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I'll put my specific situation here for the numbers I personally am looking at.
I'm looking at a condo in Williamsburg, $950,000, 30-year mortgage with all fees: Monthly payment is $5,000. That's $1,800,000 over 30 years. 10% down with closing costs 150k. Let's say $2mil over 30 years. If the condo appreciates 5% per year the place should be worth around $1,450,000 in 30 years. So after selling, the total cost to OWN is $500k.
Renting version is: to get an equally nice place, it looks like about $4,000 a month right now. If we assume 5% increase in rent annually, averaged over 30 years, is about $2,500,000 to rent for 30 years. However, we take the $150,000 that would have gone to a down payment and closing cost and put it into the market with a 6% (conservative) return over 30 years nets me about $850,000. $2.5mil (rent) - 850k (investment gain) leaves me with a cost of $1,650,000.
It seems to me, based on these extremely rough numbers, that buying is by far better?
BUY! Buy now! Do not listen to anyone who tells you otherwise. Stupid money is being poured into NYC real estate as a holding place for dirty, laundered, legally gotten and regular buyers.
In the 10 years that I have been buying NYC real estate I have never once regretted it. Set a comfortable budget (lower than the maximum that you have been approved for). Identify the type of houses and neighborhood that you prefer. BUY !!!
P.S if at all possible by actual houses. Buy multi family if you can. Condos and Co-ops don't appreciate as much and are harder to re-sell ( smaller market for those types of properties).
BUY! Buy now! Do not listen to anyone who tells you otherwise. Stupid money is being poured into NYC real estate as a holding place for dirty, laundered, legally gotten and regular buyers.
In the 10 years that I have been buying NYC real estate I have never once regretted it. Set a comfortable budget (lower than the maximum that you have been approved for). Identify the type of houses and neighborhood that you prefer. BUY !!!
P.S if at all possible by actual houses. Buy multi family if you can. Condos and Co-ops don't appreciate as much and are harder to re-sell ( smaller market for those types of properties).
Except for the sale of our house in 2003 all the big dollars we made were in coops in Manhattan.
That market is very strong ..in fact we sold two out of the 9 we had in 2008 for a mere 10% below the all time high .
Coops appeal to a lot of people because they are far cheaper then single family homes .
The economy of scale is very different in a coop or condo so they. Give access to those who could never afford a single family home in an area.
Our queens coops did meh …but the Manhattan ones were incredible
I'll put my specific situation here for the numbers I personally am looking at.
I'm looking at a condo in Williamsburg, $950,000, 30-year mortgage with all fees: Monthly payment is $5,000. That's $1,800,000 over 30 years. 10% down with closing costs 150k. Let's say $2mil over 30 years. If the condo appreciates 5% per year the place should be worth around $1,450,000 in 30 years. So after selling, the total cost to OWN is $500k.
Renting version is: to get an equally nice place, it looks like about $4,000 a month right now. If we assume 5% increase in rent annually, averaged over 30 years, is about $2,500,000 to rent for 30 years. However, we take the $150,000 that would have gone to a down payment and closing cost and put it into the market with a 6% (conservative) return over 30 years nets me about $850,000. $2.5mil (rent) - 850k (investment gain) leaves me with a cost of $1,650,000.
It seems to me, based on these extremely rough numbers, that buying is by far better?
Do your numbers take into account common charges and property taxes? In all honesty, that's what really turns the tables over the long term in conjunction with current prices. If I had to guess the common charges plus taxes on a $950K condo in Williamsburg is on the order or $1000 - $2000/month?
I think you're also vastly underestimating inflation. Taking the previous 30 years, a house purchased in 1991 for $950K, would need to be worth $2MM today just to break even on the purchase price. That's not taking any maintenance, common charges, and property taxes into account.
If one has to take a reasonable guess, inflation over the next 30 years will be higher than the previous 30 simply due to how much debt the country is carrying (inflation erodes the real value of debt so is advantageous).
Overcoming a 30 year mortgage depending on rates drives the cost up by 2 to 3x the price of the house.
Most homeowners in America can’t even itemize and so they get the same standard deduction as most renters do.
From a tax standpoint the renter tends to do better …the homeowner actually pulled that money out of piggy for their mortgage interest and real estate taxes .
The renter tends to fly the empty seats getting money back they never spent on those items in the first place.
Given that small landlords get eaten alive by taxes and a couple of bad tenants can wreck their whole P&L, unless it's primary residence and the SALT deduction exemption policy changes at the Fed, then no - Makes no sense to buy if you're just a working stiff.
But if you are a descendant of royalty, why not?
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