Another round of: How much mortgage can I afford!

You might want to mention how much extra cash you have, aside from the dp. That might make a big diff. But, I think you are gonna be real pressed to find anything decent and affordable (unless you have an extra 100K for reno's and rainy days).

I have an extra $80,000 in addition to the dp.

it depends on what neighborhood. nothing in safe brooklyn that's for sure.

bay ridge is an area that we're looking at. definitely a safe area.

http://streeteasy.com/nyc/sale/546848-multi-255-67th-st-bay-ridge-brooklyn

so, any thought on a maximum mortgage amount that i could reasonably take out?

Hmm I'm never really done this calculation before, but my logic would be this:
first, I see two rental listings for bay ridge in multi family houses... they're $1,500 (price cut from $1,600 and on the market for 2 months) and $1,800
http://streeteasy.com/nyc/rental/665545-multi-51-70th-street-bay-ridge-brooklyn

So, I'd go on the lower end of your rental income estimate and assume $1,500. Not sure exactly how many months to assume for rental income, but let's go with 10. So add an additional $15,000 to your annual income making it $90,000.

To be honest I wouldn't feel comfortable with a mortgage more than 3x my annual income, so personally I'd want a mortgage no more than $270k. Assuming you don't want to touch the additional 80k in savings which is smart, add the $150k dp, and you have $420k would be a safe house purchase for you. Actually, I'm not sure how much closing costs you'll have to pay, but if it's 4% (17k) then you're probably looking at $403k house.

But, since you question was what is the absolute maximum mortgage you could realistically obtain... 28-36% of your annual income (including rental income) is $25k to $32k. So assuming you don't really have any other debt obligations, you'll want to keep your monthly carry around $2,100 to $2,700 to obtain a mortgage. If you don't touch the additional 80k in savings, have good credit, and get a 4.7% 30 year fixed mortgage, you can probably get away with $520,000. Add the 150k dp, $670k... 4% closing costs, and you could probably qualify for a house purchase $643k as your limit.

I must say though that's a ridiculous amount of debt for you to take on so I'd recommend a purchase around 400k. The multi family homes in Bay Ridge seem to be listed for a minimum of 570k, so that's at the absolute high end of range. I'd advise you to save a little more, or possibly use some of that additional 80k in savings toward the down payment. You'll definitely want to save at least 1 years living expenses, so probably at least 50k.

Average price of 1-3 family homes in south brooklyn last quarter was $545k. May want to check out some of the other south Brooklyn neighborhoods rather than taking on a 600+k mortgage.
http://www.prudentialelliman.com/images/marketreports/Brooklyn_Q2_2010.pdf

Joe, congrats on riding the bubble up and having the sense to get out.

On what you can afford, you can borrow probably up to $300K, which will work out to $1500 a month.Joe, congrats on riding the bubble up and having the sense to get out.

On what you can afford, you can borrow probably up to $300K, which will work out to $1500 a month.  Add another $500, maybe up to $1000, for taxes and maintenance, and you're pretty much maxed out on monthlies going towards housing.  So if without a tenant, something like $450K is the edge.

With a tenant, you can afford something in the range of an additional $200K per $1000 of rent.  I have no idea what price vs. rent is in bay ridge, but if you think the rental value of that link you sent is in the ballpark of $3000 a month, then such a thing should be doable.
Add another $500, maybe up to $1000, for taxes and maintenance, and you're pretty much maxed out on monthlies going towards housing. So if without a tenant, something like $450K is the edge.

re-guru and inonada. thanks for your input. really appreciated

inon, thanks of the congrats on bubble riding. it's luck really. we're sideline sitting right now, but starting to look. though may wait a few years for things to hopefully deflate a bit and to really be able to take advantage of the $$ made from buying in 2001.

as for price vs. rent in bay ridge.... it's f'd the same way it is all around the boroughs....

Well, you bought at a fine time & valuation, and your ride up may have been "dumb luck", but your reaction to it seems quite deliberate. I think there are many people who bought that proverbial studio a decade ago, rode it up to a hefty profit on paper, and continue to ride. Yet despite a large 6-figure profit, they are still living in a studio and will continue to do so for a long time. I.e., they cannot monetize their luck into an improved quality-of-life either out of fear of the unknown, or out of delustion thinking it was all normal and that the next decade will bring more of the same, or soemthing else.

In short, I salute your effort to translate your luck into an improved quality-of-life, however things may turn out. At your income, the $230K you have in cash ain't play money, so I'm glad to hear how you are treating it.

like i said before, you cannot afford a good multi-family in a safe neighborhood.

you pointed out the fringe of bay ridge that's outside your price range. i am assuming that you have not walked around that area. the amount of alcoholics/drug addicts you see in the 2 block radius on the benches and stoops during the day should tell you that you don't really want to live there. this is the reason why that house is not selling even if it is in Bay Ridge.

ab, I have been out there. I'm out there every week to visit family. It's not nearly the way you make it out to be. Sure, it's not Park Slope... but, then again, I don't work for a recipient of tarp funds...

With that said, you are correct about us not being able to afford the area at the moment. Which is likely why we'll keep waiting and saving. Just like many, many renters I know.