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Lately I've been thinking about buying an apartment in Kew Gardens, Queens (where I currently live). However, I have no experience or knowledge of real estate. There is a lot of information floating around and I've read some articles as well, but in this case I think it's best if I turn to forum members for their invaluable suggestions and knowledge.
I guess the question is Condos or Coops? I read the NYT article about the downside of condos in the current market, but I don't know if that necessarily means that coops are the answer.
Some more questions from your vast experience or knowledge of the matter:
1. What should be the combined income of a couple to be able to purchase an apartment for about $400K and live comfortably?
2. What is the minimum amount that should be saved in order to make payments more substantial and easier to bear. (I don't if this makes any sense)?
3. Is it good to buy during the current downturn? Or is it better to continue renting?
4. Do you think that the prices of apartments will drop in the next two years?
5. Is it better to wait for a couple of years and then buy?
6. Do you have any suggestions, tips or comments you wish you knew when you were looking to buy?
Some more questions from your vast experience or knowledge of the matter:
1. What should be the combined income of a couple to be able to purchase an apartment for about $400K and live comfortably? It depends on how much you take home (dependents/deductibles, etc, and the maintenance/common charges.
2. What is the minimum amount that should be saved in order to make payments more substantial and easier to bear. (I don't if this makes any sense)? Again, make as large a downpayment as you can afford.
3. Is it good to buy during the current downturn? Or is it better to continue renting? That all depends. If you're planning on staying a LONG time, it's fine.
4. Do you think that the prices of apartments will drop in the next two years? Yes, probably, but condos more than coops.
5. Is it better to wait for a couple of years and then buy? Only you can answer that. How long are you planning to remain in that apartment?
Viralmd, I can see that you are teasing me with this "tiny drop" of information. Let me take this further...
We are planning to start a family in about 2-3 years, so we'll need at least a 2 br flat, perhaps 3 is better (naturally more expensive). Providing that we find a satisfactory place, we plan to stay there for quite a long time, I really like our neighborhood.
1. Is it possible to own a decent coop/condo for up to $400K (with reasonable maintenance charges) on a $120K - 150K annual salary?
2. What would be a "comfortable minimum" downpayment for that price?
3. We are planning to stay a long time, but if the prices drop in the next two years perhaps it's best to wait?
5. We can wait, my only concern is getting a good deal and that means looking for that right time. The neighborhood is improving and I am afraid that the prices will climb despite the recession. When I first moved in (early 90's) the area was sub par, since then the prices catapulted, making me wish that my parents would have been daring enough to buy a coop when they were very affordable.
Perhaps I shouldn't be so preoccupied with owning a place. I lived in a rental for most of my life and my parents were always conservative with their money, not investing at all. I kind of wish they had, perhaps I would have had a better knowledge of the subject. On the other hand, it's a sense of freedom one feels renting a place. You don't own anything and you're not bound to anything. You can change your residence any time and you can move around freely. There is definitely an inner conflict which I haven't been able to resolve.
1. Is it possible to own a decent coop/condo for up to $400K (with reasonable maintenance charges) on a $120K - 150K annual salary?
I think so, provided the maintenance/common charges are not astronomical. Sometimes you can get a good price on a coop/condo and then the amount you have to pay monthly is crazy! (That's probably why some of them don't command high prices.)
Quote:
Originally Posted by Entangled
2. What would be a "comfortable minimum" downpayment for that price?
Many buildings make that decision for you because they insist on 20% down.
Quote:
Originally Posted by Entangled
3. We are planning to stay a long time, but if the prices drop in the next two years perhaps it's best to wait?
If you are planning to (and able to) stay a long time, then there is no fear of having to sell for less than what you paid, so theoretically now is a good time to buy. However, I do think prices are going to go down further by next year.
Quote:
Originally Posted by Entangled
5. We can wait, my only concern is getting a good deal and that means looking for that right time. The neighborhood is improving and I am afraid that the prices will climb despite the recession. When I first moved in (early 90's) the area was sub par, since then the prices catapulted, making me wish that my parents would have been daring enough to buy a coop when they were very affordable.
Hipsters and trust fund babies are not invading Kew Gardens. I don't think in the next year or two it will have "gentrified" beyond your reach.
Quote:
Originally Posted by Entangled
Perhaps I shouldn't be so preoccupied with owning a place. I lived in a rental for most of my life and my parents were always conservative with their money, not investing at all. I kind of wish they had, perhaps I would have had a better knowledge of the subject. On the other hand, it's a sense of freedom one feels renting a place. You don't own anything and you're not bound to anything. You can change your residence any time and you can move around freely. There is definitely an inner conflict which I haven't been able to resolve.
All sound reasons to remain a renter. I think if you find the right apartment, your conflicts will be resolved.
In the coop v. condo question only you can answer. I rented in a condo before I bought my own apartment and the experience led me to buy a coop.The condo building was filled with self important yuppies who were used to doing whatever they wanted whenever they wanted.The lack of rules or any way of enforcing rules ,along with the cheap new construction without any sound insulation made the building unlivable to me.Thank god I was only renting.A lot of people buy condos so they can do what they want with no oversight and that's exactly what they do.Not saying all condos are like that but that was my experience.
Then you have all of the issues outlined in the Times article about the higher default rates,consequences of expiring tax abatements,etc .
Even without knowing what was going to happen to the market,I chose a tried and true established pre war coop building where 70 or 80 % of the owners bought during the conversion 20 years ago,most of whom have little or no mortgages on their apartments.Doubt any of them will be going under .I like that there are rules about financing,pets,renting out,etc.No expiring abatements,no huge underlying mortgage... no surprises. I think they make the living environment better for everyone and actually help keep the values up.
I also wanted a pre war building because I wanted thick plaster walls,nice floors and big rooms with some details.I didn't see any condos in pre war buildings.
I would say that if you have no children,your combined income to carry a 320,000 mortgage debt (400-20% min down)should be at least 125,000.Anything less is just asking to be squeezed.If you have kids the number obviously would be much higher.
Stop being concerned with trying to time the market with the price.It rarely works and the purchase price is not really that important.Of far more importance is whatever interest rate you will pay on your loan for 30 years.Check out an amortization table and see how much difference a percent or two will make on your total payments over 30 years.It will make your eyes pop out of your head. Interest rates are at a very very very low rate right now and some are predicting that when the market turns rates will go up considerably and may not get back to 4 1/2 or 5 % for another 50 years.It will do you no good to buy an apt 2 or 3 years from now, even if the prices drop 20 % ,if you wind up paying 7 or 8 % or more on your loan.
Everyone should forget about looking at their shelter as a money making thing.If you find the right apartment for you and you can afford it and can get a really low interest rate now,go for it.The market might go down over the next couple of years but don't bet on it.It might go up along with the interest rates.
The sooner you get into a place that you like and start paying it off and getting the tax benefits of ownership the better off you will be in the long run. Isn't there a $15,000 tax credit for home buyers in 2009? In addition to the deductions for mortgage payments and coop maintenances?
Stop being concerned with trying to time the market with the price.It rarely works and the purchase price is not really that important.Of far more importance is whatever interest rate you will pay on your loan for 30 years.Check out an amortization table and see how much difference a percent or two will make on your total payments over 30 years.It will make your eyes pop out of your head. Interest rates are at a very very very low rate right now and some are predicting that when the market turns rates will go up considerably and may not get back to 4 1/2 or 5 % for another 50 years.It will do you no good to buy an apt 2 or 3 years from now, even if the prices drop 20 % ,if you wind up paying 7 or 8 % or more on your loan.
^This is a good point.
Though before buying you may want to ask yourself if you are in a recession-proof job with no or almost no chance of getting laid off.
In terms of the coop/condo question, you will have to do quite a bit more reading than just one article to really understand the ins and outs. There are a couple of threads on this site you could look at. I would also recommend the book "the NY Coop Bible." You may be able to get it out of the library and it will open your eyes to lots of issues.
Things I wish I knew before buying a coop:
It really matters who your neighbors are, what type of board you have and if you have a good management company. These are not as easy to find out as the financials on the building (which your lawyer MUST find out) before buying.
It's really important to look at how the building is constructed. Not all pre-wars are built the same. I think there are some that are built really solidly - these (I think) are the ones that are higher than 6 stories and tend to be in Manhattan. There are other pre-wars that have very substantial plaster walls but next to no insulation between floors and ceilings and you could end up either with a noise complaint against you or you having to put up with excessive noise above your head.
Same goes for post-wars. Some of the newer construction has massive problems, while there are fire-proof (no fire escape on outside) high-rise post-wars that are built very solidly, including plenty of floor/ceiling insulation.
I wish I had understood more about electricity (circuit breaker vs fuse box, cost of putting extra outlets in), and more about home renovation in general. It's good if you have someone you can rely on to take a look at the unit you are thinking of buying to check it out for you.
I did all my research quite well and fully understood the differences between condos and coops, understood that real estate tax is included in a coop maintenance but not a condo, that part of the mtn. in a coop goes to the building's underlying mortgage, what a reserve fund is, how difficult it might be to get permission to do certain kinds of renovations etc. However, I did not understand how the board operated and how it engaged with the management company until after I moved in.
I chose a coop because I could not afford a condo. My place would easily have been 100K more if it were in a condo building. But hearing some of other people's horror stories about condos, I may have actually lucked out.
One other hint- start a free account with propertyshark.com. Use the map function to find coop and condo buildings in your neighborhood and look to see what the latest selling prices are in those buildings.
In the coop v. condo question only you can answer. I rented in a condo before I bought my own apartment and the experience led me to buy a coop.The condo building was filled with self important yuppies who were used to doing whatever they wanted whenever they wanted.The lack of rules or any way of enforcing rules ,along with the cheap new construction without any sound insulation made the building unlivable to me.Thank god I was only renting.A lot of people buy condos so they can do what they want with no oversight and that's exactly what they do.Not saying all condos are like that but that was my experience...
Bluedog2! Thanks you so much for taking the time to compose this detailed, informative and articulate post. This is exactly what I was looking for, a good perspective and knowledgeable advice.
There are definitely more pro-coop members on this board than condo supporters. I can certainly see pros and cons of both, but essentially it comes down to the building itself. Both buildings can be a nuisance if the neighbors or the board are inconsiderate or overly controlling.
I definitely needed to know about the income because I know that there are many people struggling with their mortgages, unable to travel or do much else with their money. Wasting my youth to pay down on my property for some unforeseeable future is not necessarily how I want to live my life.
I don't really care to turn my shelter into a money making thing, but it's great living in a place where you get to have a say in how the building should be managed. The problem with rentals is that people don't take much interest in the upkeep of the building or their apartments, there is a severe level of indifference...more like lack of consideration because indifference isn't necessarily so bad.
We'll have to wait for a year anyway, hopefully the rates won't go up next year, at least not by much.
Lately I've been thinking about buying an apartment in Kew Gardens, Queens (where I currently live). However, I have no experience or knowledge of real estate. There is a lot of information floating around and I've read some articles as well, but in this case I think it's best if I turn to forum members for their invaluable suggestions and knowledge.
I guess the question is Condos or Coops? I read the NYT article about the downside of condos in the current market, but I don't know if that necessarily means that coops are the answer.
Some more questions from your vast experience or knowledge of the matter:
1. What should be the combined income of a couple to be able to purchase an apartment for about $400K and live comfortably?
2. What is the minimum amount that should be saved in order to make payments more substantial and easier to bear. (I don't if this makes any sense)?
3. Is it good to buy during the current downturn? Or is it better to continue renting?
4. Do you think that the prices of apartments will drop in the next two years?
5. Is it better to wait for a couple of years and then buy?
6. Do you have any suggestions, tips or comments you wish you knew when you were looking to buy?
Don't buy in Queens now. Wait 2-3 years for market correction to kick in. Owners still expecting ridiculous prices idiot neighbors got during housing frenzy of past 5-10 years. Recommend you continue renting/saving during wait time.
In terms of the coop/condo question, you will have to do quite a bit more reading than just one article to really understand the ins and outs. There are a couple of threads on this site you could look at. I would also recommend the book "the NY Coop Bible." You may be able to get it out of the library and it will open your eyes to lots of issues.Things I wish I knew before buying a coop....
Two excellent posts from you and bluedog2, packed with information and great suggestions. I'll definitely get the book and I've started browsing through propertyshark, had no knowledge of its existence, but now I am hooked.
You brought up some points I've thought of. I've lived in a coop building where the management was absolutely atrocious, the property and the building looked great but the plumbing and courtyard maintenance was just freaky. The residents weren't very considerate and many of them were very frustrated with the board and the super. Since then the management has changed for the better and the building complex has improved.
I would classify myself (if I had to) as a classical liberal so naturally I am for less regulation and more individual freedom. Thus, a condo theoretically would suit me a lot better than a coop, but as you and others have mentioned it can be an unpleasant situation if the building is composed of people who are inconsiderate and insolent. I've had a previous experience with the board and they aren't always the best bunch either. That's why you're absolutely correct, it's very important to get to know the board and the neighbors, which is soooo difficult to do if you don't live there.
In terms of pre-war buildings, I used to be a great fan of them as well. I loved the space and high ceilings and practical floor plans, but beneath the service there is also a problem with those pre-war buildings. I think someone has mentioned before, if the building isn't properly maintained and wasn't converted into a coop with most residents as owners the property can severely deteriorate. Issues such as outlets, bad plumbing, plaster problems, cracks and mold are some of the problems in older building. Newer constructions (depending on the building of course) are more sturdy, reliable and have better architecture overall. All of this of course can be interpreted as a subjective experience.
What concerns condos, there are two concerns for me 1. cost and 2. neighbors. Otherwise it's a better option, I suppose. Based on that, I think I'll probably do what you did, purchase a coop. So is there a way to find out about the board or the management aside from knowing someone in the building?
I don't know, sometimes I really think that it would be just better to rent. It's such a hassle to buy. It's also a hassle to be a landlord, speaking to several people who are landlords it's a very stressful venture to get into. Yes, it's good income and it's a reliable asset but it's such a pain in the neck. A long time I used to think that it would be so great to own, because after you've paid off your home you can just stop paying for your shelter. No such luck, people still continue paying over $2Gs for taxes and other financial elements (for houses) plus you have to take care of the house, lots of maintenance expenses. Then there are the apartments, you have to continuously pay for maintenance fees and if you get a coop you have to put up with others placing restrictions on you.
However if you don't own anything, you are considered to be an incomplete member of this society, also you don't have much say in your living conditions.
I think this is a very circular argument....Egh, my head is spinning from this excessive analysis.
Nevertheless, Henna thanks so much, excellent post!
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So is there a way to find out about the board or the management aside from knowing someone in the building? 
