Why I'm Buying

You're not going to make a prediction about where the real estate market will be in 4-8 years except to say that it will go up at least 7%? How is that not a prediction?

if it works for you, that's all that matters. you're getting a place that you want at a reasonable price. being 15 min from work doesn't hurt that's for sure. best of luck to you.

congratulations but just curious, if all you care about is breaking, even why do it?

The personal reason is that I'd like to settle down in the same place for 4-8 years without being forced to move. I'd also like to make alterations that most likely would not be approved by a landlord. On the financial side my mortgage is fixed, so only the maintenance portion can increase. Mortgage + maint is slightly lower than the current rental rates. If I subtract the principle payments as well as the tax deduction from the total cost I see savings of upto 33% (based on maximum tax deduction).

but...tell me again how assuming that you will break even is not a market prediction?

It seems completely reasonable to me. Congratulations and enjoy your new home.

I understand the appeal of buying at that price psf. What I don't understand is renovating a kitchen and bath for an apartment you only plan to live in relatively short term.

justmebk I salute your financial acumen. Good Luck and enjoy your new home.

Ignore the troll columbiacounty. He is not happy when other people are happy.

I'm not questioning the prediction. I have no idea of whether the market will be up down or sideways in 4-8 years. I'm questioning how an assumption of breaking even is not in and of itself a prediction.

That makes sense. The poster wants to talk about his or her home purchase and you want to engaged in an bitter argument under the guise of being a superior intellectual.

you must be a neo-con kudlow report masturbator for buying!!

but seriously congrats, nothing like walking to work.. or to you neighborly concubines and tricks.. where in BK did you buy?

hol4: I think justmebk lives in BK but bought in Manhattan, unless his idea of "short walking distance to central park" and mine differ greatly.

Congratulations on the new place, justmebk.

PMG, the renovation is mostly for my own pleasure. The existing kitchen and bathroom are very plain and I'd like to have something more modern. I'll also expand the usable kitchen space by another 4 ft. One of the sponsor renovated comps that recently went into contract had a 10% higher asking price than my unit. If the renovation doesn't increase the value of the apartment it will at the very least make it easier to sell.

annnnd this is why i shouldnt skim.. thanks xellam cngrts op

Congrats justmebk! You'll probably enjoy your place more if you stop paying attention to re prices for a few years.

justmebk , that makes good sense. have fun decorating. and for the record, columbia county is not a troll or a hater. that's a different county

justmebk, in 6-7 years you will have doubled your money bro.

> justmebk, in 6-7 years you will have doubled your money bro.

Of course, steveF told that to a lot of people right before then lost 100% of their equity.

Buyers looking to buy don't listen to these unfortunate individuals from above. An investment in a home is one of the smartest financial moves you can ever make. Plus it will provide you enjoyment for years to come. Don't try to time the market BUY WHEN YOUR LIFE SAYS IT'S TIME, the younger you are the better.

Buyers, listen to SteveF at your own peril. He bought condos in the bubble and has been desperately trying to sell them, and shilling so someone takes his hot potato from him. He denied the crash, which is now fact. He doesn't have even a rudimentary knowledge of markets. He says "don't try and time the market" but he's been attempting to do that for quite some time, and just been really, really bad at it.

"An investment in a home is one of the smartest financial moves you can ever make"

No, its not. It is, by definition, NOT AN INVESTMENT.

See, this is what happens when someone who doesn't understand finance or economics tries to teach people about those things.

If you're doing it for personal reasons, great. Admit it, and decide what that is worth to you, and pay for it ONLY if the cost is less than what its worth to you.

The real estate market doesn't operate in a vacuum. There are so many factors involved that no one can accurately predict where the market will be at any given time. It's not fair to compare the Manhattan market to let's say the suburbs of Vegas or Miami. Nor is it fair to compare Manhattan real-estate today with Manhattan two decades ago. The chances are that the prices will decrease in the short-term and increase in the long-term. The long-term can be anywhere from 5 to 20 years. At the end of the day real estate is worth what people are willing to pay for it.

I personally don't think that real estate is a good investment due to the high transaction costs. That being said, it does allow for cheap leverage thanks to low rates and gov’t tax breaks, and it does offer some additional advantages. Property values typically increase over the long-term as long as the local economy keeps growing. In the case of a 20% down payment you initially have 5 to 1 leverage. Even if the value increases at the average rate of inflation (about 3% over the long-term), you're looking at a 15% (3% * 5) return on equity. On the up side your returns are unlimited. The crazy thing is that on the down side you can't lose more than the equity you put in. If you default on your payments the banks cannot go after your other assets. And on top of everything you can take 250K (500k if married) worth of profits tax free.

I'm not recommending for anyone to run out there and start investing in real-estate. What I can say is, if you run the numbers and like what you see now is as good a time as any to purchase your new home.

decent rate you got there.. was that with points? what bank did you use and how was exp? im looking to ditch archaic WF

4.625 30-yr FRM (0 points) from Bank of America. WF originally quoted me 4.625, but went up to 4.75 (0 points) only a few hours later. Bank of America seems to be overwhelmed with the volume of first time buyer mortgages. Overall I'm happy the process but it's a little slower than what I was expecting.

last i looked ny state is a recourse state so the bank can go after your other assets if they don't foreclose.

Here is what I found online:

"First of all, the answer lies with your mortgage contract. You should read it to be sure. However, as a general rule, most mortgage contracts have provisions for foreclosure by publication rather than foreclosure by action. A foreclosure by publication means that the creditor does not have to jump through the hoops of going to court to foreclose. What they give up by doing that , however, is pursuing a deficiency. As a result, most are nonrecourse loans if a foreclosure occurs."

Either way I do not condone the use of strategic defaults. Perhaps if people were held responsible for their actions we wouldn't be in such a big mess.

Note what I said above. NY state is a recourse state if the bank doesn't foreclose. Seems like a basic credit check would immediately reveal whether or not someone is worth pursuing for the balance.

Also if you don't advocate strategic default, how can you say your downside is limited to your down payment?

Those are deep questions columbiacounty.

So many questions.
So few answers.

Or do you already have the answer and need to make others feel bad? I mean, others that you don't wish hit by a bus.

best of luck, enjoy every moment in your new home!

justmebk congratulations and good luck. Seems like a good deal, great rate and good location. You also got the jist of the financials, which is important in these times.
As to the renovations, I would be more comfortable doing those after I move in to get a better understanding of the apartment, building and what the other neighbors recommend or have done in the past, but that is a personal decision. Enjoy your new home!

justmebk. It sounds like you found something similar to this:

http://streeteasy.com/nyc/sale/525334-coop-408-west-57th-street-clinton-new-york

Based on your mortgage quote, this studio co-op with flexible sublet policy gives a cost of ownership after tax of approximately $1300/month. It has a nicely renovated kitchen and bath, is generous sized, and is walking distance to Columbus Circle, Whole Foods, Equinox, subway, Ninth Ave restaurants. What's not to like? Why do people on this board think that prices have to get a lot cheaper?

PMG, how did you come up with $1300/month?

Sunday, it was totally back of the envelope, Ill admit: (Total Ask Price (incl equity) $329k * 4.625% rate / 12 months + monthly maintenance $587 ) * 70% = $1298 / mo approximate economic cost

PMG, I think the apt you posted would work financially for certain buyers (older & single), especially with the flexible sublet policy. I have a feeling some younger buyers in their 20's and early 30's might consider such a place as well. For them, I think it's a mistake because they will likely need more space sooner than they think. They might need to move for whatever reason. For them, selling under 5yrs might result in lost of some or all equity. The flexible sublet policy will give them another option, but will constraint their ability to use the equity to finance the new place.

The $1300/month is probably on the optimistic side right?

Here is another reasonably priced unit with a descent layout. It says its in need of a renovation so I don't know how bad of a shape its in.

http://streeteasy.com/nyc/sale/529247-coop-310-west-56th-street-clinton-new-york

PGM, your calculation is pretty close. I'd make a few changes:

* Multiply the asking price by 0.96 (most units are selling at a slight discount)
* Deduct the principal payment (it wont affect your cash flow, but it's still money that's going into your own pocket)
* Typically only half of the maintenance is deductible. The tax bracket will probably be either be 28% or 33%. This also assumes you already itemize.

look_pied, thanks for the info. I've been getting my renovation ideas from sponsor units with the same layout. I've also been looking through pictures of other units that have a similar layout. Most of the work is just to improve the aesthetics. I'm not looking to move walls or do any major plumbing work.

I don't understand the hesitation for people buying studios. This is a city where half the households are single people. If a studio can be rented, then it's a flexible investment: And not everyone in this city outgrows affordable studios, plus there are other scenarios, I know a guy in a West Village studio co-op that bought the one bedroom next door, and now he lives in a two bedroom.