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Please provide your thoughts and advice on matter of rent versus buy based on my special case.
I am 33 yrs old and live in a rent stabilized apartment at Spanish Harlem, New York. I pay $780 for 2 bedroom apartment. The apartment is decent looking, with few problems like no sink in the bathroom, and bed bug problems. Two years ago, I had an exterminator come to do the treatment for it. The problem was gone. However, recently bed bugs returned.
While living at this apartment, there is convenience to stores, banks and trains. Furthermore,I get to save close to 45k a year. I am wondering if i should leave this apartment due to the bed bugs and buy a coop for 200k or stay and continue saving money. I have 55k in savings and 38k in stocks and mutual funds.
Financially speaking, I believe living in this apartment would be smart. But I also feel like it would be smart to buy a coop. I am confused and stuck about which is smarter of the two.
Another path, I considered is to continue staying in this apartment, save upto 250k and then buy the coop with full cash.
Note: I work one full-time job and second part-time job. I am very frugal.
Do you plan to purchase in the same neighborhood or somewhere else in Manhattan? I bought a co-op in 2005 for $290,000 cash and it is much smaller than a two bedroom.
Also, my maintanence is slightly under what your total rent is and for a full service building with strong financials I am fairly happy with that amount. It is certainly something to consider in your equation as well.
399083453: Renting will continue to go up and it is money that goes to landlord. so I figure buying a coop is not only an investment with equity potential but maintenance that can be lower than rent. Plus, Riverdale is safe and quiet neighborhood. you are right bed bugs can be in any place. if i were to move, i wouldn't take any of my furniture.
Maintenance at coops will only go up, so you will be paying a mortgage and maintenance. At $780 stabilized rent per month, I would rent and keep the difference.
Shamrock: thank you. were you advised against paying full cash?
1 full bed room with Junior 4 with maintenance less than 850
No. When I purchased the market was on the upswing with easy financing in a seller's market. I lost out on several offers due to the bidding up of prices and sellers who had the choice of several full ask or above offers and went with all cash deals.
So, I narrowed down my choices and square footage and put in an all cash offer for a co-op in Midtown East. I had been living in a rent controlled 2 bedroom Mitchell-Lama apartment in Tribeca.
Last edited by shamrockfisher; 07-18-2013 at 09:14 PM..
Maintenance at coops will only go up, so you will be paying a mortgage and maintenance. At $780 stabilized rent per month, I would rent and keep the difference.
Maintenance will go up over time, therefore, the financials of the building and the strength of the co-op board is important. A good realtor can help you with this info. In my building, there is a parking garage that generates revenue as well as a Gristedes that helps maintain costs. I have had negligible increases in 8 years but raises nontheless.
If you are able to not have a mortgage you will be able to keep your monthly outlay within the same ballpark. Of course, that is money you may instead use elsewhere either on investments/retirement accounts or investment real estate.
Do you like your neighborhood or would you prefer to live elsewhere?
shamrockfisher: I perused few coops in Manhattan and realized the price was out off my reach. also the square foot is too small compared to Riverdale. My Realtor has shown me Riverdale coop that have excellent finance.
my mortgage banker is against paying full cash and i couldn't understand why he was adamant about it 'till yesterday when i read that it would be wise to put your money in elsewhere like stocks with potential to earn 10% +/- as opposed to taking out a loan with 5% interest. this echos what you are saying. I guess the perfect scenario is having money elsewhere and more left over to be able to pay in full cash.
In 2005, i believe the mortgage interest was high so I can see the necessity and benefit of paying full cash.
Last edited by nytenant; 07-18-2013 at 10:01 PM..
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coop location- Riverdale
