401K. I have no student loan debt, no credit card debt, and I own my car outright, which only has about 46,000 miles on it. I am looking to by a co-op in Fort Lee. The co-op I am looking to buy is for $125,000, and monthly maintenance is about $565 per month, which includes property taxes, heat, and hot water. With a mortgage, property taxes, and insurance, I will be paying less than $1,100 per month for a home. Similar apartments in that complex usually rent for $1,300 or $1,400 per month, so it is a really good deal. My parents say I can stay on their cell phone plan after I move, so I won't have a cell phone bill. Utilities are probably pretty low most of the year. All I will be paying is electric and cooking gas, and $10 per month for a parking sticker. I may not even get a landline and will probably just get basic Verizon Fios. I am a pretty frugal guy. I don't really travel anywhere and I don't spend a lot. I like to get pizza or go to a deli for lunch on weekends, but otherwise plan on eating at home. I pay about $135 per month in car insurance. After I put down a 20% down payment and pay closing costs and buy furniture, I will still have about $20K in the bank, so I think I am in better shape financially than most people. Can I live a decent quality of life on my salary with what expenses are in Bergen County? What do you think is a good budget for me?
First want to commend you for being so financially responsible and the thought that goes into planning so early in life. I went through the exact same situation 10 years ago, so here are my thoughts:
1) The 401K limit for 2016 is $18,000 and you should maximize this above all else (since you have no high interest debt) as it's tax free money. That means you should put 35% of your salary into your 401k.
2) That leaves $38000 including bonus, minus all taxes, leaves ~$30000, or $2500 a month.
3) After $1100 housing cost, you looking at $1400 for food and discretionary, which looks to be just fine. The $20k reserve you have will last you 1 year in bad times. Which should be ok for now, i would look long term to boost that to 2 years (save the tax return from mortgage/property tax to boost the reserve).
4) Now on buying a new property, at your age it should ONLY be viewed as investment - meaning will it appreciate down the road if i sell it, and will the rent vs expense be cashflow positive if i have to rent it out later.
Be very cautious about coops, most cases they will NOT appreciate with the market like condos/houses do. They have very strict rules on renting out, buyer's income and other criteria restrictions on who can buy the unit (problem when you need to sell). Also the monthly fees are usually insanely high (due to mortgage on the building itself, mismanagement and out right fraud) as the reason for such low prices compared to condos / houses.
I dont have the details on which building you are looking at, but the fees seems really cheap if it's $565 and includes both maintenance + tax. Just make sure you go through their financial books like a hawk, to make sure the building is financially sound to avoid high assessments down the road.
Fort lee coops in general do not appreciate much over the years due to the very high inventory and monthly cost. So i would be a bit cautious.
You are in a bad spot on timing in term of buying real estate since the prices already went up so much, if it were 3 years ago i would suggested you buy a 1br condo for 150k in one of highrises in jersey city journal square by the path. As that area has the high growth potential, t's condo not coop, and you dont have to worry about schools for a while. But nowdays all those 150k units in JSQ are going for 250k which is higher than your budget.
A bad real estate buy will set you back many years financially, so i would make sure the area/unit has potential for appreciation.
In term of your numbers, i dont see anything wrong with it risk/reward at your age.
First want to commend you for being so financially responsible and the thought that goes into planning so early in life. I went through the exact same situation 10 years ago, so here are my thoughts:
1) The 401K limit for 2016 is $18,000 and you should maximize this above all else (since you have no high interest debt) as it's tax free money. That means you should put 35% of your salary into your 401k.
2) That leaves $38000 including bonus, minus all taxes, leaves ~$30000, or $2500 a month.
3) After $1100 housing cost, you looking at $1400 for food and discretionary, which looks to be just fine. The $20k reserve you have will last you 1 year in bad times. Which should be ok for now, i would look long term to boost that to 2 years (save the tax return from mortgage/property tax to boost the reserve).
4) Now on buying a new property, at your age it should ONLY be viewed as investment - meaning will it appreciate down the road if i sell it, and will the rent vs expense be cashflow positive if i have to rent it out later.
Be very cautious about coops, most cases they will NOT appreciate with the market like condos/houses do. They have very strict rules on renting out, buyer's income and other criteria restrictions on who can buy the unit (problem when you need to sell). Also the monthly fees are usually insanely high (due to mortgage on the building itself, mismanagement and out right fraud) as the reason for such low prices compared to condos / houses.
I dont have the details on which building you are looking at, but the fees seems really cheap if it's $565 and includes both maintenance + tax. Just make sure you go through their financial books like a hawk, to make sure the building is financially sound to avoid high assessments down the road.
Fort lee coops in general do not appreciate much over the years due to the very high inventory and monthly cost. So i would be a bit cautious.
You are in a bad spot on timing in term of buying real estate since the prices already went up so much, if it were 3 years ago i would suggested you buy a 1br condo for 150k in one of highrises in jersey city journal square by the path. As that area has the high growth potential, t's condo not coop, and you dont have to worry about schools for a while. But nowdays all those 150k units in JSQ are going for 250k which is higher than your budget.
A bad real estate buy will set you back many years financially, so i would make sure the area/unit has potential for appreciation.
In term of your numbers, i dont see anything wrong with it risk/reward at your age.
The co-op is Linwood Park. The requirements are 20% down, 3 to 1 income to debt ratio. The only rule on renting is you have to live there yourself for 2 years before you can rent.
I was once in the EXACT situation as you. I would avoid co-ops at all costs. If anything, save your money and buy a condo or house. Co-op is a losing proposition. Rent cheaply in a multi family house until you are ready.
As for me, I was looking at condos in Hackensack, then small houses in West Milford. Before I found anything I was ready to move on, I met a girl...who turned into a fiance, who turned into a wife. 2 houses later, I am glad I never bought a condo.
So is a $300 per month grocery bill realistic, including food, toiletries, and cleaning supplies?
Yes. Its probably a bit high.
Quote:
Originally Posted by 46H
Buying a place at your age and early in your career can be an anchor. What if your job moves or you change jobs and your commute becomes an hour or longer? What if a better opportunity pops up in another state? You also need to figure out how easy it would be to sell or rent your co-op and if they are in demand. Closing costs can suck a lot of money out of your pocket.
I would rent and continue to save.
I bought a condo at that age and it worked out. I knew I never was going to move out of the area. This is right outside of NYC and commutable to most of the suburbs, he should be able to find work in pretty much any industry.
Quote:
Originally Posted by MDonovan1990
The co-op is Linwood Park. The requirements are 20% down, 3 to 1 income to debt ratio. The only rule on renting is you have to live there yourself for 2 years before you can rent.
IMO you can more then afford it.
You should go into it trying to get it paid off well before 30 years are up. There is little chance you will actually live in this cheap 1 BR apt for 30 years. You want to pay like an extra $250-300 or so a month to start building up equity and reducing the term to 15 years or so (but take a 30 year mortgage for the flexibility it provides). Not like it would be expensive for you to do, plenty of people with your salary pay $1350-1400 in rent. You would be paying the same, but gaining a ton of equity for it.
Keep it as a rental once you move on and its the kind of thing that should set you up nicely with a bit of side cash. Not gonna become rich off it, but its a nice little investment and sure beats renting a place if you know you want to continue living in the area
After reading through all these posts the OP seems most concerned about his grocery bill. That doesn't sound like someone who is ready to buy property.
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