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Old 11-30-2014, 12:37 PM
 
28 posts, read 47,032 times
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I am a 24 y/o guy living in Brooklyn (no wife and no children). I have enough for a down payment on a cheap co-op in Brooklyn, however my ultimate goal is to buy a house. Should I buy a co-op now or should I wait and save for a down payment on a house?
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Old 11-30-2014, 12:58 PM
 
128 posts, read 162,058 times
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dam what you do for a living LOL!, but yea its a wise move to buy a condo instead of a Co-op, Condo/House has more benefits than Co-op
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Old 11-30-2014, 01:45 PM
 
1,100 posts, read 1,074,263 times
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Quote:
Originally Posted by muzic072014 View Post
dam what you do for a living LOL!, but yea its a wise move to buy a condo instead of a Co-op, Condo/House has more benefits than Co-op
OP asked either a co-op or house...if he can afford a condo, he can probably afford a house as condos are nearly twice as much as co-ops.
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Old 11-30-2014, 02:05 PM
 
499 posts, read 370,381 times
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the whole "strict" co-op rules are overblown.

At the end of the day if you plan to live in the unit a co-op will be much cheaper and you'll have plenty more options.

Most co-op boards aren't that strict and a good amount allow you to rent out the unit after living in it for a year or two if something happens.
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Old 11-30-2014, 04:53 PM
 
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The co-ops right now seem very reasonable price wise, but their restrictions and rules are ridiculous. It all depends on what you ultimately want.

I've been in finance for 2 decades and i can tell you from experience, what goes up, always comes back down. If this was 2008, I'd suggest you buy something. For now, I'd suggest you hold off. Besides, it gives you more time to save while you wait for prices to drop. Prices now are astronomical for no reason. Also consider if you see yourself with a family and kids in 5 years. If not and you want a sheik hotel type lifestyle, I'd suggest a new luxury high rise condo with tons of amenities. If you see yourself with a wife or kid, then get the house.

Also, here's something else I learned in finance. You can also buy now if an owner went into default on his mortgage and is being evicted where the bank is taking possession of his house. The bank doesn't want the house. To get the house off their hands, you can buy a nice brand new house for a very low price. Check out listings in "foreclosure". It's like a black Friday deal, but on real estate hahaha.
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Old 11-30-2014, 06:21 PM
 
Location: New York, NY
624 posts, read 706,196 times
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Buying a co-op and then reselling in a only a few years to buy a house is not a great idea. First off, the transaction costs in real estate are criminal. You need significant appreciation just to break even. Your capital which is buried in the property could be generating income for you in the stock market or elsewhere. You're also bearing real estate market risk when you own the co-op. If we have another RE market correction while you hold your co-op, you could be waiting a very long time to buy that house while you wait for the market to give you back your equity.

Real estate investment is generally long term investment. It's also primarily a lifestyle choice. You buy a place because that's where you want to live. If you can play the market intelligently and build some additional wealth along the way that's great but this is where you're going to spend most of your time living. It's not like buying and selling stocks.

If you decide to buy a co-op (or any real estate), plan to own it for at least 5 years either as a primary residence or a rental property later on (rental maybe difficult if not impossible with many co-ops). With all of the RE transactions costs, taxes, co-op / condo fees, and loss of income generation of your capital it generally takes that long to break even vs renting. You can do the calculation yourself for your particular neighborhood. I would only do a short-term buy/sell plan if I had really strong confidence that the neighborhood real estate is going to make a huge jump and even then its a HUGE risk. Especially if you're looking at the already insanely expensive gentrified parts of BK.

I would ask more specifically why do you want to buy a co-op now? Do you really want to live in one? Will it improve your lifestyle over renting? Do you believe it will be a better financial decision over your timeframe?

Quote:
Originally Posted by EndlessData View Post
I've been in finance for 2 decades and i can tell you from experience, what goes up, always comes back down. If this was 2008, I'd suggest you buy something. For now, I'd suggest you hold off. Besides, it gives you more time to save while you wait for prices to drop.
While its true that markets naturally rise and fall we have no idea when. What if it takes 15 more years for prices to fall in OPs chosen neighborhood? What if they rise even more before then?

Quote:
Prices now are astronomical for no reason.
The current real estate valuations are not happening for no reason. They are happening because people want to live in the cities again and there is fierce competition. While the current environment could be a fad which may pass into something else in the future, we really cannot predict what will happen and we definitely cannot pinpoint when. My best guess is that the world class cities will remain a playground for the wealthy for some time.

Quote:
Also, here's something else I learned in finance. You can also buy now if an owner went into default on his mortgage and is being evicted where the bank is taking possession of his house. The bank doesn't want the house. To get the house off their hands, you can buy a nice brand new house for a very low price. Check out listings in "foreclosure". It's like a black Friday deal, but on real estate hahaha.
Not all foreclosures are super good deals and there are ton of pitfalls to learn about and avoid going this route. I know some people who made money doing foreclosures but its not the easy free lunch that some people make it out to be.
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Old 11-30-2014, 06:34 PM
 
28 posts, read 47,032 times
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Thanks for the responses. I've been looking mostly at foreclosed properties. Condos are more expensive than co-ops. There are far more co-op inventory also. I don't need luxury with a doorman or anything. I would reside there for several years. I don't see myself getting married and having kids anytime soon. They say it's always better to own than rent. I also know its going to be a hassle selling in ~ 5 years to get a house. What are your thoughts?
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Old 11-30-2014, 06:45 PM
 
Location: New York, NY
624 posts, read 706,196 times
Reputation: 439
Quote:
Originally Posted by nynewyorker View Post
They say it's always better to own than rent.
A lot of people think the opposite, that its better to rent than own. Ownership comes with a lot of hassle, cost, risk, and responsibility. Not that owning is always bad, but it's really not so simple as when people say things like "renting is throwing your money away".

You should watch this:

https://www.youtube.com/watch?v=s8GjDRT2MI0
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