Here We Go.....Do we RENT or BUY.....CNBC Video...!

Um ... OK ... so like, just tune in or something?

NYCMatt:

Did you watch the video? For me, the information coming from the owner of the Real Deal is priceless....!

Um, what video??

So Sorry NYCMatt:

Here we Go...!

http://therealdeal.com/newyork/articles/when-to-rent-and-when-to-buy-according-to-spencer-rascoff-and-amir-korangy-on-cnbc

http://www.cnbc.com/id/15840232?video=1222279426&play=1

Again, the decision to rent versus buy a HOME is multi-faceted, and boiling it down to whether the timing is right FINANCIALLY is a flawed strategy right off the start.

Your primary home is NOT to be considered an investment. It's a place to LIVE. Will you make money in the short run if you sell, versus whether you could have rented for less during that same time period? The answer is different for every buyer, renter, and home.

And there are non-financial variables involved in this decision, including the ability to just pick up and move on a moment's notice versus the peace of mind one has when not having to answer to a landlord.

Seriously. There is no more of a one-size-fits-all answer to rent versus buy than there is a one-size fits-all answer to whether you should wear green on Thursdays.

why would anybody that can rent buy now as prime homeowners are just beginning to default? those nice houses are gonna go into auction within few years.

At these price levels and rent/buy ratio vis a vis historical ratios and any other metric, a primary 'home' ceased to be so 6 years ago. So if you ended up in vegas and rolled a perfect set and are up enough to pay college/ retirement, time to thank the bubble god, sell and rent till the dust clears in a few years.

Yep, I've ended up in Vegas at a blackjack table and really don't understand the logic of how I got there : )

I did like Amir's Advice to his own MOTHER..!

"why would anybody that can rent buy now as prime homeowners are just beginning to default? those nice houses are gonna go into auction within few years."

Not in Manhattan. I can assure you that you will never buy a prime Manhattan apt. at auction. NEVER.

why would anybody that can rent buy now as prime homeowners are just beginning to default? those nice houses are gonna go into auction within few years.

Admin, probably true for 2005-2007 Vintage not earlier..

My Advice to the Renter looking to BUY.....!

Eyes and ears all over the market.....and when you actually do find a treasure.....a home that really fits the bill...Make an offer!

Whatever you pay....should be at least at a 25% discount!

Nice. I think these EXPERTs read streeteasy discussion.

Reminds me of the guy who reads Car & Driver and thinks he can fix G.M.

jjun4733

Nice. I think these EXPERTs read streeteasy discussion.

I would like to disagree that Amir Korangy or the Zillow Founder read the boards on SE!

"why would anybody that can rent buy now as prime homeowners are just beginning to default? those nice houses are gonna go into auction within few years.

Admin, probably true for 2005-2007 Vintage not earlier.."

how many people do you know that did a cash out refi during 2003-2007? even earlier... i can give you an example, madoff's mistress refied and put the $ to "work" in the ponzi... now is trying to sell. okok, it's only 1 example, but it's a funny one.

"I would like to disagree that Amir Korangy or the Zillow Founder read the boards on SE!"

lol I'm just saying, they are saying the same things you guys have been talking about here on the boards, that's all.

admin:

Very Funny!

how many people do you know that did a cash out refi during 2003-2007?

LESS IN NYC THAN IN OTHER PARTS OF THE COUNTRY I IMAGINE.

Admin I know 5 couples that doubled down in re with takout refi. Lmao.

> LESS IN NYC THAN IN OTHER PARTS OF THE COUNTRY I IMAGINE.

emphasis should be on IMAGINE

i do know refi victims here and there, but nowhere as colorful as madoff's mistress.

actually, in 2005 right after a musician friend of mine told me "my house tripled in value" i told him SELL SELL SELL... he looked at me with this look of "forgive her, for she doesn't know what she's talking about" during which he followed up explaining me that he just did a cash out refi

2 years later he asked me for a loan. enough said?

originally bought more than 10 years ago, now would like to divorce but doesn't have the $ to do so... the house is a prison so to speak.

> Not in Manhattan. I can assure you that you will never buy a prime Manhattan apt. at auction. NEVER.

Remember when alpo said the EXACT same thing about 20% down. Even put that in all caps, too.

actually, in 2005 right after a musician friend of mine told me "my house tripled in value" i told him SELL SELL SELL... he looked at me with this look of "forgive her, for she doesn't know what she's talking about" during which he followed up explaining me that he just did a cash out refi

2 years later he asked me for a loan. enough said?

I KNOW SOMEONE WHO DID A REFI-EQUITY TAKEOUT THERE FOR EVERYONE DID?

"I KNOW SOMEONE WHO DID A REFI-EQUITY TAKEOUT THERE FOR EVERYONE DID?"

Thank you.

Not all of us used our apartments as ATMs.

NYCMatt

Your point well taken!

A home should be "a place to live"...! Sometimes it breeds money....we all love that aspect!
and when the market falls, enjoy your home!

found 3 guys that didn't do a refi (NYCMatt, Fayek and Riverside) hence NOBODY did

found 3 guys that didn't do a refi (NYCMatt, Fayek and Riverside) hence NOBODY did

Admin

Am I having Double Vision or what?

Time horizon of 5-7 years to purchase a home seems short to me, especially with so many near-term risks. It'd take some significant appreciation just cover buying and selling costs!

wow fayek, my crappy laptop didn't show them posted... now at my other laptop is showing twice, thanks god i stopped pressing "Reply"! anyway, now i say goodbye, have fun you all SE addicts... serious work to do! don't miss me... :-)

admin---ouch...incarcerated in house with lousy cellmate--heavenly!

Having recently received an $800. reduction on my rental lease renewal, I know I'm not going to be buying any time soon.

Ubottom... sucks to be me sometimes, but at least i'm not wonderbra. that always makes me feel better.

Otto

At least I can count you out of those people "Sitting on the FENCE" so to speak!

"originally bought more than 10 years ago, now would like to divorce but doesn't have the $ to do so... the house is a prison so to speak."

Well, what did you do with all your money? Snort it? If you bought 10 years ago, you should have a ton of equity.

ound 3 guys that didn't do a refi (NYCMatt, Fayek and Riverside) hence NOBODY did

nobody said that? Admin if your going to build a straw man, how about some wizard of oz footage?

"actually, in 2005 right after a musician friend of mine told me "my house tripled in value" i told him SELL SELL SELL... he looked at me with this look of "forgive her, for she doesn't know what she's talking about" during which he followed up explaining me that he just did a cash out refi

2 years later he asked me for a loan. enough said? "

oh lord.

way too many people just don't get that a mortgage doesn't save you from full exposure to the market movement, in fact making it worse given the leverage factor.

It is important to remember that co-ops should be discounted further in the rent to buy scenario due to asset structure and limitations.

Therefore if one were to comapare: It costs $2,800 per month to rent a 650 sq foot one bedroom apartment which would sell for the equivalent cost of $620,000 including closing costs.

Rental Cost Per Year: $33,600.

Ownership Cost Per Year:
CC/Taxes = $1.60 x 650SF = $1040 x 12 = $12,480 (based on avg of $1.60 for doorman lux bldg)
Cost of Money @ 6% x $620,000 = $37,200

Total Cost = $49,680 (assumes a mortgage of 6% and opportunity cost on downpayment cash of 6%)

At this point everyone reminds me of the mortgage interest rate deduction which is HUGE, right??

But how about the cost of upkeeping your property, the occasional assessments that you will receive, the lack of flexibility you have to move upgrade/change, the soon to be 1.875% property tax that you will incur upon the sale of the residence, the 6% brokerage fee that you will incur, etc. etc. Does this not count for anything, not to mention the downside risk you are taking getting into one of the biggest bubbles in current economic times????? HELLO?

The primary benefit to owning - the artificial feeling that you have achieved something due to the fact that owning is a good thing is drilled into our heads. Well about half of America has wisened up about this lie. Here, on the other hand, we got a long ways to go.

A $300,000 house rents for $2,500 per month. Why is it here that you have to buy $550,000 worth of house for the equivalent $2,500 per month rental ---- B-U-B-B-L-I-C-I-O-U-S ----

lr10021 - I think your example properties are mispriced. I am seeing 620K one bedrooms renting for closer to $2400.

"The primary benefit to owning - the artificial feeling that you have achieved something due to the fact that owning is a good thing is drilled into our heads."

Wrong.

The "primary" benefit to owning is that eventually you'll have the home PAID OFF free and clear.

The other major benefit is that, presuming you bought within your means without need of exotic adjustable-rate mortgages, your housing payment by and large will remain constant for the next 30 years, as opposed to the yearly uncertainty of rent hikes, and the very real possibility every year of having to endure the expense of time, money, and stress of MOVING to another home if you can't afford the rent increase or if the landlord chooses not to renew your lease.

"way too many people just don't get that a mortgage doesn't save you from full exposure to the market movement, in fact making it worse given the leverage factor."

this person doesn't even know what leverage is. as i saw it, it was a combination of the belief that sound personal finance (number crunching that comes with it) doesn't get along with the artist persona and very expensive tastes (a painting here and there, nice wines & restaurants, nice concerts...) that cannot be sustained without a steady income. can you be very good at personal finance and suck at math at the same time?

> The "primary" benefit to owning is that eventually you'll have the home PAID OFF free and clear.

Which would make the mistakes of buyers in the last few years even worse.

If that is the primary benefit, then MAAAAAAAAAAAAAAAAAAAAAAN did buyers overpay.

"this person doesn't even know what leverage is. as i saw it, it was a combination of the belief that sound personal finance (number crunching that comes with it) doesn't get along with the artist persona and very expensive tastes (a painting here and there, nice wines & restaurants, nice concerts...) that cannot be sustained without a steady income. can you be very good at personal finance and suck at math at the same time?"

Oh lord.

I just call that ignorance.

But, its why we had the bubble and crash in the first place.

"If that is the primary benefit, then MAAAAAAAAAAAAAAAAAAAAAAN did buyers overpay."

No, they overBOUGHT, forcing up the market.

Many Americans overextended themselves to the point they were paying artificially low mortgage payments that they assumed wouldn't reset until long after they'd flipped the property for a profit.

nyc10022

That is precisely why I bother spreading real estate information!

Knowledge is power!

there is nothing more valuable than a buyer or seller that are in the know.....!

And for the real estate newby out there, information was never so available and free like in todays day with the web and sites such as SE, and the likes.....!

ChasingWamus - I am seeing them for $2400-2800. I used the high end of the rental range just to appear unbiased.

NYCMAtt - So buy the PH @ THE FORUM which is on the market for $999,000 or about $500 per square foot. When you are free and clear, you will only pay a cool $6,200 per month in mtc. Not to worry - it's tax deductible. As for stress, time, money moving, how often does one move. Every 3 years? What about the excitement of moving, the flexibility? Doesn't that ADD value to one's life? Seriously?

"What about the excitement of moving, the flexibility? Doesn't that ADD value to one's life? Seriously?"

Depends on the person.

I've lived in my current apartment for three years, and I plan on being here for at least another 7 or so. I stayed in my last apartment for a full decade. Personally, I hate living like a gypsy, being forced to pack all my stuff and move it every two or three years (or worse, like some of my friends, every YEAR). I like settling down, and the sense of permanency that owning gives me.

Ir10021

Excitement for everyone does not STEM from MOVING every 2-3 years! To some people owning is preferable over renting to avoid the hassle of moving...!

Rent vs buying isn't always directly comparable.
For those that can afford , they will purchase amenities they may not rent. Example..River view or higher end appliances..

On a rental you are throwing away your money....On a purchase you know you will realize a longer term benefit and may realize a profit upon resale.

I would like more of your feedback regarding the video I posted on this thread!

Thanks for posting the video Fayek. It, like much of the other news I've read this week, just reaffirms my decision to rent for another year was a wise one.

LuchiasDream

You are right on the money....Thanks for the compliment!

Call me crazy but I have moved each of the last three years and I kinda like it

EastVillager

You must get Bored real Quick!

Tell me about it.. I moved four months ago and I'm already getting antsy

Their are certain people that are just simply cutout for rentals......Eastvillager being a great candidate....he certainly has the need to move after short periods of time...the buying option would just not FIT...!

Wow when the founder of 'The Real Deal' says, "I wouldn't tell my mother to buy in THIS market." you know the market is in sh!tzville right now.

IluvNewYork

I would take Amir Korangy's advice pretty seriously! Although it is not one size fits all advice!

Some people are in a financially stable condition and buying at the RIGHT PRICE at this time would be beneficial!

Fayek...can you take off your borker speak for once on this board. Would you recommend buying in this market (to a person with limited funds i.e. not unlimited) to your mother?

Seriously, your mom is about to retire can rent or buy to be near you... do you tell her $1000psf is a BARgain!!!!? Or do you tell her rent and when you pass I'll buy at the appropriate moment?

Great video segment--very eye opening.