Better to Buy or Rent?!?

Here's what I mean about paying up for a rental you like. Buying is a much larger financial decision than renting and too often, people aren't happy in their rentals because they don't pay up for a place they'd be happy in. My rental story:

Sold our co-op in '05. Looked around on the UWS s. of 80th for a 3br rental in very good condition. There were 2 rentals in building A that I'd always wanted to live in (condo). Both were in good condition, the larger one was asking 9k but with a worse layout than the smaller one, which was asking 8k. I negotiated the 9k one down to 8k, but I really wanted the 8k apt (but only wanted to pay 7k max). Guess what, friends. I didn't get the apt, someone else bit at 8k. Finally ended up moving into another rental in Building B, arguably a better location, not as nice a building (though very quiet, no bad neighbors) for 7k. Both buildings were condos, with a fairly high number of resident owners and long-term leaseholders.

Ultimately ended up buying another place because of dissatisfaction with the 7k rental and btw, no 3br leases in the line that we originally wanted in building A have come up in the last 4 years. Even in less desirable building B, our 3br rental has been re-rented very quickly in the last 2 years since it's come up for rent.

Too often, people want the best possible deal on a rental, but given the freedom that renting affords you, I think it's okay to pay up a little bit to get the space you want. It's hard to say, but I think we'd still be in that 8k rental today and not have purchased.

st. tropez, wasn't this the first NYC condo building? 19J, last on the rental market 06/30/09 at $4800, listed as mint condition.
http://www.streeteasy.com/nyc/rental/503136-condo-340-east-64th-street-lenox-hill-new-york

21J, "original condition," currently on the market for $1,499,000, total monthly costs of about $9500.
http://www.streeteasy.com/nyc/sale/430345-condo-340-east-64th-street-lenox-hill-new-york

park avenue court. 8N was available as a rental until 9/14/09 at $3500. now available for sale at $950k, monthly costs of roughly $6000.

http://www.streeteasy.com/nyc/sale/463537-condo-120-east-87th-street-carnegie-hill-new-york

bridge tower place. i believe this is 32A.

http://www.streeteasy.com/nyc/rental/501283-condo-401-east-60th-street-lenox-hill-new-york
04/07/2008 Previously Listed in StreetEasy by Sotheby's International Realty, Inc. at $12,500.
07/08/2008 Sotheby's International Realty, Inc. Listing is no longer available.
05/06/2009 Listed in StreetEasy by Sotheby's International Realty, Inc. at $12,000.
10/27/2009 Price decreased by 17% to $9,950.

http://www.streeteasy.com/nyc/sale/468097-condo-401-east-60th-street-lenox-hill-new-york

37A is on the market for $2,950,000, total monthly cost of approximately $20,000.

Wellington Tower, 10D was available to rent for $4700

07/25/2009 Listed in StreetEasy by Prudential Elliman at $5,500.
08/05/2009 Price decreased by 9% to $5,000.
08/16/2009 Price decreased by 6% to $4,700.
09/15/2009 Listing is no longer available.

is now available to purchase.
http://www.streeteasy.com/nyc/sale/461177-condo-350-east-82nd-street-yorkville-new-york
04/12/2007 Previous Sale recorded for $1,125,000.
04/20/2009 Also Listed in StreetEasy by Manhattan Apartments at $1,395,000.
09/10/2009 Listed in StreetEasy by Prudential Elliman at $1,195,000.
10/31/2009 Price decreased by 4% to $1,145,000.

total monthly costs of around $7500.

215 west 95th street, 14H, total monthly costs of roughly $7000.

09/08/2006 Previously Listed in StreetEasy by Corcoran at $1,035,000.
12/15/2006 Corcoran Listing sold.
12/15/2006 Previous Sale recorded for $982,125.
11/12/2009 Listed in StreetEasy by Corcoran at $1,150,000.

15H
04/06/2009 Listed in StreetEasy by Raz Realty at $4,200.
04/24/2009 Price decreased by 5% to $4,000.
06/15/2009 Listing rented.

AR -Tell me why does most buy/rent analysis always use 20% down payment? Why not 50%?

i'm doing condos, but spin it's the general convention. now for many of these you'd need 30% down but i'm trying to keep things apples to apples and consistent so people have a reference point.

besides, 20% down had been the standard amount for quite some time that allowed one to obtain a mortgage without PMI, until the HELOC debacle. very few 50% down buildings allow much, if any, in the way of renting so i can't see that that would be the relevant number.

at least i'm not doing a cap rate.

Thanks nyc_sport for your on the money analysis about the obvious deficits in my character. I'm glad to hear that you think the Mets have a shot to get Roy Halladay. I guess it's too much wishful thinking to imagine they could also acquire either Matt Holliday or Jason Bay. It's November and the pain of being a Mets fan will begin again in April.

spinny... rule # 1 of finance... always put down as little as possible.... you don't see Goldman using 100% cash in any deals... it's 1% or 2%... that way.. you get to keep the winnings but shove the losses to the tax payers! PERFECTION!

hey, i'm a mariners fan. i don't think there are no benefits to owning. but getting away from assholes probably shouldn't be too high on the list of potential benefits. would hate to see your spirits crushed post-closing.

Hi AR,

What do you think of the NYT's Buy-Rent widget? Is it flawed? This is really what I wanted to know.

Thanks

the veneto, yes quite bubblicious times, but this is the same unit for rent and sale, so it's fun. unit 2701, just under $15,000 a month to own, $8500 to rent. but if you own the landlord won't increase your rent.

http://www.streeteasy.com/nyc/sale/318265-condo-250-east-53rd-street-sutton-place-new-york
05/09/2008 Previous Sale recorded for $2,210,000.
07/09/2008 Listed in StreetEasy by Prudential Elliman at $2,795,000.
11/13/2008 Price decreased by 11% to $2,495,000.
02/19/2009 Listing is no longer available.
09/01/2009 Re-listed by Prudential Elliman.

dwell, quit interrupting my selfish fun. who do you think you are, trying to redirect the thread back to your original question? actually, i haven't looked at it. when i get all of this overexcited zealotry out of my system i'll have a look and tell you what i think.

here's a simple answer: better to rent b/c we can't afford to buy the same unit (3br/3ba). i have a feeling we aren't the only people in this situation.

Uwsmom, thru the magic of negative option arm, anything and everything was 'affordable' for awhile in 2007. ; )

dwell, i ran a few scenarios. it is only as correct as your assumptions, and making assumptions that far out regarding rental and ownership cost increases or decreases is virtually impossible. also, remember to adjust the tax number so that it includes both taxes and common charges. all of my scenarios strongly favored renting, i used 20% down, and housing appreciation of 2%, rental of 3%.

Dwell: If you search these forums, you'll find some excellent critiques of the NYT calculator from when it first came out. If I recall correctly, the general answer is that it works pretty well, but there are some errors in its implementation that affect results in small ways. Nonetheless, the calculator isn't flawed because it is telling you that it doesn't make sense to buy until the 20th year (or whatever you were saying): the prices are flawed. ;)

10007: You asked about P/E (assuming you mean price to rent ratio). Nationally, long run, it is about 12. In Manhattan, it is actually a bit lower. Prepare for a parade of silliness from the bulls because I said this, but that's the historical.

Thanks, AR. Ya kinda confirmed that it's a kinda useless widget. And, after reading Roubini, don't think I'll ever buy anything again, ever. Aw, cheese, sorry I ruined yer fun; please, carry on.

OMG!!! skinny, sweet & smart?? I am jealous. So, the prices are flawed. Aw cheese. Think I'll go live on the Queen Mary.

dwell, where it's particularly useful is in the next five or so years. there you may be able to make some more meaningful assumptions. so just focus your numbers on the next five years. when i do so the enormity of the loss tells me to put that money aside and forget buying. if an when the rent/buy numbers hit parity, and the area increased in affordability, i'd rethink it and run the numbers again.

Agreed, AR. Not only is the NYC RE market still kublewy, but, with the demise of the $ & rise of one world currency &/or gov, Ttis a brave new world & who knows what's next. I'm gonna live on a boat & be a pirate.

Dwell: forget piracy, join my commune.

I am mentally setting targets again to sell USD. I think it'll rally a little when the equity market loses steam.

I thought this was a joke thread - for the average apt on UWS, it hasn't made financial sense to rent v. buy since 1998. Some deals of course, could be had in the '98 to '00 time frame. I'm saying "average" because clearly Spinny's apt isn't average and I don't know when the last time an equivalent apt (if there was such a thing) was available for rent.

Lobster, being a Mets fan is like being a real estate shopper in today's market. Sure, like most of the bandwagon fans, you can rent yourself a team like the Yankees and greatly increase your odds of short term success. It doesn't quite have everything you want, and you do have to put up with all of the rest of those annoying neighboring Yankee fans, but it is the safer bet. Yet, if you find that one team that is different than the others, the one that just feels better and fits your needs in ways the other teams can't, you can throw caution into the wind and take on the much more charming and enjoyable, but risky and often deeply frustrating, team. Like a fine wine or an even finer sports car, sometimes you spend time and/or money on what is most satisfying, not what is the most risk adverse anf fiscally prudent path.

Me, I am probably $500K into Mets and Knicks season tickets over the past 20+ years. All I have to show for it is 1986. But, alas, what a fine, fine year that was.

Thanks for the invite, nyc10023. Hope there's room for my shoes ;)

ah yes. i should have been more specific. we can't bippity-boppity-foolishly afford the same unit.

nyc_sport, 20 yrs, $500K loss, and you are a "happy" metz fan... well you really are a perfect candidate to BUY. ; )

nyc_sport, you're a philosopher as well as an avid sports fan I see. Right now I'm watching rhe MLB Network hot stove special. I've become very addicted to the MLB Network in a very short time. Thanks again for your posts.

NYC real estate taxes to rise - co-op and condo owners will pay 10.3-percent more.
The average co-op resident's tax bill will go from $4,467 to $4,930 and condo owners from $6,422 to $6,874.
Need any more convincing?? Lock in a long term rent agreement and let your landlord sweat.

sjtmd, philosophy please. none of this financial talk.

Absolutely. You pay your monthly costs with Søren Kierkegaard. I 'll cover mine with Friedrich Nietzsche.

example of aboutready's helpfulness and insightfulness:

"dwell, quit interrupting my selfish fun. who do you think you are, trying to redirect the thread back to your original question? actually, i haven't looked at it. when i get all of this overexcited zealotry out of my system i'll have a look and tell you what i think."

How's that new toilet seat treating you?

homeownership is basically pre-paid rent. It's fine to rent in the short term, but don't make the mistake of never buying in your prime earning years or else you'll be paying $10,000/month for a studio when you retire in 2030.

I'm sure there are a few folks who bought in their prime earning years who think you have no idea what you're talking about.

Relative to paying rediculous prices to buy, rents look pretty fing awesome these days.

That may be true, downtownsnob. But keep in mind that the maintenance on that awesome studio you own will be $5,000 a month in 2030 also.

I'm all in favor of home ownership. Just want to be "reasonably" sure the price is reasonable relative to prevailing rents.

Yeah, spending $5 million to avoid $3 million in rent never makes a lot of sense.

Nyc_sport, two points (nothing to do with real estate):

1. How can you break tradition by being both a Mets and a Knicks fan? Isn't it always Mets-Jets-Nets?

2. I was working at my first job at 26 Federal Plaza when they had the 1986 Mets parade. Our stupid boss wouldn't let us leave to go to the parade. They actually wanted us to work. So a group of us all crowded around this 13 inch television to watch the parade. It wsa great.

Mets/Jets for sure. Jets were renamed for Shea!
Giants played at Yankee Stadium, so clear connection there.

But Knicks... that should be universal. What the hell do we care about teams with Jersey in the name?

Should Mets fans like the devils, too?

Lobster -- While it is true that the Nets picked that name in order to rhyme with the Jets and the Mets, the Nets were a non-issue when I was growing up. There were two camps, as somewherelese suggests, the Mets and the Jets, and the Giants and the Yankees, primarily a borough issue. There was one NYC basketball team. The Nets were never a NYC team. They moved to New Jersey from Nassau Collesium when I was close to high school age. I remember my basketball team went to a game because it was basically free, probably around 1980, when they were playing at Rutgers because the Meadowlands had not yet been built. They were never part of NYC.

Back in 1986, season ticket holder could buy two additional (but crappy) tickets for each playoff game. I was in those seats for game 7 -- Row U in the upper deck. It was a perfect place to be for that game. The game is so vividly ingrained in my memory (so is John Starks hailing 16 missed shots in game 7 of the NY Knicks 1994 game 7 loss in the NBA finals but, alas, I digress). There was a parade around the outfield after the game led by Gary Carter for about an hour. I did not go to the broadway parade.

I am envious that you went to Game 7. I haven't been to CitiField yet. My brother has season tickets and offered to take me, but it didn't work out for this past season. I think that I like baseball because to me, it's my memory of time spent with my father and of course, it's a great game. I was recently talking to my brother about when my father, my grandfather, he and I went to the 1973 playoff game when Pete Rose and Bud Harrelson got into a fight. I was young then, but I still remember all the boos at Pete Rose. Hope that you have a good evening.

nyc_sport

Wow you stirred a lot of old memories for me. I was a Knick season ticket holder for 10 years. I don't think any one person had captured a city via sports like Pat Riley did when he came to the Knicks.
And it's a shame that though John Starks abysmal game 7 was viewed by all, his game 6 heroics were missed by most (The OJ white bronco coverage).
I bailed on basketball, and it was before the Knick demise. In fact the Knick demise started for me when Viacom sold the team.
The basketball demise for me started with the melee in phoenix and the non foul calls on the Charles Smith triple layups. I realized then that basketball was not worthy of any of my emotions and a waste of time. It was so heavily influenced by officiating I smelled a rat. I left during Van Gundy's tenure though I would have left earlier if so many customers didn't still want my tickets.
After van Gundy left it was easy to give up the seats.
I have not watched basketball even for 60 seconds on ESPN for 10 years. Donaghy only confirmed what I knew years earlier. Many of my friends offer "you were were right" but I wish I was wrong.
Basketball gave me a lot of thrills when it was still innocent to my eyes.
But a foul is a foul is foul, no matter who is committing it, when in the game it is committed, and no matter the disparity in fouls between the two teams.

Mets
Oh the pain. As a little leaguer in the 70's, sadly Dave Kingman was the closest to a star.
I can vaguely recall Felix Millan getting body slammed by a Pirate at second base.

The 80's were great, Mets def owned this town (anyone remember "Yankees moving to Tampa!") and used to rub shoulders with them at a small bar/club on Bell blvd called Avanti. I even remember a Bobby Ojeda get well party there when he chopped his finger off with a hedge clipper.

nyc_sport, I just reread this discussion and I realized that I didn't thank you for helping me. When I came back to the site after being out for a few hours and read your first comment, it stopped me cold in my tracks. I suddenly saw that there was little point to continuing my side of the discussion. Your second comment was beautifully written and I will try to take its meaning to heart.