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In terms of appreciation I think he will do better and get more north of the GW bridge. Better schools in Tenafly for example. Tenafly has both houses and condos at that price point and is more family focused with Edgewater having more empty nesters and DINKS. I am not convinced that the edgewater condos will hold heir value as new ones are built and become more desirable. By car, the commute is about the same to the GW bridge and I like 9w and sylvan better than river road because it runs faster. The only negative is that you don''t have the ferry or light rail options and are left with the less desirable bus option for public transportation.
Englewood Cliffs is a good option if you are sure you will be out by High School. Cresskill and Demarest are also options but a little bit further away.
A decent 3 bedroom in a decent, not even prime neighborhood in Manhattan will run closer to 2 M.
I second the Tenafly tcommendation. It has great schools and is a good location for driving to work (by NYC standards at least). He should able to find a nice 3+ BR for that price point.
Another option for that kind of time horizon would be to just rent. Let's assume a conservative annual return of 3%, that's $30k/yr he can be pulling in on the $1mm.
It'll probably cost him at least 1% in transaction fees to buy a place ($10k), another 5% to sell the place ($50k), over 10yrs that averages out to $6k/yr.
Now throw in property taxes of at least $15k/yr, all in that's $4200/mo he can spend on renting a 3BR apartment in Manhattan (or a nice house outside of Manhattan) while not completely locking in his $1mm (keep it in liquid, safe investments), and provide him w/ the flexibility of moving at any time if he sees better opportunities or just doesn't like the place/town. Just food for thought...
JPF. your logic would work if you could rent a house in NJ worth 1M or a 3 bedroom in Manhattan for 4200 a month; neither of these options are realistic.
Also, there a broker fees for rentals in NJ. In nyc the rental fee is at least one months rent and you also should figure on a rent increase every year. If you rent a co op or condo in nyc, there are hefty building fees and you may not be able to rent long term as per board rules.
Thanks for all the inputs - I don't think he is much into renting since he accumulated his $1MM from buying and selling his prior homes in Singapore so he is a serious believer in home ownership. I think he was pretty lucky since the real estate market in Singapore really took off in recent years though. In any event, many of my friends in Asia all think that real estate is reasonably cheap here in the US (and weak US dollar) with rooms to appreciate so perhaps that's another reason he wants to buy.
In terms of appreciation I think he will do better and get more north of the GW bridge. Better schools in Tenafly for example. Tenafly has both houses and condos at that price point and is more family focused with Edgewater having more empty nesters and DINKS. I am not convinced that the edgewater condos will hold heir value as new ones are built and become more desirable. By car, the commute is about the same to the GW bridge and I like 9w and sylvan better than river road because it runs faster. The only negative is that you don''t have the ferry or light rail options and are left with the less desirable bus option for public transportation.
Englewood Cliffs is a good option if you are sure you will be out by High School. Cresskill and Demarest are also options but a little bit further away.
A decent 3 bedroom in a decent, not even prime neighborhood in Manhattan will run closer to 2 M.
Brooklyn is a decent choice, though i don't know about schools. tenafly is nice, edgewater, all those towns are really gonna be the target right between GWB and Lincoln if he wants to drive. Personally, I think anyone who drives is crazy. the few times it works out to be 20-25 minutes doesn't come close to cancelling out the numerous times it's well over 60. I'd even try and live right near one of the ferry terminals if i were him, and base the location on schools you can go further south in jersey and take the ferry, but that gets you downtown to a wall street location so that probably wouldn't work).
Brooklyn is a decent choice, though i don't know about schools. tenafly is nice, edgewater, all those towns are really gonna be the target right between GWB and Lincoln if he wants to drive. Personally, I think anyone who drives is crazy. the few times it works out to be 20-25 minutes doesn't come close to cancelling out the numerous times it's well over 60. I'd even try and live right near one of the ferry terminals if i were him, and base the location on schools you can go further south in jersey and take the ferry, but that gets you downtown to a wall street location so that probably wouldn't work).
I second that and in 5-10 years the prices on some of those brownstones are going to go through the roof..many Manhatten people moving there because more affordable and bigger places compared to NYC
Thanks for all the inputs - I don't think he is much into renting since he accumulated his $1MM from buying and selling his prior homes in Singapore so he is a serious believer in home ownership. I think he was pretty lucky since the real estate market in Singapore really took off in recent years though. In any event, many of my friends in Asia all think that real estate is reasonably cheap here in the US (and weak US dollar) with rooms to appreciate so perhaps that's another reason he wants to buy.
He is delusional if he thinks he is going to get similar returns by owning a house in the US for the next 5-10yrs like he did in Singapore.
Agreed on the Asians think US RE is very cheap compared to there but good luck trying to get double digit returns on property outside of Manhattan (and parts of Brooklyn)
Personally, I would take a gamble on the luxury town homes in Harlem if my investment horizon was 5-10yrs.
If he does buy in Edgewater, tell him to watch out for those supposedly decontaminated/remediated superfund sites (I'm sure you're aware since you live there):
* City Place was built directly next to a superfund site and sits atop a capped landfill...
* Promenade: also built next to a superfund site.
With 3 kids, I personally wouldn't take any chances especially since no one really knows what may happen healthwise 10-20 years down the road. Not sure what the deal is further up north in Edgewater (Vela Townhomes for instance) but I'd do some homework on that topic before deciding.
Not sure if it matters since the guy's buying the place with $1m cash but Tenafly, as others have mentioned, is a great option but taxes will be higher in comparison to Edgewater for a comparable $1m property.
Englewood Cliffs would be the cheapest in terms of effective property tax rates in that area thanks to many corporate HQs paying tons of taxes but then again you're not going to find condos/townhouses (not that I know of anyway).
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