Buy or Rent

The market is stable, prices in some neighborhoods are increasing. The best news is that interest rates are at an all time low, as low as they have been since 1954. If you are financing your puchase this is important. We don't know if they will go lower. Remember you live in the montly payment. The NET montly payment (less tax deductions) is important to calculate. Real Estate Tax, on a condo is deductable, a portotion of your maintenance is deductable on a coop. The NET montly payment can be lower than renting. I would be happy to provide some examples and do an analysis for you. You can reach me at ddrake@elliman.com. Best Regards, David Drake Prudential Douglas Elliman Real Estate.

you need to figure out where you want to live and the size of the apartment. almost always, rent is cheaper then buying in Manhattan.

watch for the RE guys who will sell you an aptment for $2M with maintenance of $2K per month that can be rented for $4K.

Please, for the love of Baby Jesus, Xenu, and Oprah...not aNOTHER buy versus sell thread!!! Is this like 102 or 103?

Hey Drake, give me a break!

baby jesus...like in the manger??

The only real estate broker i trust on the current condition of the market ... died 3 years ago !

nooooooooooooooooooooooooooooo!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

>>ladida321

A RE broker is not the right person to answer that queston. They are salepeople that will always tell you its a good time to buy. I you own an appartment they will tell you it's a good time to sell. I never heard one that says renting is better. If they can earn a higher commission from a rental, they will tell you it's better to rent. Be careful

I'll answer your question from a financial perspective, as I think that's where it was coming from. Obviously, adjust based on your personal preferences for ownership vs. renting vs. quality-of-space.

I think the range of views you'll find here are anywhere from "it costs much less to rent than buy" to "it costs about the same to rent as to buy". I don't think anyone here has put together a coherent set of assumptions that show "it is cheaper to buy than to rent". That lack of people on the "buying is cheaper" side of the argument should give you a sense on how things tilt IMO.

Here's how my situation stacks up. I rent a fancy condo in a prime location. Normalized to a $1M price, my rent is $2400. Monthlies paid out by LL on the place are $1100. Amortizing upkeep & a high-end renovation every 30 years is $400. Amortizing the 10% transaction costs once every 10 years is $800. So the yield on my place is $100 a month, or $1200 a year on a $1M cash payment, or 0.1%. I think this is nutty low for a risky asset and have much better uses for my cash.

The counter to this story is that my rent should really be double: $4800. Never mind that I got it less than 1 year ago in the free market, and that perhaps the highest asking price ever seen is not a good indicator of market rents. So, the monthly yield on that $1M in cash is $2500, or $30K a year, or 3%. Given that bank rates are 0% currently, that is a fair return on capital. Never mind that banks lending to you with a 25-35% downpayment to buffer losses require 4.5%. Never mind that you could buy mortgages that are buffered by a 25-35% downpayment can get you 4.5%. That 3% return is just fine.

The big red flag, IMO, is that the "bullish" story with everything priced to perfection has you earning a paltry yield for a risky, illiquid asset.

That said, the masses have a hard time understanding math/risk/return and can do funny things to prices for a long, long time. Not indefinitely, but a long time. Predicting their nutty behavior is pretty hard. I personally find it best to just take instant gratification on the nuttiness: borrow their apt at 0.1%.

We determined many years ago that we could stay in a 5-star hotel in NYC whenever we wanted, and still pay way less than buying.

After many years of looking at the numbers, we bought, and we're thrilled. But we belong to the school that says "an apartment is your HOME."

If you want to do what you want to do without a landlord's intervention, if you want to have some control over your HOME, if you want to settle down in your HOME in NYC, then you should buy.

If you're looking at your HOME as an investment, buying is not necessarily the best investment out there, although if you have $1M cash lying around, there aren't many good places to put it right now.

I'm in the buyer's camp. I've said it before, and I'll say it every time a "buy vs. rent" thread comes up: Your apartment is your HOME. If you look at it only as an investment, you've already lost.

"The best news is that interest rates are at an all time low, as low as they have been since 1954."

That is mostly terrible news, actually. It means that interest rates will inevitably go up, which will put downward pressure on the price of the place you just bought.

Well, all the Trulias and Zillows will tell you that say in Dallas TX or other such places with low buy/rent ratios it is better to buy if you are staying more than as little as two years in one spot.

But NYC is a place where EVERYONE who is NOT a RE broker says buying is almost always more expensive than renting, given current market conditions, the ratios, etc.

Buy now and i guaranty you that your 20% downpayment will vanish within 3years.
Buy today at $1M with a 20% downpayment. Your house is actually costing you $1.72M including the interests. Lose 3%/year on your property value, you still owe the bank the same amount but you just have a $155000 negative equity! Worth investment ever when you buy at almost the top of a bubble! Fvck the: "But i can paint my walls pink if I like!"... You don't need to own, you need a fvcking therapy!

Google "rent versus buy calculators" and you go to the one put out by NY Times. You can then enter in your rent amount and expected rent raises, the amount of the apartment and expected appreciation.

Obviously, the calculator is only as good as the figures you plug in but you can play around with these and get some idea.

Personally, I don't think real estate will appreciate more than 1-2% a year because the bubble effects still need to be wound down. You might feel differently so you will use your own estimate.