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Hi City-Data. Long time lurker, first time poster. I work for a Government Agency in NYC and have been in the same field for ~15 years. Post-Grad (Two Masters Degrees) Stable job, close to six figure salary (will hit that mark soon), working towards a promotion, never married, no kids.
I've noticed in conversation with some of my co-workers and people in my social circle that many of them have bought homes throughout the five boroughs with down payments way below the recommended 20%. For example, one of my colleagues purchased a multi-family home in the Tremont area of the Bronx with $55K down (he claims the home was $425K). Another in Woodhaven, Queens (SFH) for $35K down ($650K home), and another in South Ozone Park (SFH) for $24K down ($425K home).
Some of them have mentioned taking advantage of FHA and other methods (which they didn't discuss) and are telling me to get into the market now. I have close to $90K saved, but feel like I need to get over that $100K mark before I consider making any moves as I know 20% is that magic number. Most of the homes I'm interested in are in the $450-$600K range. I'm looking to stay in my native Queens, most likely in the Queens Village/Cambria Heights section (frequent LIRR service for shorter travel times to Manhattan and Brooklyn (gotta love that City Ticket!), not far from the train, highways, etc). Though I've looked at Woodhaven, Oakland Gardens and Kew Gardens, realistically, I doubt I could afford a single family home or multifamily in those areas. (Alternatively, White Plains looks amazing for the money, but... taxes!!).
Forgive my rambling. Looking through Trulia and Zillow, I see an unbelievable amount of foreclosures through Queens in all areas and I'm betting a lot of it has to do with people putting less than 20% down and not being able to keep up. When I was in Grad School, a lot of my peers would talk about getting a multifamily in order to have passive income and that being the only way to achieve real wealth (property/future inheritance) in NYC.
I am financially responsible, have good credit (on track to having amazing credit) and though the economy is rebounding, I'm always thinking about the worst possible scenarios (i.e. losing a job, market crashes).
How many of you have bought homes, condos or co-ops for less than 20%. Any advice for a guy in his mid 30s?
Last edited by ThatCareerGuy; 12-29-2017 at 01:17 PM..
Many, many, *many* times these people have either saved for some or all of the down payment. This or parent, parents, grandparents, in-laws or other family members have given again some or part of money required.
Then you have people who have trust funds, cashed out various investments/savings, and finally sold property elsewhere (other parts of NYC or surrounding area and or even country).
There have been no end of articles say in the Sunday NYT real estate section about people buying in NYC/NJ area whose parents/grandparents say advanced their inheritance or otherwise contributed.
People who bought their apartments in or even brownstones ten, twenty or more years ago are sitting on gold mines. Especially in the "hot" areas below 34th street such as Chelsea, Greenwich and West Village, Tribeca, Soho, and now even East Village. They are often selling to they can cash out to buy something else.
Where I come from in Staten Island it was and still is normal for people to save nearly every penny they get (we're talking money from birthdays, First Holy Communion, Confirmation, school graduations, summer jobs, etc...) with the goal of buying a house and or at least paying for college.
Condos/Coops usually don;t allow less than 10%, they are different entities from a house. Houses, you answered your own question. Though if someone is struggling to come up with 10% for a house, I think maybe they shouldn;t be taking on a half million dollar plus loan. but thats IMO
An FHA mortgage allows you to put down as little as 3.5%. The downside you have to pay mortgage insurance every month with is expensive as hell.
The friends and colleagues of mine who have taken advantage of FHA, speak about it like it's the best thing since sliced bread and keep telling me things like "Don't worry about it, just sit back, put a small amount down, save the rest of your money and pay off those mortgage payments each month because you have to pay it off anyway", ignoring the fact that not putting down 20% is a bad thing. They don't talk about their mortgage payment amounts, but wouldn't they be unnecessarily higher?
If I walked into a $475K home in say Bellerose, Queens, my mortgage would be close to $2150/mo. Wouldn't their mortgage be way higher than this (say $3K/mo) if they went the FHA route and put less down?
Many, many, *many* times these people have either saved for some or all of the down payment. This or parent, parents, grandparents, in-laws or other family members have given again some or part of money required.
Then you have people who have trust funds, cashed out various investments/savings, and finally sold property elsewhere (other parts of NYC or surrounding area and or even country).
There have been no end of articles say in the Sunday NYT real estate section about people buying in NYC/NJ area whose parents/grandparents say advanced their inheritance or otherwise contributed.
People who bought their apartments in or even brownstones ten, twenty or more years ago are sitting on gold mines. Especially in the "hot" areas below 34th street such as Chelsea, Greenwich and West Village, Tribeca, Soho, and now even East Village. They are often selling to they can cash out to buy something else.
Where I come from in Staten Island it was and still is normal for people to save nearly every penny they get (we're talking money from birthdays, First Holy Communion, Confirmation, school graduations, summer jobs, etc...) with the goal of buying a house and or at least paying for college.
Thanks for this answer. My family is horrible with money overall. I'm one of the few if any people in my family who are financially responsible (i.e. emergency accounts, etc), but unlike those people you described, I have no one to help me (and that's fine), so it's a slow crawl, but I'm crawling
Thanks for this answer. My family is horrible with money overall. I'm one of the few if any people in my family who are financially responsible (i.e. emergency accounts, etc), but unlike those people you described, I have no one to help me (and that's fine), so it's a slow crawl, but I'm crawling
Several family members on Staten Island are selling so there was much talk about real estate over Christmas.
They all repeated the same; people showing up at open house with suitcases/bags of cash looking to make an offer "now" and close the deal. To a one all were either Asians or Jewish. Family members told them they don't roll that way and everything had to be handled above board with banks/lawyers, but there you are.
That brings me to the other way people are affording NYC real estate ATM. You have people who own one or more (cash) businesses such as restaurants, nail salons, shops, liquor stores, etc....that can produce large sums of cash quite easily. Something that makes you go hmmmmm.
Oh and then you have those who rent out properties but only take cash for rent.
Several family members on Staten Island are selling so there was much talk about real estate over Christmas.
They all repeated the same; people showing up at open house with suitcases/bags of cash looking to make an offer "now" and close the deal. To a one all were either Asians or Jewish. Family members told them they don't roll that way and everything had to be handled above board with banks/lawyers, but there you are.
That brings me to the other way people are affording NYC real estate ATM. You have people who own one or more (cash) businesses such as restaurants, nail salons, shops, liquor stores, etc....that can produce large sums of cash quite easily. Something that makes you go hmmmmm.
Oh and then you have those who rent out properties but only take cash for rent.
Thanks for this answer. My family is horrible with money overall. I'm one of the few if any people in my family who are financially responsible (i.e. emergency accounts, etc), but unlike those people you described, I have no one to help me (and that's fine), so it's a slow crawl, but I'm crawling
Maybe is time for you to look someone and consider marriage. Is really hard to do it by yourself, especially with purchasing a house.
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