Manhattan #1 Best City to Rent instead of Buy

can you trust the conclusions if you cant trust the data? their avg 2br condo price seems high.

gcondo, if you do a search of two bedroom condos for sale in manhattan the median price listed is $1,550,000. I don't think it's that far off and that stat should be fairly simple for trulia to generate.

The figures aren't far from off.

LICC / JuiceMan: Discuss.

Yeah but but but but

In NYC, the average for-sale unit may be a lot nicer than the average for-rent unit.

In my opinion, a 2bed/2bath should be 1,200 square feet (otherwise your lying to yourself with a big former 1 bedroom) With doorman, $1,153 a foot seems about right for asking prices at $1.38M for an average Manhattan apt. I think the ask on 2 Bed rental is a little light in their example, maybe $4,000 a month would be more appropriate, but even still, that gives you a 28.82 price to rent ratio. A 28.82 P/E ratio is perfect for Flooz and toys.com

does anyone seriously believe that transactions are regularly occurring at 32x rents? If so, I've got a 2/2 for sale ASAP - I'll even throw in my car.

we all know that the actual sales/actual rent ratio for the majority of manhattan right now is from 17 (<1mm) to 25 times (above 3mm).

Printer, so here's what I'm looking for: A real 2Bed/2Bath UWS with view and doorman, unit must be 1,200 square feet. Now, I know I can get this unit for $5K rent, if I use a 19 multiple the unit would cost $1.14M, if you can find that, sign me up....

"does anyone seriously believe that transactions are regularly occurring at 32x rents?"

Yes.

"we all know"

No we don't.

"gcondo, if you do a search of two bedroom condos for sale in manhattan the median price listed is $1,550,000. I don't think it's that far off and that stat should be fairly simple for trulia to generate."

There are 841 sales listings of 2 bedrooms in Manhattan that are over $2M with a median price of $2.7M. There are only 30 rental listings for 2 bedrooms over $20k a month. Does anyone want this consider what impact this would have on a price to rent ratios based on 2 bedroom average selling prices in NY?

Silly.

tallisman, show me a place that rents for 5k that has sold (not ask, but sold) for $1.9mm (32x). I'm an owner - I would love if places were really selling for those crazy multiples b/c I'd smack that bid as fast as I could. but they're not. I live on the UES, the less desirable portion of PS6 zone, and my 2/2 would rent for 4500-5k, and would sell for 950-1mm. If someone wants to pay me 1.7mm they're more than welcome to.

"The figures aren't far from off."

Of course you would say that steve. So why don't you find a couple examples where rent to buy ratios at 32x? If the numbers aren't far off it should be easy to spot them.

"To calculate the price-to-rent ratio, Trulia compared average monthly rent costs with average monthly home owner payments, arriving at a final number that identifies whether buying or renting offers a better value."

paperless, do you pay maintenance/cc and taxes?

take a look at this juice.

http://streeteasy.com/nyc/building/the-veneto

the 04 line, higher floors, 1922sf.

two for sale, $3.1 and 3.0MM. two for rent, $13 and 12K. those are three bedrooms, but you get the point.

a 1559sf 2 bedroom unit is for sale for $2.65mm, and a 1559sf unit is for rent for $10k.

Silly.

betcha your monthlies are appx 3K--now calc your rent vs buy based on the monthly differential of 2K

ownership---what a deal!!!!

Can somebody explain to me how the 32.59 "ratio" is calculated from the following numbers:

Average home list price: $1,383,612
Average rental price: $3,538

AR - i see that 1204 just closed for 2.675mm. A different 3 bed just rented (last, reduced ask 12,500), which is what 1404 is asking. so 12,500 *12 = 150k. 2.675mm/150k = 17.8x

Ephraim - they are taking the average monthly rent of 3538, multiplying by the 12 months of the year to get total annual rent of 42,456, and then dividing the average asking price of by that to get 32.59

and wbottom, if you could do that simple math you'd see that you have no idea what you are talking about.

This is telling:

"According to Trulia, a price-to-rent ratio over 21 indicates the cost of owning a home is far greater than renting, a ratio of 15 or below tips in favor of ownership is, while a ratio of 16-20 is something of a toss up, depending on individual financial situations, although owning is generally more expensive in this mid-range."

What I've been saying all along.

"So why don't you find a couple examples where rent to buy ratios at 32x?"

Done a gazillion times Juicy, and every time anyone does it you claim something bizarre about Wayne New Jersey or Albany. Of course we have it on record where you say Manhattan prices would never fall 20%, and you were sort of right: they fell 30%, and are still falling.

printer, that wasn't the point. my point was that juice was looking for rentals in the $20k plus category in his comparison to the above $2mm sales. you don't have to go nearly that high.

and there's no indication of where these will finally rent at either.

"take a look at this juice.

http://streeteasy.com/nyc/building/the-veneto

but you get the point"

AR, you should really do some math before speaking. At the Veneto, median sales price per sqft for current listings = $1524. Median rental price per sqft for current listings = $74. Do some quick math and that equates to ~21x. You are getting sloppy AR.

"Can somebody explain to me how the 32.59 "ratio" is calculated from the following numbers:"

ephraim2, multiply $3,538 by 12 and divide into $1,383,612. Price to rent ratio's are generally based on yearly rent to list price.

see my above point. i was talking about the search parameters you were using to show how "silly" it is to compare the rental and purchasing market.

oh, and btw, i think 21 sucks.

""According to Trulia, a price-to-rent ratio over 21 indicates the cost of owning a home is far greater than renting, a ratio of 15 or below tips in favor of ownership is, while a ratio of 16-20 is something of a toss up, depending on individual financial situations, although owning is generally more expensive in this mid-range."

What I've been saying all along."

HAHAHHAHAHAHHAAHAHAHAHAHAHAAHHAHAHAH. LMFAO! No freaking way! I can show you a hundred threads where I said equilibrium is somewhere in the 16-20x range and you said it was 12x. Don't even try this steve, you can't begin to lie this badly!

"Done a gazillion times Juicy"

Where? Show me 32x if the numbers are so good. Should be easy to do.

"I can show you a hundred threads where I said equilibrium is somewhere in the 16-20x range and you said it was 12x."

I said that historically IN NEW YORK it is 12x, and it is. It's higher elsewhere in the country, and I've always said as much. I also said that given very low interest rates it could go as high as 15x, but not higher. As I quoted, "owning is generally more expensive in this mid-range."

Exactly what I said.

HAHAHHAHAHAHHAAHAHAHAHAHAHAAHHAHAHAH. LMFAO!

No you said prices would need to fall to 12x to be in equilibrium. You also said they WOULD fall to 12x, That is EXACTLY what you said.

Waiting for those 32x examples

http://streeteasy.com/nyc/talk/discussion/10391-rent-or-buy-the-same-unit

And here's the rest of what I said:

http://streeteasy.com/nyc/talk/discussion/20850-manhattan-apartment-disconnect-a-boon-to-renters

"my point was simply that 12-15x annual rent ratio formulas do not work for this market"

I agree that interest rates have some effect on the rent formulas, so 12x would probably be low for today's market. 15x would probably be about right - about where rent and PITI are the same. We're still a long way from there, however.

Apology accepted, Juicy.

We were paying $3,500 in rent, and there's no way we'd have needed to buy a 1.4 million place to get the same. Try $700k, which would be about 16-17x rent. Almost every place we looked at in that range was noticeably nicer than our rental.

Give some deets, lad.

I don't feel comfortable with NYC price-to-rent ratios. P/R ratios, though, "should" be different from city to city based upon the degree to which relative rents are expected to increase. Most people probably expect Manhattan rents will increase more rapidly than Detroit rents so the P/R should be higher.

If you look back over the past decade, Manhattan has outperformed pretty much every other major metropolitan area - including the New York metro area. History is history - and Manhattan's "relative" P/Rs look excessive - unless you're expecting huge rent increases on the horizon.

AR - true we don't know where they'll finally rent, but given that a unit just reduced from 14,500 to 12,500 and then rented a few weeks later, that's probably not terribly far off the mark. point of this being that the 32x number is just wildly off the mark. based on what inonada has said about where places of this price are trading (25x), I was surprised that this is below 20. 32x is frankly horseshit, and if that is what Trulia is using to make its rankings, then it shows you how useless their rankings are.

printer, i wouldn't ignore monthly charges. due to the tax abatement they're low now, but without it they'd likely be $3500 a month or more. it kind of skews the analysis when the charges alone are so high. and they've been increasing at a rather rapid pace all over.

anyway, i'm not happy at much above 15x regardless.

This argument would be less silly if people paid some attention to what Trulia actually said. They are comparing AVERAGE sales to AVERAGE rentals. In every market in the US, even NYC, the average sale is a higher quality product than the average rental. That necessarily means that the ratio for similar apartments will automatically be lower.

It is quite possible that Trulia is right AND that Printer is right that few or no apartments actually sell for 32 x rental value. If the average rental rents for $1000 and the average sale would rent for $2000, then a Trulia 32 x ratio might imply a 16 x ratio for LIKE:LIKE.

If Trulia's AVERAGE:AVERAGE ratio were around 15x, which they say is an indication that ownership might make sense, then LIKE:LIKE ratios would be quite a bit lower -- presumably more like 8-10x, which is about the most an investor would be willing to pay if it expected to earn a return from renting rather than flipping.

AVERAGE:AVERAGE ratios are helpful in determining if an entire market is out of whack. They are basically useless as indicators of value in actual transactions: in any market at any time, anyone who pays the AVERAGE:AVERAGE ratio has wildly overpaid.

I have lived in SF and NYC. For suresey the difference between 2 bedrooms for sale and rent are not THAT different in each city. So finance guy is correct. The AVERAGE rental is not as nice in pretty much every city on that 50-city list, so both the numerator and denominator should correspond across the board. Duh.

...what I meant to say ^^^ is that if rentals are 30% worse than condos in NYC, they are also 30% worse in SF.

Are we all missing the fact that a lot of Manhattan is rent stabilized hence an overall lower rental basis. Do we have 1M units in the city that are rent stabilized? From my perspective, my rent is $2,570, rent stabilized, UWS, doorman bldg, with really good river view. This unit would sell for $1,100 a square foot easy, 785 square feet here, purchase price of $863,500, ratio of 26.2.

"Are we all missing the fact that a lot of Manhattan is rent stabilized hence an overall lower rental basis. "

I think the figure was based on listings, and rent stabilized apartment are rarely listed because the tenants in such apartments only leave in a Hearse.

Funny how JuiceMan, when yet again confronted with the truth, remains silent.

Yes financeguy is probably right, and you also have to take into account the distribution of sales to rentals - there are a lot of very nice, albeit less expensive, rentals in Washington Heights, for instance, where there is a dearth of apartments to buy. The opposite is likely true of the West Village, which has a lot of apartments to buy, but fewer to rent.

The thing that baffles me is that "investors" require a 7% cap rate while "residential owners" only require an "effective" 3% cap rate on Manhattan properties today.

In most other areas of the country there is little difference between what "investors" require and "residential owners" require.

That, Topper, is my point, stated in just one more way: owning and renting should cost the same out of pocket, so you could buy an apartment and rent it out at market rates, and at least break even.

> Funny how JuiceMan, when yet again confronted with the truth, remains silent.

Better he should change his story 5x like steve...

Oh, SWE - there are my words.

from the article in the inevitable thread. as many of us have noted, this all began in 1998.

The relationship between home prices and rents typically remains steady within a market, Miller said. In Manhattan, the average apartment, adjusted for inflation, cost 8.1 times annual rent from 1991 to 1997, according to Miller Samuel data. That means that in those years, buyers in Manhattan concluded that the long term benefits of owning an apartment -- tax savings andproperty appreciation -- were worth an initial investment of eight times the cost of renting.

Then in 1998, Manhattan prices began a decade-long climb, with year-over-year values rising by 10 percent or more in most quarters. By the second quarter of 2008 apartment prices peaked at 22.4 times annual rent, according to Miller Samuel data.

AR - how do you say "Bubble"?

it rhymes with trouble.

SF has rent control too.

Thanks for that link AR - 'in the 1st quarter of 2010, the ratio was 19x'. Yet more proof of what hogwash that 32x number is, and right in line with the numbers I posted.
Point being, if you think 15x is the right #, and it is certainly a valid POV, there is a big difference between saying that the mkt is due for a >50% plunge, which could only happen with massive price declines, and a and 20% move, which can be accomplished through price stagnation and gradual, moderate increases in rent. The 19x number also proves how ridiculous is steve's belief that monthlies on owning are 3x what they are to buy.

> Oh, SWE - there are my words.

yes, which is why I found it ironic...

> SF has rent control too.

Unless something changed, its full vacancy decontrol. Huge difference.

printer, you're talking about 2 different things: one is comparing the averages, and the other is comparing the buy / rent on the same property. Buy / rent on the same property is between 20x to 25x for the more ambitiously priced units; that doesn't in any way affect what the average is.

Moreover, you have to look at what Trulia included in its calculation, which is more than just the purchase price: for instance, they included closing costs which can include a mortgage recording tax and the mansions tax. Those alone add 4% to the price, more or less, making 32x not such a far-fetched ratio.

I don't care about ambitiously priced. I care about clearing price - that is all that matters. So please show me how 19 P/E (J Miller's number, not mine, not yours) gets you to 3x cost of owning vs. renting?

You're still talking about 2 different things - one is what the two averages are, and the other is what the same apartment would sell and rent for.

Nonetheless, I can't do it for averages because SE doesn't list them. But medians for Manhattan are:

Real estate for sale
in Manhattan
We found 9,051 listings
Median price: $959,000

Then if you go to nybits.com and take the weighted average of the median prices listed for market-rate apartments for rent on their website, you get $2,708.46.

$2,708.46 * 12 = $32,501.52

$959,000 / $32,501.52 = 29.51

Add closing costs to the $959,000, and you get g*ddamned close to 32x.

Are you happy?

Steve, I apologize for once again thinking that I was dealing with an intelligent human being. My bad - I have only myself to blame for knocking my head against a wall. I hope you and your cats have a great weekend in your ultra-luxurious, mint condition, central park bordering, 1300 sq foot apartment that you are renting for 1/3 of what someone else paid for it.

Sorry for bearing bad tidings, printer - all I did was very quickly duplicate what Trulia was saying - which is not what you or Miller were saying. They compared AVERAGE rents to AVERAGE prices. I would have done that but StreetEasy doesn't give AVERAGE prices, just MEDIAN prices, so I compared MEDIAN market rents to MEDIAN prices, and got a figure of about 30x, which if you add the closing costs to the MEDIAN price you'd get about 32x, which is Trulia's figure.

Does that mean that an apartment would sell for 32x annual rent? No. It means that it's the AVERAGE for Manhattan, and the fact that I was able to get it so quickly, and to get it to be so approximate to Trulia's using a different dataset (I assume) means there must be something to the calculation.

All quiet on the JuiceMan front.

Those averages are COMPLETELY MEANINGLESS. The median rental unit in NYC is, excuse my language, a piece of crap.

Why don't you do something useful and compare comparable apartments, and weight them for square footage difference.

In the old prewar building I live in, a one bedroom rents for $3000.

Across the street in another prewar building co-op, a one bedroom is listed for $475,000 plus maintenance of $930/month.

I'm not sure how to account for that maintence fee, but I think it would be fair to take $500 off the price of the rental to do the comparison.

So $475,000 / 12 * ($3000 - $500) = 15.8.

15.8 is what the price/rent ratio SHOULD be. I don't see how that renting is such a great deal.

Bob,

I am curious, how many square ft are these 1 bedrooms and what part of the city are they in?

Most of the 1 bedrooms under $500K with maintence under $1,000 I searched for on SE were either WAY uptown or downtown (Lower East Side). Yet, when I searched for rentals from $2,500-$3,500 I found apts that were all over the city (many in far better neighborhoods) with better amenities.

I agree that if a place really should be renting for $3K and can be bought for $475K, if one has the money for the down payment - sure, it could be interesting.

The only problem is that I am having great difficulties finding apartments that trade anywhere NEAR that multiple.

I rent a place for $5,000/mo. I would consider buying an equivalent place for your 16x ratio - but I only am seeing places trading in the mid-20's, if not even higher - for places that aren't even as nice as my rental.

Ultimately, the "math" might work for ultra-cookie cutter studios and "one-bedrooms" (read: converted studios), from a simple monthly expenditure approach, but even then one has to wonder if such spaces - many of which have tripled or more in price over the last 10 years, will be able to maintain their value.

The one bedroom is less than 600 sq ft. What did you expect for $475K in a good neighborhood?

I've tried the same math with new buildings, comparing a new rental building to a new condo building. I got a 17.5 ratio.

You are probably renting from a condo-owner who's not a professional landlord who has underpriced the unit. You should enjoy your luck while it lasts, if that's the case.

Also, there are two reasons why the price-rent ratio should be higher than 15.

(1) Manhattan residents are in higher tax brackets then the normal American, so they benefit more from the home ownership tax deductions.

(2) Mortgage interest rates are below 5% right now. When's the last time that happened? A 1% difference on a $1,000,000 loan is $10,000/year. That's real money.

Of course, I'm not saying there won't be the next Great Depression coming, lowering the value of your home. But that has nothing to do with the price/rent ratio.

Good luck with predicting that stuff. If you can always predict when markets will go up and down, you should be so rich by now that you don't have to worry about real estate prices on two-bedroom apartments.

they are also much more likely to be subject to the ATM

and they also have to consider possible resale value when mortgage interest rates are no longer 5%

having said that, i just posted a comp on the UES thread that i think is a good deal when viewed from a rent/buy perspective (although a first floor unit), and i think it comes in at around 15x

AMT, not ATM.

"You are probably renting from a condo-owner who's not a professional landlord who has underpriced the unit. You should enjoy your luck while it lasts, if that's the case."

My luck's been running for years now. Really, you're 13.2x ratio is pretty fantasy. You can rent a $900K condo for $3000 if you put in some effort, but even if you look at three places and take one, you're come out with at $700K unit. A $475K unit is a joke.

No offense, but you couldn't be more off if you tried....

My landlords evidently have been in the business for many decades and charge rents that keep good tenants renewing leases. I guess they have learned something from 50+ years of doing business in Manhattan.

I mentioned this in another thread, but when I recently resigned my lease I had a chance to chat about the present real estate market. One of my landlords said that the vast majority of asking prices were "insane" and the market had gone crazy over the past 6 years.

It is clear that he has seen SEVERAL NYC real estate booms and knows an over-priced market when he sees it.

But then again, maybe he isn't taking into account the recent ponzi scheme wealth transfer that has enriched a select few who now see Manhattan RE as a luxury item.... He is a rational business person that may be unestimating irrational behaviour.

(And please don't tell me this that he was just trying to convince me to resign my lease... with the space and location I live in, he hardly needed to "trick" me...)

Dear me, I'm just starting on my morning cup of coffee, so please excuse the "you're" vs. "your" and "come" vs. "coming" mess-ups.

In this building:

http://streeteasy.com/nyc/building/worldwide-plaza

The price-rent ratio is 18.65 based on comparing median price/ft2 for sales listings vs rental listing.

Of course, the problem with renting there is that a lot of those condo owners are waiting for the market to improve a little so they can sell the unit and kick you out.

Regarding AMT: aboutready, you've got it backwards. The home mortgage interest is deductible against the AMT, making a big mortgage loan especially valuable for high earners. They may not realize the full tax benefit of their real estate tax, but this is why it's an especially good deal a rich person to buy a new condo that comes with a real estate tax abatement.

It's closer to 22:

http://streeteasy.com/nyc/rental/604589-condo-350-west-50th-street-clinton-new-york

vs.

http://streeteasy.com/nyc/sale/484254-condo-350-west-50th-street-clinton-new-york

and they can't rent it, and it doesn't include transaction costs.

Even if they do get their $4,500 asking rent, the price would have to fall 33% to get a buy-to-rent index of 15. I'd pay $750,000 for the place, but not what they're asking.

And to those who question my quick analysis of rental prices in Manhattan, StreetEasy gets approximately the same median price:

Rentals
In Manhattan
We found 9,088 for rent by owner or broker-represented listings
Median price: $2,850

versus $2,708.46 for nybits.com.

The fact is, on average the price-to-rent ratio in Manhattan IS about 30x.

All silent on the JuiceMan front....

This article has deceiving data. One thing to keep in mind is that many cities dont have coops - an inherently restrictive and leveraged bargain. I don't doubt for a second that to duplicate my apartment, in a condo form, would be at least 25x....in coop form 18x.

"tallisman, show me a place that rents for 5k that has sold (not ask, but sold) for $1.9mm (32x)."

Printer, in a condo you could find that. Not in a coop.

Whatever the ratio is in Manhattan, its higher than 15x....and as such, buying entails a steep price to the right to spend money renovating.

rhino, what could possibly justify a 40% premium for a condo vs. co-op? It certainly can't be the right to rent it out, since we all know that at 25x renting would be a substantially negative cash flow proposition. Financing? Sure during the bubble it was easier to get low down payment/high loan/income mortgages, but certainly not now, especially in the Jumbo market, where from what I understand you need 30% down or so, and tight loan/income ratios - pretty similar to a co-ops requirements.

steve, what exactly should I be reacting to here? I see you have been calling my name for a couple days but I have no idea why.

Condos

(1) Condos tend to be newer construction and thus have modern amenities like thermostat-controlled HVAC and washer/drier hookups. (Stuff they had in the suburbs 50 years ago.)

(2) Buying and selling co-ops is a huge time-consuming hassle, so people prefer to buy a condo if they are not sure they want to live in that apartment for the rest of their lives.

(3) There are co-ops with really high common charges because the co-op is paying interest on a loan. So those co-ops need to have a lower price to be economically on-par with condos.

I live in 2Br (smaller 2nd bed) / 2ba on the UWS in the 60s. I have a corner unit with views of the park from a high floor. the same exact layout 10 floors below (no park view due to short building in between) traded for 1.5mm. my rent 4500. thats 28.5x annual rent. I found the same situation at several buildings when looking to buy a 2BR on the UWS.

ante148, It seems like your rent is below market. That would effect the price/rent ratio. Have you lived there long? Are you RS?

Hey everyone else.. it seems like your purchase prices were way way way above historical norms or any rational basis based on incomes..... maybe even due to lax credit and an asset bubble of epic proportions.....

Have you bought in the last 10 years?

Not to revive this thread that should be dead, I'm looking at Sept-13 rent vs. buy PER SQ FT, which is probably more informative ($1137 vs $51) for Manhattan (Elliman report). P/R ratio is 22. High, but not insanely high. The market is betting that there's a relatively good growth potential for Manhattan real estate. P/R is likely much higher at the high end, because demand is very strong, but below 3 mil things should still be reasonable and salary driven.

Does anyone know what this P/R ratio is for other comparable cities such as London, HK, Singapore?

@sluox

there is one major problem with this ratio....you need to subtract the purchase co-op/condo fees and taxes from the rent comparison. For ex, if you are renting at $4k and an equivalent apt costs $1.5 million with $1.5k per month in fees, you are really comparing a $2.5k rent (because only that portion is the extra cost of your rent compared to owning) versus a $1.5 million apt, the ratio of 22 doesn't account for that...it would be more like $1,137 vs $25 or so, closer to a P/R of 40

Of course you don't need to do it this way but of course, this is what would give u a more accurate understanding of the cap rate

@nyc1234 - whether you're renting or purchasing a condo you pay the same amount in fees to the condo board and managing agent of the building. The only fees that's extra is the 15% broker fee which on a $4k per month apartment is $7,200. Divide that by 12 to get $600. Minus $600 from $4k to get $3,400 which is almost $1k more than your $2,500. So in you're example you should have $3,400 instead of $2,500 for a comparison. Obviously you're for renting versus purchasing but you neglect to also take into consideration people who sign two year leases with paying on one broker fee. So that $7,200 gets divided by 24 months, not 12. And since 99% of ppl who buy live in the home more than a year, it's more accurate to do a 2 year comparison which mean $4,200 versus your intial $2,500.

It's weird also, because we went into contract recently to buy a coop below 96th, and several of my colleagues went into contract either above or below 96th. Middle of the road manhattan coops. Not crazy luxury, very middle class stuff by Manhattan standards. None of us have P/R anything close to 30--I know these buildings very well, so I check on SE. The rentals in my building go out really fast, like in a week. Anecdotally I'm not sure where these P/R ratios are coming from. The top 30% of so inventory is completely inaccessible to us anyway so I don't even think of it as existing...

Flmazozz. U should buy apple after earnings and when it hits $600/share. Hahahahaaaa. Oh Lordy.

Can you buy apple share now? How about now? How about now!

Flmaozzzzzzz....

you an earn a lot by know $390 is bottom.... .WHOOOOTTTTT... GO APPLE ... .FLMAOZZzzz.. Bought more when it was down $15 after news.... then it bumped up $4... $20 swing in one hour... .

Hanging up more apple bear skins on my yacht... FK u retards.

GO team RE!!!!

@nyc1234

But then you also have to take into account the taxes. The part of the maintenance that is property taxes is not taxed in your income, you can also get subsidized with the mortgage interest deduction (both things that the renter doesn't get if he invests in say, bonds or the stock market) and, with depreciation, everything that you get in rent as an owner below 1/27th is also tax free.
On the other hand, you also get tax liability for the property taxes (ask Detroit residents if it s worth nothing) and an illiquid asset with 10% transaction costs. In the end the proper calculation depends on plenty of parameters, including your tax bracket (on dividends one can now pay close to 44% just in federal taxes).
Also, with RE, you can leverage your bets more easily than on other markets, embetter your quality of life, etc. Also, the higher the the price/rent, the more appreciation potential the real estate has usually (I am talking about the market in general). Gold has a negative price/carry, doesn't mean it s a bad investment.

>Gold has a negative price/carry, doesn't mean it s a bad investment.

Is gold an investment? http://streeteasy.com/nyc/talk/discussion/25126-is-gold-money?page=9

What discount rate are each of you using when calculating your buy vs. rent ratios? I'm not trying to be obnoxious - genuinely curious.

Asking a question doesn't make you obnoxious NYCNovice.

I find some of w67th's questions, clearly geared towards others in-the-know, to be obnoxious simply in their asking.

It could make you sound silly though. You do realize that a ratio is just the inverse of a rate?

12:1 ratio buy vs. rent = 8.3% rate of return

for example

FC - You know I am a fan, but let me be precise for your 12-year old mind (though I like how AR has appropriately aged you for the years you guys have been going at it; soon you two will be old enough to attend homecoming together): In calculating said ratio, it is necessary to compare the cost of renting vs. the cost of buying. What discount rate is everyone using to calculate cost of buying?

you realize that a 12 year old is in 7th grade, right?

Novice implies young. Maybe you'll take hb to homecoming.