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Hello fellow New York StreetEasy-ers -- long-time reader, first-time poster!
I'm an expat New Yorker in Tokyo who's thinking about heading back to the city in two or three years or so. I'd love to buy my future apartment right now, rent it out until I'm ready to go back, and then occupy it myself.
It'll be just me, probably my future wife, and possibly (hopefully!) one kid, so we're happy to stick with the small dimensions that we're used to. She and I occupy 400 ft^2 and might want a little more space, but not too much more. (Our neighbors are raising *two* teenage daughters in a space of the same size -- more power to them!)
If we go back to the US, it has to be NYC and preferably as centrally as possible. We both have minor visual impairments that prevent us from ever driving a car, so we need to have everything within walking/cycling/subway distance and are perfectly willing to make the sacrifices space-wise so that that can happen. (We also don't want, years from now, to have a kid who asks why all his friends' parents have cars except us.) I'm seeing 1BRs even in Manhattan in the sub-$400k range, with good price-to-rent ratios.
I work in finance and make about $65-70k, with about $100k saved. I also own the apartment we live in now, so my only expenses every month are common charges ($150; buildings are disposable here) and property tax ($25 per month; no, there's no zero missing). Income taxes are lower here, so I could pack away $2-3k per month easily if I set my mind to it.
Rather than have that money sitting on the sidelines getting 0.1% from the banks, or at risk in the stock market, I want to get a head start on the future and buy the NY home that we'll eventually live in.
How realistic is this? I still have my US bank account and credit rating, have filed US taxes every year I've been gone, and go back to the US several times a year. Has anyone done anything like this?
Or should I just keep saving until I've got more cash? I know that some folks look down on $100k in savings like it smells bad, but it's what I've got so far -- and it's on the way up every single month. I'd really hate to see inflation eat away at the savings that I worked so hard to earn.
Bumping my own thread as I just realized that when I posted it, because SE holds new users' posts for a while, it wasn't visible to anybody... anybody want to comment on my situation?
You'll need a condo, most coops do not allow a "foreign" owner, and the vast majority will not allow liberal renting.
Now is as good a time as any, prices will probably be higher in 3-4 years. But maintenance and taxes will probably be at least $600- $1000 a month (and higher every year).
Go for a 1 bedroom, a studio will not get as much rent.
I would prefer a condo and are you willing to rent/buy in Harlem or Hamilton Heights.
You could do more damage there.
$100K is barely enough for a down payment on a one-bedroom in Manhattan (and I've said before I would never recommend *buying* anything smaller than a two-bedroom).
If you were making at least twice what you currently are, with twice the savings, I'd say this might be a good move. But at your income level with barely enough for a decent down-payment, "investing" in real estate is out of your reach at this point.
Also don't be ashamed of 100K, don't let some jerkoff on here tell you different.
Also if you hate inflation, try TIPS
@Needsadvice and Truth - I guess I'm "foreign", huh? I was very careful to maintain all my ties to the US -- my family's address in the suburbs is still my "home", technically -- and have a savings account there. My credit rating isi pretty good, too, because I hardly ever use my American CCs. Only my income comes from overseas. If I moved back and then tried to get into a co-op, would the board balk if I didn't have several consecutive years of domestic income? I have no desire to rent for a few years even after coming back!
@Matt - If I had twice the income I've got now, my savings wouldn't be double; they'd be three or four times what they are now; I'd continue to live as I always have and bank the rest.
People in NYC get paid a bit more for doing work like mine, but taxes are higher, so I suspect that I take home what someone making $80k or so takes home. I'm also treating my wife's income as zero for this exercise. With me not having to pay any rent now, and being able to rely on income from the future renter of my current condo, I feel richer than an "average" $65k-earner, for what that's worth.
@Consigliere - I suspect that Harlem would be a little scary for the Mrs., who is used to Japan-like levels of public safety. (Then again, she expressed a desire to live in Alphabet City based on a comic-book series she once read, so who knows?) And molto grazie on the TIPS recommendation. I might put some of the money into those; I was also looking at municipal bonds. If the US follows Japan's trajectory of many years of mild deflation in a low-interest-rate sluggish economy, my problems are solved, but if inflation perks up, I'll have to find some outlet for the money.
I suspect that the dollar is going to pick up some ground against the yen in the next few years, which will drop my $70k income down to $60k or maybe less. Now's the time to move that savings into dollars and get it to work for me.
Triple_Zero please note that I am not a broker, I don't have any bias in what I am about to say. I don't know if purchasing a property is the best thing to do (Based on your concerns) but here are my thoughts on Harlem.
I assume you would look at any property before purchasing. Take several looks around the city at places like Harlem, it is pretty different from what your probably thinking in your head.
Harlem has changed quite a bit. I think there is good value on a 2BR Condo as an investor up there if you find the right place. You can rent it out too if you want.
For a time I considered buying in Harlem - prices are super low but the problem is not the prices - it is the high asthma rates!
For our triple zero friend here, I would not recommend raising a family up in Harlem! My friend's kids developed apnea when they moved in their brownstone in East Harlem!
John75, you think there is problems with the air in Harlem?
Not sure if serious.
A lot of articles on this issue - you cannot help but think about it if you have kids or plan to have kids and move to harlem:
"For a time I considered buying in Harlem - prices are super low but the problem is not the prices - it is the high asthma rates!"
That's because of the high concentration of low-income families living in roach-infested housing.
Cockroaches are a prime cause of asthma in inner-city children.
NYC Matt: Washington Heights is not much better than Harlem - just FYI...it's still poorville...
"After measuring environmental conditions in the homes of all subjects, the study found correlations between mouse and cockroach allergen exposure and the onset or exacerbation of asthma symptoms. Children who had four or more episodes of wheezing correlated with higher rates of pest allergens. The study also identified possible correlations between local sources of diesel particulates and rates of asthma symptoms."
Interesting...I think new construction may avoid some of these problems.
It's a matter of poor air quality too: “As we continue to formulate strategies for improving air quality in a community that has long suffered disproportionately from air pollution, we welcome this walk-in center to the neighborhood as a breath of fresh air for the many families who need assistance preventing, managing and treating this condition,” said Senator Serrano.
With some of the highest asthma rates among children in the country and eight public schools that burn the dirtiest type of heating oil, a city plan to phase out the pollutant should begin in Central Harlem, Community Board 10 said.
“Because of the adverse affects of asthma in Central Harlem we should be first,” said CB 10 chair W. Franc Perry.
Perry cited the black smoke billowing from Harriet Tubman elementary school on West 127th streets between Adam Clayton Powell Jr. Boulevard and Frederick Douglass Boulevard.
“The black smoke comes out first thing in the morning,” said Perry.
Under Mayor Michael Bloomberg’s PlaNYC, boilers that burn heating oils No.4 and No.6, which emit black soot that increases asthma, heart attacks and premature deaths, would be phased out by 2030.
Boilers using the dirtiest form of oil, No. 6, must switch to a lower sulfur form of No. 4. By 2030, even No. 4 would be phased out in favor of cleaner alternatives.
The year 2030 is nowhere near so my advice to Triple Zero is to look for an apartment below 96th street....
Senator Serrano, where did they get their medical degree?
Do parents in Harlem smoke?
Do kids get raised more unhealthy (obesity, poor nutrition etc.) in Harlem?
Do they have asthma before they attend these schools?
What about new construction?
I have to imagine the air in ALL of Manhattan (even south of 96th) is pretty bad compared to the suburbs. I live in Manhattan and can't imagine living between the FDR and West Side Highways is any better.
Survey says, Manhattan is bad in general.
"The study, which used data from summer 2009, showed Manhattan to have the worst air quality, especially in areas lots of skyscrapers like Midtown and lower Manhattan."
I'm pretty sure you won't be finding a coop or condo that you can buy and the rental income will cover all your costs. That's kind of the issue with NYC... Where are you looking at that the buy/rent ratio looks good? Do you mean the ratio looks good **if you live in the apartment for X years**? If that's the case, realistically do you plan on raising (for the sake of argument) an American child in a ~600sqft 1 bedroom all the way through high school? Not sure if it'll work out, so in that case when would you upgrade? Either way, wouldyou be sending your child to public or private school? That will determine the premium vs. an otherwise identical apartment in a bad school zone. Notwithstanding the above, just the carry costs (maintenance taxes) can be over $1k/month. Can you still live your std of living and responsibly save as well? You're probably not used to a carry cost that big.
For my Brooklyn Heights coop 1bedroom 700sqft the monthly total cost of mortgage carry cost is $2275 @4% interest on a 30 year mortgage with 20% down. It is a great neighborhood with much better access to the city than many places in Manhattan itself, but is still priced at a discount to many of those Manhattan neighborhoods because it is in BK. My point is if my costs are easily in your means, then you should be ok. But I do make a bit more than you, so take a very careful look at your situation. And remember 99% chance you'll bleed $$$ while you rent out. Not to mention you'd have to go condo, which may cost more for the same apt.
@Truth - Indeed, New Jersey air smells decent when compared to Tokyo! My bicycle tires are covered in a layer of black soot, thanks to the automobiles that are everywhere and the lack of bicycle lanes, that never goes away. It's no fun breathing in their exhaust all the time!
@Saiyar1 - Brooklyn Heights is actually the first place I started looking -- plenty of 1BRs in the mid-to-high $200s that seem to fit; only a few stops from lower Manhattan -- and when judging affordability I was basically just estimating the ratio of selling price to [monthly rent + maintenance], which, if around 150 or under, indicates a potential buy. My current condo has a ratio of about 120, which made buying it a no-brainer. I've never regretted this purchase.
School districts would be the next thing to look at, and I have to admit that we might not have a kid at all; the odds aren't exactly getting better at our age. If it does end up being just the two of us, 600 sf would be on the spacious side, and the 400 we now have would be fine. Even in New York you don't see too many 400-sf 1BRs; they're studios (and we'd be wanting to put a wall in). In Tokyo anything over 30 m^2 (about 300 ft^2) generally is divided into a living room and a bedroom.
I guess I feel richer than I am because my current condo, which is in agreat neighborhood, could sell for up to $150k, and if I sold it and moved back today, I'd have $250k in the bank and no debts. Even on a $350k purchase I'd only have to borrow $100k, which is less than two years' salary. It's a great income-producing asset and I don't want to sell it. I'm sure co-op boards don't value such assets highly, but if I'm buying a NY condo, I'd rather rent out this Tokyo condo and put its income toward my future mortgage. An unmanageable $2500 monthly payment becomes a very manageable $1500 payment if I can even get $1k per month from it.
Oops; I meant bicycle tire rims, not bicycle tires; you wouldn't be able to see the soot on the tires. The rims, the spokes -- covered in ugly filth. The air quality on the ground in Tokyo is terrible -- but it improves if you go up a few floors. Sounds like in Harlem it's the opposite, with the pollution cmoing out of high smokestacks.
"You don't have the option of losing and moving back in with your parents."
Actually, the result of "losing" would be to have to move back to Tokyo and live with *her* elderly parents. Not too many stronger incentives to avoid losing!
It would take some doing to sell me on Harlem as I've never spent any time there. All the neighborhoods I know are below the 70s and in westernmost Brooklyn. I'm not interested in gambling on an unfamiliar neighborhood that I might discover is unpleasant to be stuck in for several years. I see RE as a fundamentally conservative and safe investment -- you know your expenses and you know what you're getting out of it, for the most part, and the RE investment I made when buying my current place has performed exactly as expected. I want my next venture to go the same way.
What did you think of Tokyo? The city may be fast-paced, but the slow-moving, cell-phone-scrutinizing people who bobble around the sidewalks at excruciating slowness certainly aren't! I always enjoy the moment, returning to the city and getting off the train at Penn Station, of stepping onto the street and getting back into walking at the high speed -- the correct speed -- that New Yorkers walk at!
Triple Zero that is Bull Shit about the Air Polution in Harlem. Read the actual studies above.
If you notice on the picture here
That Harlem is actually CLEANER than the rest of Manhattan.
It is lighter above the park (where Harlem is) that the rest of the city.
Triple: you mentioned East Village. You might qualify for an HFDC/similar co-op. I've seen a few small 2-brs/1baths for under 350k. Walkup, low maintenance. But you can't buy as a non-resident. So why don't you wait until you move back - I don't think HFDC prices are going to spike in the next few years.
As for schools, if you have one child, parochial schools are inexpensive. There are also charter schools, if you are able to tolerate the politics.
@NYC10023 - That one on E. 3rd is one of the ones we spotted when we first started checking out listings on SE! As you mentioned, I'd have to already have moved back to get into that one.
We also like the area stretching from Union Square (and the glorious Strand Bookstore at Broadway & 12th) up through Gramercy and Kips Bay to Murray Hill. Murray Hill in particular used to be pleasantly dull and quiet but still right in the middle of things.
Let me post some of the other ones I was eyeballing. Hopefully prices stay at these levels when it comes time to buy!
http://streeteasy.com/nyc/sale/647938-coop-323-east-21st-street-gramercy-park-new-york (Maintenance is on the high side with this one but we love all that floor space and the fact that it's a duplex. It's a co-op, though. And they raised the price $10k despite it not selling.)
http://streeteasy.com/nyc/sale/574841-coop-215-east-24th-street-kips-bay-new-york (Lots of price cuts on this one and now someone is in contract at $300k. Top floor; plenty of space. This is a huge building and there always seem to be openings.)
SE doesn't want too many links in one post, so here's the second half:
http://streeteasy.com/nyc/sale/634750-coop-39a-gramercy-park-north-gramercy-park-new-york (What's the opposite of a price chopper? A "price stacker"? This seller raised the price from an I-might-be-interested $299k to a forget-about-it $425k. Has a below-market renter in it; if they planned to leave at the right time a situation like this one is fine with us)
http://streeteasy.com/nyc/sale/682219-coop-628-east-14th-street-east-village-new-york (No photos or floor plan in the listing, but the numbers look OK. A little too far east, but that's reflected in the price.)