Owners No More

"The problem is with buying and it has been for six years easy."

hmmmm, not sure I get that one Rhino. What if you bought 6 years ago with a 15 yr fixed? 9 years away from owning property outright and you are still posting endlessly about the couple hundred bucks a month you (may be) saving. Me thinks you are barking out of the wrong orifice.
What do you have at the end of renting for 15 years? What does your landlord give you back?

I live within jumping distance of the Hudson, my friend. Good idea about the raft, I should probably get one.

you should read "The Road" => made me wanna get a glock.

So Rhino, at what valuation would you be a buyer? I would start to consider buying at about $600 psf. My guess is that would be a cap rate of about 5.5%. Of course that starting value would only work for a guaranteed, desirable rental. Generic would have to be valued lower to get my attention.

Kinda done with the sci-fi post-apocalyptic stuff. I don't even watch the polar ice cap melting or the big game poaching documentaries these days. Too hard to reconcile all the bad crap with my decision to reproduce. Begs the question of if things go to crap, would you take the lives (horrible I know) of your children to spare them their future?

OJ... the key is 9 yrs to go.... when you run a marathon... the first 10 should be easy... it's the WALL and then can u finish....

FYI it was customary that you'd have 2 yrs in carry bf you got a loan... so 4 yrs w/o the crutch.... 6 yrs.. .just learning to walk and ya get hit by a city bus!! DOH!

btw, jm, what is YOUR position? i've asked and asked. and i don't think you've answered. do you own? etc. etc. etc.

Doesn't jm own (recent vintage) and isn't he a perma-bull?

W67: correction, 20miles is a piece of cake. Last 6 hurts like hell.

nyc10023.. that's up to the kiddums.... (yeah I've thought those morbid thoughts too, we should totally hang )

Wife is gonna do it this yr... c u nov 1.

The worst part (and the last 6 months) is up by the Bronx. Boring meaningless little loop by the projs. Very cool when you go by Harlem and you get the gospel singers serenading you.

PMG I dont know. It depends on the environment. Right now its the gap between mortgage rates and cap rates that I don't like plus the fact rents are moving down. If I see stable rents...5.5% might make sense. Depends what else is out there. Right now a short term bond fund that averages 5% is clearly a better risk return in my view. If cap rates rose to 5.5%, but only because rates rose...it might not be attractive anyway. It is tax free return to an owner occupant after all, although the deduction is at risk. All that I am sure of is that these valuations under these circumstances are bad. I think at least before things rolled, there was momentum and rising rents.

Correction - last 6 miles, not months (!) Also, very cool to go through the Hassidic part of Bk and have all the little kids watching you and setting out water for you on tables. FG part of the run is very pretty. Queensboro bridge, amazing to feel the bridge rumbling underneath you. Be very nice to her the next couple of days. I could barely move.

no, i don't think that jm has found his final abode, although he could deny that at any moment, but that wouldn't be honest, open, forthright.

Rhino: the real issue for you (based on your posts) in buying RE is your long-term view of whether you are going to be here. At this point, nothing is going to drive us out of Manhattan and our current place (even the school issue, hey, we can always buy our way into some lowly private) unless things go apocalyptic in a big way.

The long term view is intertwined with the price.

"but feel free to go back one, two or even three years and link to posts where you were right."

I wasn't always right, but I always gave balanced advice. Find one post where I mislead or gave bad advice to sincere posters and I will gladly vote for Michael Moore in the next election. Don’t confuse point of view with advice. While you are at it, feel free to link to all of your brilliant prognostications showing your sound, balanced advice. Especially the ones about the world melting.

"OJ... the key is 9 yrs to go.... when you run a marathon... the first 10 should be easy... it's the WALL and then can u finish.... "

w67th, 9 years is downhill all the way. Good rate locked in, cash flow positive if I wanted to rent it, it's easy street baby. If I would have listened to the aboutready's and w67th’s of the world then, I would still be running uphill. I may even be wishing for a crash so that I could get out of my rental.....

you're smart to watch rents, which should track employment trends. you should be confident that there isn't a serious ongoing crisis before committing. there are a lot of leveraged owners of rental properties that are freaking out right now.

actually juice, no, you were wrong.

really. and i have no interest in going back and trolling the three years of comments. i was there, you were there, and you were WRONG.

and i believe that i also give balanced advice.

Go ahead an link to them AR. Link to any of my past post and (in context) tell me how they were wrong. I dare ya.

"no, i don't think that jm has found his final abode, although he could deny that at any moment, but that wouldn't be honest, open, forthright."

Has anyone?

"Doesn't jm own (recent vintage) and isn't he a perma-bull?"

Yes, I own. I buy, live for a few years, move, rent the property, and buy again. So far, has worked pretty well. I have never been a perma-bull, I just can't stand one-sided, manipulative information (bull or bear).

btw, i don't know why everyone has been so reluctant to talk to you in any real sense, as if you have some special aura. fuck off. you haven't been so clever, or so remote, or anything. you have simply been really wrong. on so many levels.

JM, i don't have to. others have done so recently for me. your fortitude is intersting however.

how about:

JuiceMan
about 24 months ago
ignore this person
report abuse
2005 levels? Your talking about a 15-20%+ correction. Ain't gonna happen.

"An armed society is a polite society" Robert Anson Heinlein

(although I have to say I disagree)

"btw, i don't know why everyone has been so reluctant to talk to you in any real sense, as if you have some special aura. fuck off. you haven't been so clever, or so remote, or anything."

strange comments from the apocalyptic

jm, you were f'ng wrong. and i can find enormous numbers of examples. would you like to continue to bait/encourage me?

because i'm happy to do so, and your position will sink and i mean sink.

cc, you fail to post the comment in context. One liners don't tell the story without the detail.

really? seems pretty clear to me. the irony is that the correction is considerably worse.

hey juice, shall i go off and post some of our conversations? i'm happy to do so.

AR, I'm still trying to figure out the "talk to you in any real sense" comment. Very strange. You can say I was wrong all you like, but if you looked at my comments objectively (which you won't) and put things in the context that they were posted (which no one ever does) you will find that I was actually quite accurate in my statements. Was I right all the time? Of course not. Neither were you or any of the other apocalyptic nut jobs. Sorry you don't like that, but it is what it is.

"hey juice, shall i go off and post some of our conversations? i'm happy to do so."

AR, hold off for now. Gotta run, but we will continue and I would love to re-visit our past conversations. Don't get so testy………..

"really? seems pretty clear to me. the irony is that the correction is considerably worse."

worse than 2005 levels?

juice, i'm so sorry but you literally must be joking.
but thanks for calling me an nut job. by the by, many don't feel that way.
i spent years chatting with you, and even recent months, and you seem to be for whatever reason becoming more corporatists.

You are not a nut job, that is not at all what I meant.

juice, i'd love to chat with you. actually, i've been interested in chatting with you for eons.

"Find one post where I mislead or gave bad advice to sincere posters"

Well, what about the one where you took all the New York Times article out of context to make it seem like they were saying something that they weren't?

What about all the claims you make above where you say I said things that I never said?

What about the time you claimed that a Hong Kong paper supported your view that the mortgage deduction should be taken into account, when the paper said no such thing?

Dude, you do it all the time.

NYCMatt:

However, I still prefer owning to renting for its permanency. It's hard (at least for me) to psychologically feel totally "at home" and "grounded" in a dwelling that is only mine from lease term to lease term. Add in the uncertainty of rent hikes (it always goes up), and the absolute pain in the ass it is to pack up one's entire world every couple of years like a gypsy just to go through the horrendous experience of spending both time, energy, and money to find yet ANOTHER apartment.
_________________

I realize there is a lot of goading on this thread, but this question is not intended to be confrontational. To the point about rent hikes, generally, they do go up over time (although this year they had not, at least for me). My question is in the carrying costs that owners are subject to. Do common charges go up in a similar fashion? How about taxes? Curious on this especially, as history may not in this case be a good predictor of the future (since income tax is seriously crimped given the record numbers of unemployed, so I would have to imagine states are hungry for alternate revenues). I see potential increased taxes / assessments as a real risk to buying RE. If these ancilary charges of owning are also increasing, then is the risk of future rent increases really a wash? I have never owned in NYC, so if I am way off, please let me know.

"really. and i have no interest in going back and trolling the three years of comments. i was there, you were there, and you were WRONG."

agreed.

Juice likes repeating the word "context" over and over again, but content won't make some of his gems any less incorrect. He clearly denied that the declines which we now have would/could ever happen.

> I just can't stand one-sided, manipulative information (bull or bear).

Why is it that those with the most one-sided views are always complaining about one-sided views that just happen to disagree with their own?

Lecker: here's the thing about increases:

with rent, it's 100 percent of your nut.

cc' and RET or mtc is a portion of your nut.

Let's say for argument's sake you've found the magic place where renting and owning are equal (without taking tax advantages into account) at $6,000 a month.

For the own it, let's say the cc/ret or mtc is $1500.

So if your rent goes up 10% and your cc/ret goes up twice as much - 20%; your rent went up $600 but your cc/ret/mtc went up $300.

Because when you purchase, as long as you get a fixed rate mortgage, your largest expense - mortgage payment, is fixed.

so...using your example..one saves $3,600 a year and has how much capital at risk in return?

Here's the thing. With rent you can just about always find something cheaper in 12 months if you really have to. And you can move quickly if you are faced with a really tight job market.

aboutready, totally agree. That freedom is valuable and even necessary to a lot of people. It's one of the reasons there will always be a large renter population in this city. I will add that that value changes from person to person, and to some, it's not much, even if those people are in the minority. The reason this thread may never end is that there is no one-size-fits-all solution, even if believing there is makes people feel that much more confident in their choice.

You know that I agree. Of course there are realities that apply to all but how one interprets and deals with those realities is personal.

Although the real reason there are so many renters here is much more complicated and is related to building, zoning and supply issues.

and history and culture.

30 YRs - thanks for the response. I am in a position where I think my rent figure is closer to just the cc in the example (which skews my thinking - as 6k a month is well beyond what I have budgeted for shelter). Thanks for the context and the example as at least I am now straight with the intent.

"as long as you get a fixed rate mortgage, your largest expense - mortgage payment, is fixed."

BRILLIANT!

Don't forget the 15% transaction costs and liquidity risk.

15%? Why not 25 or 35% steve? Any more random numbers to share?

"Juice likes repeating the word "context" over and over again, but content won't make some of his gems any less incorrect. He clearly denied that the declines which we now have would/could ever happen."

Context is a wonderful thing. You can quote one liners and spin it however you want (which you do frequently). When you actually read the links and put the posts into context, it tells a very different story. But you won't do that

"15%? Why not 25 or 35% steve? Any more random numbers to share?"

Sorry you can't address all the other misleading comments you made that I pointed out, JM.

Real estate commission = 6%
Mortgage recording fee = 1%
Mansion tax = 1%
Flip tax = 2% - 3%
Points
Legal fees
Conveyance tax
Stamp tax
Capital gains tax

They add up, Juicy. 15% is not unreasonable, considering that the real estate commission alone is 6% when you go to sell.

Yet another set of random numbers that steve can't back up with facts.

I don't have a dog in this fight, but those numbers are far from random. I just checked some of the percentages stevejhx threw out, and 15% is certainly not unreasonable, particularly when you consider the size of some of these taxes (e.g., capital gains is 15% of sale amount over tax basis), but the fact that at least some of them have to be paid at more than one level of government (e.g., the capital gains and mansion taxes).

sellers pay capital gains taxes on profits. renters don't ever have profits. When you own a home and have a cost that is less than current market rent, that savings is not taxed, but it is most definitely a return on your invested capital.

"Although the real reason there are so many renters here is much more complicated and is related to building, zoning and supply issues."

Actually, the real reason why there are so many renters in NYC is because housing for SALE is generally out of the reach of the middle and lower class -- the vast majority of the population.

15% is almost certainly on the very high end of what you're potentially paying. Some "technical" points:
* commission, of course, can be negotiated
* mortgage tax is closer to 2%, I believe
* flip tax doesn't always apply
* neither does mansion tax
* you're not always paying points (it doesn't always make sense to do so)
* you're definitely not always paying capital gains tax, especially if you're buying another home after selling
* especially with new construction, some of (and potentially all of) these costs can be paid by the sponsor

I think a range is a more "honest" estimate of what your transaction costs could be.

"you're definitely not always paying capital gains tax, especially if you're buying another home after selling"

bjw2103, please explain. My understanding of the tax law is that on the sale of one's primary residence, resulting in capital gains in excess of $250,000 (or $500,000 for married individuals) is taxed, and cannot be avoided by buying another residence. Don't tell me you mean 1031 exchanges, which are intended for swapping like-kind investment properties, not principal residences. Of course, I may be the only one who expects that tax payers follow the letter of the law. There may be millions of Americans that have swapped homes and don't declare capital gains in excess of the exempt amounts because they are so called 1031 exchanges.

"Don't tell me you mean 1031 exchanges, which are intended for swapping like-kind investment properties, not principal residences."

Ok, I won't tell you. But that is what I meant - sorry if I missed we were only talking about primary residences, but you're absolutely correct on that point of course. I just thought it was important to mention, though I should have been more clear. The other points apply to either case, I believe, though mortgage tax can be higher for large investment properties (correct me if I'm wrong?).

and by the way....there are state and local taxes on top of the 15% fed cap gain...almost another 12% and no deduction on the feds asuming you are in the jaws of the AMT.

There is a wait period to convert investment property into residential and get $500k tax bennie. Ask a good acct.

State and local taxes are taxed as income, as well, not at a lower capital gains rate.

JuiceMan: "Yet another set of random numbers that steve can't back up with facts."

In response to:

Real estate commission = 6%
Mortgage recording fee = 1%
Mansion tax = 1%
Flip tax = 2% - 3%
Points
Legal fees
Conveyance tax
Stamp tax
Capital gains tax

If those aren't facts, what are?

What's your estimate for transaction costs, Juicy?

"What's your estimate for transaction costs, Juicy?"

Well unless stamp tax is 4% my estimate is WAY under 15%