Where would you buy in the nyc area for under $350k

What kind of lifestyle do you want? Do you mind driving or sitting on a train for awhile to get to town (if not, Riverdale, Queens), or do you want to walk everywhere (Bklyn). What do you want around you in terms of amenities?

why not rent for a year or two and then your $350k might buy you a larger place or in Manhattan

"why not rent for a year or two and then your $350k might buy you a larger place or in Manhattan"

Can you guarantee it?
No one knows what tomorrow will hold.

small one br coops can be had for that price right now. hopefully they keep goin down

Lincoln Square have large alcove studios for under $350k...you can get one now for about $290k.

there are close to 400 listings between 100K and 300K

We found 392 listings for between $100,000.00 and $300,000.00
Median price: $270,000 Median size: 500 ft² Median price per ft²: $478
Information on Manhattan

Of course you'd have to weed out the ones that are not occupied by rent controlled tenants, or 1/4 1/2 share ownership types of listings. The majority will be coops.

The under 500K apartments will take longer for the price drops I think. There is just a larger pool of competition.

I'm young, work and live in financial district right now. I don't like the neighborhood of financial district other than being close to subways and work. I've been saving for about a year by only paying $850 in rent. I also have some cash saved up. I have good credit and I'm interested in taking advantage of the interest rates, first time home buyer credit and some of the tax abatements and finaciing options on some of the new condo developments. I don't want to have a more than 30 min commute and don't want to get a car for now. I wouldn't mind a commute of slightly longer if it was mainly all subway and the neighborhood was desirable. Also I don't want to pay a ridiculous amount in common charges.

thank you everyone for your input so far

"Lincoln Square have large alcove studios for under $350k...you can get one now for about $290k."

These would be coops with high common charges right?

steve...that is right..co-ops with high carrying costs. The fact is that the price of studios and one bedrooms remain stubbornly high. I remember the days when it was hard to sell a studio because nobody wanted them. That was way back in 2001. Save your money for now, and buy a 2 Bedroom in another few years, when interest rates are high and prices are low, you will do far better in the long run.

Check out Jersey City. PATH to WTC. A waterfront filled with distressed condos that feels a bit like LIC, but when you travel further in, instead of becoming desolate you have blocks that feel like brownstone Brooklyn. Liberty State Park is wonderful. Newport Marina is right there if you think you might have a future interest in boating. I'm not considering the outer boroughs, but it I was I'd add JC to the mix.

Lincoln Square has a number of bldgs. with individual Boards so the monthly costs vary...i saw some bldgs. in the $700 range and others higher...but the apartments are very large and includes electric and basic cable.

There's quite a bit of inventory out there in your range. You should probably type up what you need, would like, and don't want in a neighborhood, then figure out which neighborhoods fit your interests best. If you're young and single and need to be relatively close to the FD, maybe stick with Brooklyn, Hoboken, Kips Bay/Murray Hill, or even LIC.

Agre with Julia, ccs are a bit high in Lincoln Center, but not as high as they look at first glance because other monthly costs (cable, electric, some might even include gas) are folded in.

The way I see it, I could actually be in the same or better situation 2 years from now if I buy as opposed to renting. Maybe I am being too optimistic, but I have calculated that it would be possible to buy a one bedroom in Brooklyn, split it into 2 bedrooms, rent one out and keep my monthly expense to what I could be paying in rent. Lenders won't even consider lending more than you could 'afford' to pay in rent on a monthly cost basis. So I could have roommates, pay $1250 per month and rent for 2 years or I could have roommates, pay $1250 per month and purchase ($1250 as just an example and assuming that I would never pay the maximum I could 'afford' to pay in rent). While paying the $1250 or so toward my mortgage and collecting rent, I would also be maxing my 401k, deducting the interest paid on my mortgage from my taxes and receiving another $8000 tax credit in my first year. This would result in not really owing much in taxes at all, at least in the first year. To me it seems a bit too good to be true, but this has been my thought process recently. Tell me where I am wrong, please.

"Can you guarantee it?
No one knows what tomorrow will hold."

Who needs a guarantee? The poster said *might*... and could easily be worth renting just to see what happens. A fairly low risk proposition.

And if you need a guarantee to make a RE decision, then why did everyone buy in the bubble?

Steve, that formula works in a go-go economy. In today's economy, there are far fewer people interested in renting rooms from owners, and they (and their parents) have less to give. There are also far more people who expected NOT to have roommates, who have found that they need to rent rooms out in their apartments to make things work. It's a losing formula.

A winning formula is continuing to pay $850 in rent, and saving the difference, while watching the sales market collapse as it always does in NY, lagging the nation by a couple of years. The beauty part is that once in plummets, it just sits there for a few years doing nothing much, so there's no rush to buy.

don't buy anything if you must have roommate income to make it work
for your price range you have many options outside Manhattan, so you might want to just ride this out and see if prime Manhattan comes down to your range, if that's what makes you happiest - if you don't buy now, you're not missing anything

Location, Location, Location.

Here you go:

http://www.streeteasy.com/nyc/sale/364491-coop-10-west-15th-street-chelsea-new-york

Offer $335,000. Or a lot less next year.

Renting out a room would not be necessary for me to afford it (the bank doesn't allow this) it would just offer a buffer and allow me to save. I'm still not convinced that if I want or was going to have roommates anyway why this would not be a good idea. No one can time the market, so saying 'just save now and buy later because we have not hit a bottom yet' doesn't seem like the best option either. I agree that location is key. Maybe I am wrong, but it seems to me that Williamsburg in Brooklyn, for example has a lot of young people that want to rent and don't mind paying a slight premium in rent for the location.

Again thank you everyone for your input so far

" I'm interested in taking advantage of the...tax abatements...on some of the new condo developments."

Steve, be careful with tax abatements. They sound great when you are figuring your monthly payments. But what happens when the abatement start to ramp down? Make sure that you can pay the higher charges. Even more important, the loss of the abatement will negatively impact the value of the condo in the future.

ord, that is an interesting point. Do tax abatements typically have a fixed time period and impact or can they change from year to year as you suggested by saying it could ramp down?

"A winning formula is continuing to pay $850 in rent, and saving the difference, while watching the sales market collapse as it always does in NY, lagging the nation by a couple of years. The beauty part is that once in plummets, it just sits there for a few years doing nothing much, so there's no rush to buy."

Agreed.

Abatements are usually for limited time periods. I'm not an expert, but I know they generally last for a limited period of time with the abatement reducing each year. One result of this is that the price of the apartment is artificially propped by the initially low taxes which mostly benefits the developer. Noah at Urban Digs warns against them: http://www.urbandigs.com/2007/04/biggest_scam_in.html

1 bedroom in Astoria. Steps to subway, 10 min to Midtown Manhattan.
Condo, 24 doorman, gym, souna, garage (extra $200 per month),
Apartment - large 1 bedroom with huge balcony. Manhattan slyline view. Dishwasher, washer/dryer in the apartment. $335K CC-$335 Tax -$163

2bedroom, 2 baths - $550K

elena
(broker)

get a brand new condo for $339,000 in East Harlem. 4 blocks from the # 6 train and soon to be home to Target and Costco. Tesoro Condo 317 East 111th Street.

So some of the suggestions posted so far have been Jersey City, Williamsburg, Astoria, Hoboken, Riverdale, LIC, East Harlem or wait it out for more desirable areas in Manhattan. If you could rank these choices what would they be. Again, I am young, single and want to be within a 30 min commute of financial district.

As far as the risk in increase of monthly expenses if the tax abatement goes away or winds down, I guess that is a risk I will have to consider. I think I am being relatively conservative, however, because when I am looking at the monthly expenses, I am only considering my base salary without any anticipation of raises or bonus.

Area
Astoria -- I'd rather be dead
Riverdale -- You'd have to pay me
LIC -- the poor man's Jersey City
East Harlem -- might as well live in Detroit
Jersey City -- only if you love the smell of curry in your building
Hoboken -- Only if you're 25, single, grew up in Livingston, and think Belmar rocks
Williamsburg -- the poor man's Nolita
UNION SQUARE -- where do I sign?

West34, that was a solid post, but it doesn't help me much. Someone needs to do a better job at convincing me to stop being so anti-rent. I agree that you are not throwing your money away if you rent a place well below what the formulas tell you would be affordable for your income and use the difference to save. But once you convince yourself that renting will be better it is easy to fall into the trap of renting a nicer apartment and paying more and thus not saving.

Steve -- dont be anti-rent. It's the way to go right now as condo and coop prices drop. Apartments will start going "on sale" as the year progresses and into next year. Read Julia's long thread for all the reason's why. If I was young and single, I'd live in Murray Hill.

Steve - rent a studio in the east 30s for 1800. Then go to El Rio Grande frquently and buy frozen margaritas for the cuties. You will kill two birds with one stone. One is increase your savings. The other you can guess.

I don't think the young kids call them "birds" anymore.

frozen margariatas...yes!!

He's only paying $850 now; why spend the extra $950?

yeah steve - are you in a share now, or renting a broom closet in an office building?

Yes, I'm in a share in financial district right now. I don't mind roommates and actually prefer them at this point.

Steve, on another thread you stated that you're one year out of college and work for a large financial services firm.

You're the poster child for "don't buy now". You need flexibility: pursuit of MBA, discovery that you don't like living in NY, cooperative relocation with a significant other, transfer to London (or wherever) and (sorry to have to say so) the possibility that you won't make it up the up-or-out pyramid. And don't count on being able to rent out a condo ... if it's even permitted indefinitely (not a given, and changeable), it's a potential headache that you don't want to deal with, especially if you happen to live out of town.

Also, have you considered the transaction costs of buying and again of selling? They're daunting in anything but a skyrocketing market.

Ok, then here is my revised advice -- rent a one bedroom in Murray Hill for $2200 and share it with a roommate. Give him the bedroom and you sleep on a pullout in the livingroom. That keeps your rent under $1000. Now go to El Rio Grande, buy the frozen margaritas, and just remember to go to HER place when you leave!

It is true that I am one year out of college and just starting into the corporate finance world, but my background is more entrepreneurial. I'm interested in investing in real estate for the long term. I ran a couple of successful seasonal small businesses while in school and was able to pay my tuition without taking out any loans, start and max a roth ira from 18 on and also buy a rental property in my college town following my junior year. Of course there were risks involved with what I did and will be risks to consider for the future, but I don't see myself as the poster child for not buying. On the other hand your advice makes sense and these are all things I will consider.

Regarding renting out the condo down the road, what would be an example of regulations disallowing this? Clearly I would look for buildings/properties that seemed favorable for this.

steve_cummings: you may want to consider this book for helpful info on buying coops & condos in NYC: Sylvia Shapiro's "New York Coop Bible".

thanks tandare, I will look into it

you said you would get a one bedroom and split it into two bedrooms...where are you going to find a one bedroom big enough to split for under $350k in a condo?

Curious: Are you currently 4-up in a 2BR?

Julia- I guess that is why I started this thread. I see some listings in Williamsburg that would potentially work, but after seeing some of the opinions on Williamsburg I'm not so sure (I am getting a general consensus that it is overpriced, but what are people considering not overpriced right now?)

Alanhart- even better/worse, original 1 bedroom that was split up. The whole place can't be any bigger than 800 sq. ft. I guess it all depends on what you’re comparing it to. When I first moved up here full time I rented a 60 sq ft room in Chinatown for $750 (part of a 4 bedroom apt). I guess I got ripped off b/c I was new to the area, but at the time it was one of the only shares on CL close to financial district for under $1000/mo. I stayed there for about 5 months, saved a lot of money and then found the share in financial district which is a 'luxury' building, so to me much better than a 4 bedroom with one bathroom, no bathroom sink, roaches, etc. I also walked 30 min. each way to work.

steve, a fair amount of Williamsburg is overpriced in my opinion, though each building and unit will vary to a degree (for instance, there's a 1BR resale at Northside Piers that looks like a potentially decent deal), and negotiation is always a bit of a gray area until you actually deal with the brokers/sponsors firsthand. I wouldn't necessarily dismiss your plan out of hand, but it's something you need to sit down and seriously weight pros and cons for, not to mention $ and cents. alanhart makes a lot of good points, and unless you plan on hanging on to the place for a while, transaction costs are pretty substantial hits. Good luck!

"West34, that was a solid post, but it doesn't help me much. Someone needs to do a better job at convincing me to stop being so anti-rent. I agree that you are not throwing your money away if you rent a place well below what the formulas tell you would be affordable for your income and use the difference to save. But once you convince yourself that renting will be better it is easy to fall into the trap of renting a nicer apartment and paying more and thus not saving."

Its also easy to fall into the trap of upgrading what you own as well, not recognizing that a house you live in is not an investment either.... it costs you money.

> I'm interested in investing in real estate for the long term.

This might be your problem...

don't confuse investing in real estate with choosing where you live and how you will pay for it (unless you buy a multi-family unit).

These are *very* different things.

If you want to invest in RE and start small, try a REIT to start. Or aim to buy somewhere cheaper - new jersey perhaps. Putting that much of your capital into one illiquid investment that costs you money really isn't much of an investment.

bjw2103, thanks for the input. Any more details on the Northside Piers 1 BR?

nyc10022, I agree that simply buying a home shouldn't really be seen as a main investment strategy, but I'm considering buying a condo that I will be able to rent out in the future. I am looking for creative ways to do this and see the current market conditions and incentives for buyers as attractive. I am willing to make sacrfices on neighborhood/where I really would want to live in order to find a property most condusive to renting out in the future.

Isn't the proposition of buying a $350k condo and living in it for a few years while renting part of it out less risky than buying a rental property for say $150k to $200k in an un familiar market? My other option would be to buy another rental in the same area as my first. This is an area I am familiar with, but would still require about $300k.

Steve -

If you're interested in Williamsburg, there is a fairly interesting New York Magazine thread on the overdevelopment and bubble there... including some details about who has fire sales. They cover northside piers as well.

thanks nyc10022, I will check it out

You also might consider what neighborhoods you just plain *like* and would want to live in, day in, day out.

yes clearly it would be great to be able to make a good investment and also really like the area. My initial reaction to Williamsburg was that I really liked it. There seemed like there was so much to do as I walked around last Sunday, sharp contrast from walking around in my current neighborhood on a Sunday which usually involves giving tourists directions to the WTC gift shop.

but I do also really like the idea of my current 5 minute walking commute to and from work

"nyc10022, I agree that simply buying a home shouldn't really be seen as a main investment strategy, but I'm considering buying a condo that I will be able to rent out in the future."

Given capitalization rates, that too might not be a great strategy either in NYC. Even at current reduced prices, you're still talking about losing money doing this, likely for years to come.

"Isn't the proposition of buying a $350k condo and living in it for a few years while renting part of it out less risky than buying a rental property for say $150k to $200k in an un familiar market?"

Depends on how unfamiliar. But, if you're talking about most of your net worth (and actually sounds like its more than your net worth), putting $350k into one property in one location is as risky as it gets.

You don't get diversification in terms of asset classes, and you don't even get in in terms of specific assets (than say if you bought a few different stocks in case one goes bad).

This has been discussed over and over again, but unfortunately I think as "investments" go, you need to look elsewhere.

If you want to live somewhere, and you can afford it, and there is a nice bonus if you have some cash at the end, then that could be cool.

But I think you have to stop thinking of it as an investment.

Thats what got, oh, half the country, in trouble in recent years.

'Thats what got, oh, half the country, in trouble in recent years.'

Yeah I agree with you there, but you see I'm different (jk).

Williamsburg is falling down fast...you want your investment to grow and I doubt Wiliamsburg is the place...stick to Manhattan.

10 w 15 is a great building and a great location..with lowest maintenance in the city...you might want to check out studios there.

definitely an interesting nymag article, but condos still seem to be selling in the area at or near asking prices. Am I wrong?

The NY Mag article was a bit sensationalized, but overall a good bit of caution on getting too excited about Williamsburg. I love the neighborhood (and bought there), but there are some people who wanted/expected it to turn into Tribeca in 2 years' time. But julia's Manhattan-centrism aside, it can be the right place for you if you put the time in to really get to know the area. I don't see any appreciation in the near future - there's too much inventory to clear first - so if you have your heart set on buying here, you can certainly take your time, spread your bids around, and see who bites on a lowball. In my experience, someone will. Yes, others will buy at or near asking prices, but you don't have to be one of them. I say this in the context of buying a home for yourself - if you're looking at a pure investment, nyc10022 is right - there are much better places to put your money right now. If prices tumble considerably more and rents stay flat, look at cap rates again and maybe it'll be a no-brainer, but I don't see much of that currently, unless you find a truly distressed property on the cheap.

Thanks bjw. I do really like the neighborhood, so I will continue to research different properties and explore the area. Where are some of these other places you would put your money?

Any opinions on Park Slope vs. Williamsburg or any other neighborhoods with new condo developments that I might be able to pick up for under $350k. I went to an open house at 500 4th Ave recently. Seemed to be the better value when compared to other developments in Williamsburg. I also liked how it is close to a lot of subways and not far from financial district. I don't know what the deal is with the 10% off thing. I had an agent tell me that once the 10% off is finished, prices will 'go back to normal'..what does that mean? Also they are currently not negotiating on the closing costs to be factored into the offer.

i would buy this

http://www.streeteasy.com/nyc/sale/416589-coop-7-2nd-avenue-east-village-new-york

Well I'm looking for a condo, I know that limits me, especially at my price range, but I don't think I would ever buy a coop.

glamma, that maintenance fee is very tempting. But not the HDFC part, unfortunately.

"'Thats what got, oh, half the country, in trouble in recent years.'

Yeah I agree with you there, but you see I'm different (jk)."

So were they. ;-)

"I had an agent tell me that once the 10% off is finished, prices will 'go back to normal'..what does that mean? "

20% off.

;-)

Its a sales ploy, thats it. "You have to buy today, or you'll miss out!" Its been a clear lie for a couple years now.

I agree with you there nyc.

"definitely an interesting nymag article, but condos still seem to be selling in the area at or near asking prices. Am I wrong?"

I haven't seen anything go anywhere near original asking price in a WHILE. Where are you getting your data from? Tons of stuff with major discounts off asking.... and I'm sure there are contracts being signed well under even the reduced asking.

no real data, just my perception, which I am hoping is wrong

Yeah, Steve, I know I don't know you very well, but all my instincts point to the fact that you might need a good slap. (not in a mean way, a wake-up slap).

Sounds like you just really, really want things to be a certain way, and you're not really looking to see if the data supports it or not.]

There is plenty of data out there, and right now, short term stuff is all pointing down. And the historical data says to expect more of the same (there are no quick Vs in RE).

And then you need to do the whole rent/buy math thing.

Do the research for yourself, absolutely. But, you might want to REALLY think about your motivations and whats going on inside your head. I have this funny feeling you're fighting a bit of "wish" here.

you really know how to cut to the core of me nyc

WHOOPS didn't even see the HDFC part. sorry. also aren't 97% of all manhattan (owned) apartments coop? i thought it was only like 3% condo

steve_cummings, don't worry about nyc10022's comments. I don't think it's much of a stretch to find a pattern of "wishing" in his posts either. I do fully agree that you should determine for yourself what's best though. Good luck!

I love how everyone is so honest when a true lad comes around and asks for advice. In the recent go-go days of real estate, advice like that given by alanhart were all but shot down by egomaniac friends and family, real estate brokers, and even your typical new yorker. They would put you down quickly if one were to suggest renting vs. owning. Of course, there was that factor of "sorry, that you missed out on the 6 figure appreciation recorded in the last 12 months" but there was also the ego factor that I am right.

What I see here is a mystique growing by Mr Cummings about owning real estate. He probably has an itch to upgrade out of his 17 way share paying $850 per month, and enter real post college civilization. The only problem is that assuming he is looking for $350,000 pads, he needs a salary of $100,000 to really make it work, and have somewhat of a lifestyle. Not impossible in one of these financial firms, but still by no means a given anymore.

These days, 3.5-4x gross income to purchase price is very difficult to achieve for most people, which is why the not so special $1M + categories are so screwed. Young couple with newborn looking for an apartment with space to grow....hmmm $1000 psf x 1400 sf = $1.4M. Same young couple needs to make $400K per year. But most are probably taking $250K.

Here is the problem. Mr Cummings likely makes $50,000 - $75,000 per year which is fairly standard assuming he is in finance and one year out of undergraduate. At that rate he can afford between $175K and $300K. Now there are no real Manhattan condos out there for $300K that would be a major upgrade to his lifestyle, even in Williamsburg that is a studio at the moment.

lr10021, you are pretty much right on. In talking to lenders they were fairly consistent in that I could afford at most $300k, when factoring in your average RE taxes and common charges. Some of these condos have low common charges and virtually no taxes for 15 years so it makes it tempting because in this case I might be able to get approved for a bit more (one lender said $325k would be possible), which is why I started the thread for $350k and under. As I stated above, I live with roommates now, not quite 17, but close and I will likely have roommates for at least a couple more years. I know you can't count on a roommate paying you rent when looking if you could afford it or not, but even without a roommate I would be fine. Everything involves risk. At leaset I'm considering buying real estate and not day trading.

"I love how everyone is so honest when a true lad comes around and asks for advice. In the recent go-go days of real estate, advice like that given by alanhart were all but shot down by egomaniac friends and family, real estate brokers, and even your typical new yorker. They would put you down quickly if one were to suggest renting vs. owning. Of course, there was that factor of "sorry, that you missed out on the 6 figure appreciation recorded in the last 12 months" but there was also the ego factor that I am right."

I know, I know... and the funny part is, its the folks who were 100% WRONG who are still the ones complaining about the advice the most!

If anything, the folks who had logic and facts on their side should have been louder. Not sure if I could have screamed any more than I did, though.

But, yes, absolutely hillarious to see the complains from bulls now.

> you really know how to cut to the core of me nyc

Steve, sorry if you took that hard... but I look back and realized a few months back that I should have slapped a few more of my friends 2 years ago. I don't feel great when they tell me "I should have listened to you"; I just feel bad that I didn't say it louder.

"Everything involves risk. At leaset I'm considering buying real estate and not day trading."

Are you inferring that one is more or less risky than the other?

I figure taking your whole net worth and going 10x with it is risky no matter what you put it in.

tandare mentioned Sylvia Shapiro's "New York Coop Bible". That book is awesome with tons of info, assuming everything in there is accurate. There is condo info, but much less than co-op info. There's a very long free preview on google books.

If anyone is arguing that buying real estate and holding for 20+ years is as risky as day trading, I would have to disagree.

Has anyone really become wealthy without buying at least some real estate? My older brother is a modest small business owner and is very conservative when it comes to saving and personal finance. He still drives the same honda civic he bought for $5000 in college. On the other hand he has accumulated about 15 rental properties in a small college town. Granted, he built up this position during some of the 'boom' years and definitely was able to take advantage of some creative financing that would probably not be possible today, but who is to say that the market will never allow this again?

"If anyone is arguing that buying real estate and holding for 20+ years is as risky as day trading, I would have to disagree."

If you leverage it enough, sure it is... (and in those cases you won't get to own it for the 20 years).

"Has anyone really become wealthy without buying at least some real estate?"

Absolutely. Checked the Forbes billionaires list yet? And, a ton of people got rich despite it.

BTW, biggest names in RE... Trump, 3 bankruptcies. Zeckendorf, multiple bankruptcies. Reichmanns, bankrupt and never recovered.

"Has anyone really become wealthy without buying at least some real estate? My older brother is a modest small business owner and is very conservative when it comes to saving and personal finance. He still drives the same honda civic he bought for $5000 in college. On the other hand he has accumulated about 15 rental properties in a small college town. Granted, he built up this position during some of the 'boom' years and definitely was able to take advantage of some creative financing that would probably not be possible today, but who is to say that the market will never allow this again?"

Change a few words and you described a whole bunch of the folks who made money in tech stocks and then lost it.

Who is to say that tulips will never make folks rich again?
Who is to say that there won't be another tech bubble?

Yes, no one knows for sure.... but here is a fundamental truth about markets that waaaaaay too many folks have made the mistake on..

We have always recovered from bubbles, but the recovery almost never means a return to bubble prices in the asset class that went through the bubble.

At the top of a bubble, *everyone* in the asset class looks like a genius, and every purchase looks like a great one. Same thing for tulips or tech stocks.

I'm not talking big name celebrity million/billionaires, I'm talking about self made millionaire next door types. These are not the type of people who were speculating in Arizona, but chances are they own some rental properties.

I'm also going to assume your brother bought with a proper capitalization rate.

If you can get that, awesome.... thing is, you're just not getting that in NYC these days, and thats the point folks have made to you several times.

Its one of the golden rules of RE investing.... (and one that 99.9% of "investors" in NYC re in the last few years seem to have missed)

"I'm not talking big name celebrity million/billionaires, I'm talking about self made millionaire next door types. These are not the type of people who were speculating in Arizona, but chances are they own some rental properties."

You can come up with stories and anecdotes to justify and position you wish.

But, fact is, a TREMENDOUS amount of wealth has been lost in RE in the last few years, and while it is possible to make money from RE, those conditions seem to be far from here, in NYC.

As I said, capitalization rate. Without an understanding of it, you have no chance...

nyc10022, I definitely agree with you on that right now the cap rates for current investors, at least small time investors don't make any sense, well in Manhattan at least. But typically when someone is talking the real estate bubble and people who got caught and lost money, they are refering to the huge run up in prices, speculators, people looking to flip properties, etc. Buying for the long term and renting out is much different and less risky. And I know people have pointed out my flaws in this, but my view is or at least was about a week ago that if buying and renting out a condo would not generate positive cash flows right away and I will be otherwise paying rent anyway, why not use the money I would be paying in rent to cover the difference, live there for a few years with a roommate and move on. Of course I am taking the risk that all of the bears will be right and we will not see any appreciation of rents or home prices, but I am clearly more optimistic.

http://bestuff.com/images/images_of_stuff/210x600/asok-30649.jpg?1173266324

> Buying for the long term and renting out is much different and less risky.

Without leverage, agree.

With leverage, can be absolutely darn risky, even if you're not trying to flip. With enough leverage, its the quickest way to lose 100% of an investment (more so than day trading stocks, where losing 100% is hard to do even if you try).

Plus, there are multiple kinds of risk. There isn't just capital risk, there is interest rate risk.
Cash under your mattress for 20 years is absolutely risky.

In the same way, saying "well, I'll hold it for 20 years" has its challenges, even if you make a little. If you lose some, the time horizon doesn't save you, it can compound the problem.

And, then, when you bring leverage back into it, it can absolutely be risky.

Add in low capitalization.

That can be a recipe for disaster.

This is NOT saying "real estate never makes sense". This is just saying, now in NYC in 2009 logically doesn't make a whole lot of sense.

and, steve, someone just posted this...

http://curbed.com/archives/2009/07/30/three_cents_worth_sales_v_rentalsratio_this.php#more

Again, you have to go by the data and research. Yes, somebody at some point (and probably lots) made money buy buying X at a certain time. That doesn't mean that now is the time for similar returns. Maybe its NYC in 2 years, who knows.

But think of the problem with evaluating investments and investors at the top of the tech bubble....

these are all good points nyc. These are the things I think of also, but try to rationalize. right now I'm leaning toward waiting it out 6 months, saving as much as possible, thinking to my self I could buy at any time, worst case scenario I will just have a lot of cash after that time. What is tempting though and why I keep going back and forth is that with a roommate (set aside what I could 'afford' in rent for a moment, which I would never pay, but what brokers think I should pay) my monthly cost after buying could be as low as or lower than $850. I'm also assuming I would be taking advantage of one of these condos having FHA available. I think, although more leveraged that putting out 20% down right now might be more risky than just holding on to what you would be putting into a down payment and taking the low interest fixed term loan. With the same monthly cost, I could be saving as much per month as I would be while paying rent.

> but try to rationalize.

To make proper decisions, you don't take the data and then use it to rationalize the decision you want to make... you should aim to be objective with it as much as you can.

"right now I'm leaning toward waiting it out 6 months, saving as much as possible, thinking to my self I could buy at any time, worst case scenario I will just have a lot of cash after that time"

I think THAT is some great perspective.

"What is tempting though and why I keep going back and forth is that with a roommate (set aside what I could 'afford' in rent for a moment, which I would never pay, but what brokers think I should pay) my monthly cost after buying could be as low as or lower than $850."

Maybe thats your challenge, you're trying to balance the living with the investment part, and it doesn't always fit.

That being said, we've looked at tons of examples on this board, and renting keeps winning. If you can rent something cheaper than the cost of buying (very doable), why not do the same thing you'd do with finding a rooommate?

Also, you have to factor in the cost of the down payment. Having a slightly lower monthly payment may not be worth having to put cash down.

Funny thing is, your suggestion of renting a nicer place on my own and then getting a roommate to pay some to put my monthly cost at maybe even lower than $850 is a great idea and I haven't really thought of it. Right now I have $850 locked in for another year, but I'm not on the lease and can move out at any time with ample notice, maybe I should start a new thread: 'most desirable area to rent for under $1850'

That will be $100.
;-)

Seriously, all you have to to is separate the two "interests" of yours a little better, that way you can balance them out.

SC, you may want to lowball this unit: 230 Riverside Dr, 7G. It's a fully and beautifully gut renovated prewar condo studio that has been on the market a while. The owner also tried renting it out previously but either didn't get their price or had a chance of heart. They bought for the low 400s in January 2007, and financed with a mortgage below 350k. So if their revised goal is to just get out of the mortgage, a 350k bid will accomplish that. While the unit is smaller than you may want, it has solid fundamentals. Decent view of Riverside Park and river and very low monthlies. Adjacent to the park, Hudson River Path, tennis courts, 91st St Garden and Esplanade. Also, steps to soon to be renovated express subway station. Not far from soon to open Whole Foods. 12 minutes to Times Square (to transfer anywhere), 18 minutes to West Village and 30 minutes to Financial District via express subway.

Lowball, lowball!

(yes, and something 30% below market can always change the economics dramatically)

NYC, a 20 percent discount from January 2007 price is not far off "market" in my opinion. An asking price does not define a "market" price in this case, which is why it hasn't sold.

And I was pointing out a recent buyer turned seller that may be motivated for a price that pays their mortgage--not exactly pie in the sky logic.

pmg, you saw lowball.... so I figure getting the ADDITIONAL discount off that.