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I am considering buying co-op in long island (looking around Freeport, Hewlett, east rockaway, Lynbrook). I have enough for 20-40% down on most single studio co-ops i see(85k and less). the maintenance fees for the place I’m interested in are around 310-530 a month. This includes all utilities except electric (Freeport electric is cheap). This will be my first place outside of living with parents. I am concerned about expenses and if I’ll have enough to live comfortably(or at all) and be able to save.
The expenses I have considered and estimated are as follows:
100 phone
240 car lease
123 car insurance
100 gas
400 food?
200 meds?
30 gym
<300 mortgage
450 maintenance
100 electric
100 cable/internet
Is there anything that I’m missing or need to consider?
How much should my net earnings be per month in order to make this reasonable/affordable?
There are a couple places that are cheap and I may be able to buy outright without a mortgage, but will have little to no money in reserve (rainy day/ fun fund).
I may have overestimated some of these costs just to be safe. Am I even close?
Should I not make this move? Is this a good idea for a first place to buy?
All of my friends got burned on co-ops. Most took a 20-50k loss. Are you planning on living there more then 5-10 years? If not you may be better off renting. Out of all real estate they are the hardest to sell. Especially if there is a bad co-op board.
East Rockaway and Freeport got hit pretty hard by Sandy. Not sure if the maintenance costs will go up on those buildings because of the Insurance costs / repairs.
Cable is going to cost about $110 after the promo rate. Your better off using an antenna and a DVR. Brings the bill to $40. Get a prepaid cellphone provider to bring those costs down too. PagePlus (Verizon)
There's also a gas bill for cooking unless the building is all electric.
Since its a co-op you will not need home insurance but id get it anyway especially in the flood zones.
You deserve a lot of credit for doing the right kind of planning before moving forward. I'm not a financial planner, but several things stand out in your list:
1. You may want to consider putting less down and investing the balance in stocks or something else that will grow faster than the value of the co-op. I'm guessing that a studio co-op on Long Island won't be all that great of an investment and will appreciate slowly. In the meantime, you could put 20% down and use the remaining $17,000 or so for IRA contributions or other investments that would help you to build your future. You're young enough to put the money in more risky investments, such as stocks. With interest rates still relatively low, you should definitely not buy anything outright and use up most or all of your cash.
2. You'll likely spend more on cable/internet per month -- after you exhaust any special promotions offered in the first year -- if you want any decent variety of programming. Of course, if you use the streaming services more and cable less, that may not be an issue.
3. I'm wondering whether $123 a month for insurance will cover a younger driver with a relatively new car in Freeport. You should check with your insurer on the rates, especially if you'll be parking on the street.
4. Finally, be sure to do your homework. Ask people coming out of the building whether they like living there. Google the name and address of the building to see if any stories pop up about crime, resident complaints, lawsuits, etc. Examine the building financials carefully. You can find plenty of guidance online and you should have a lawyer who understands co-ops. When we looked at condos, for example, we found many cases where there were annual special assessments that weren't disclosed by the real estate agents. In fact, more often than not, the monthly maintenance disclosed by the agents was outdated and did not reflect the current higher amount.
You deserve a lot of credit for doing the right kind of planning before moving forward. I'm not a financial planner, but several things stand out in your list:
1. You may want to consider putting less down and investing the balance in stocks or something else that will grow faster than the value of the co-op. I'm guessing that a studio co-op on Long Island won't be all that great of an investment and will appreciate slowly. In the meantime, you could put 20% down and use the remaining $17,000 or so for IRA contributions or other investments that would help you to build your future. You're young enough to put the money in more risky investments, such as stocks. With interest rates still relatively low, you should definitely not buy anything outright and use up most or all of your cash.
2. You'll likely spend more on cable/internet per month -- after you exhaust any special promotions offered in the first year -- if you want any decent variety of programming. Of course, if you use the streaming services more and cable less, that may not be an issue.
3. I'm wondering whether $123 a month for insurance will cover a younger driver with a relatively new car in Freeport. You should check with your insurer on the rates, especially if you'll be parking on the street.
4. Finally, be sure to do your homework. Ask people coming out of the building whether they like living there. Google the name and address of the building to see if any stories pop up about crime, resident complaints, lawsuits, etc. Examine the building financials carefully. You can find plenty of guidance online and you should have a lawyer who understands co-ops. When we looked at condos, for example, we found many cases where there were annual special assessments that weren't disclosed by the real estate agents. In fact, more often than not, the monthly maintenance disclosed by the agents was outdated and did not reflect the current higher amount.
Good luck!
Hello,
Thanks for the responses.
My insurance is actually lower than 123 a month right now. some buildings i have seen have free parking.
all buildings I've seen do not charge for gas.
I've talked to others in the coop community in Freeport about cable and they pay about 100 after years of living.
I would plan on 'borrowing' a neighbors wifi and using my slingbox type device for television if necessary. however, I must have internet for my work. Also Im considering switching to sprint and getting my 20% off discount(i hear 65$ before), just not sure about their service.
these places to not appear to be affected by Sandy and are mostly north of Sunrise/Merrick road mostly. But i definitely do need to consider any annual assessments and/or increases in maintenance fees.
Can't i lose money in stocks just like with real estate? Also if i put less down, then won't my Mortgage be higher!? also i was considering that i would try and pay off the mortgage as soon as possible to pay less interest on the mortgage. is that a good idea?
I've talked to others in the coop community in Freeport about cable and they pay about 100 after years of living. I would plan on 'borrowing' a neighbors wifi and using my slingbox type device for television if necessary..
Can't i lose money in stocks just like with real estate? Also if i put less down, then won't my Mortgage be higher!? also i was considering that i would try and pay off the mortgage as soon as possible to pay less interest on the mortgage. is that a good idea?
WiFi: be careful with borrowing someone elses wifi, especially if they are savvy people and can tell when someone is borrowing. And especially since you are in a co-op and neighbors will be even closer then in a house.
Paying early: If that is what you plan to do, make sure you get a mortgage that doesn't have a penalty for paying off early. Yes, they even have a fee for that. We thought it was kind of funny when were looking for a mortgage, but they are out there.
wow, good to know about the paying off mortgage early thing. Thanks,
I got ways to encrypt what im doing, but was also thinking of using one of the cable company hotspots, if available.
Don't most people protect their wifi? My neighbors' all pop up when I go into the network, but they are all password protected.
Like i said there are hotspots available through cable companies(i have family/friends that has provided me with different usernames/passwords for each companies hotspot(cablevision/twc). also there are ways around those passwords(like just asking a neighbor).
Inquire about any special assessments that are currently being paid by the home owner and is the unit being sold with the special assessment paid in full or will you simply assume it. IF assumption, what is left on the payments? Ask the agent to find out how many , if any, special assessments have been charged in the past 10 years. Ask what if any major work has to be done on the Co-op. See if they have a five year facility plan and what does it suggest. We lived in RVC and they had to repoint significant portions of the the entire building, it was a killer. Check the reserve fund and if it is not significant RUN don't walk away. FYI don't know your budget but RVC also has their own electric.
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