Things to look for in an investment condo

Neighborhood infrastructure is one. Access to transportation shops, schools, parks, restaurants. An example would be to compare the Upper East Side vs Hudson Square Would also look at what the stock of apartments is that you would need to compete against when renting out(e.g On the Upper West you have Extell putting up new rental stock as well as Equity Residential and others).

just curious - in the "old" days people bought an apartment, or a house, and then when they wanted to "trade up" they sold their entry level property in order to be able to do so. In the heady "real estate is only going up,up up" market, that basic way of looking at things was lost, in part leading to people losing their home(s) and "investment property".

Even with the events of the past several years it amazes me that people still think of buying condos in New York for "future investment rental income" What am I missing?

Lots of people have historically bought real estate as an investment to hold and pass along. The mortgage is a fixed cost(if they took out the mortgage). Capital gains are tax deferred, Income generally goes up over time and it's a concrete asset as opposed to a paper asset.

OP did not say he is buying for investment. He said he is buying somewhere to live but if and when he moves out he wants to have that (investment) option open to him. Of course at the time (of moving) it may or may not be a good financial option but at least he has the choice.

It is a good *option* to have if the (sales) market is not healthy when one moves, as one can rent out for a few years and sell when more optimal to do so.

Also we do not know the OPs personal circumstances. Many people's are such that their circumstances change and, even if not the plan, they may move earlier than anticipated and may need the rental option. That is partly why one should not go for co-ops if their future is not as predictable as most may be.

Yes, Riversider and Matsui read me correct. We both work in Manhattan and have no kids yet. I have no idea what we'll want to do in 3-5 years, but would like to have options. I don't think real estate is a bad investment at the moment and I wouldn't mind "diversifying" by using down payment money on an apartment instead of having it in stocks (or doing nothing in cash). Good point about rental stock, that's exactly what I was thinking of...we are basically looking UWS so that's pretty significant. They seem to have the exact same idea as me.

> Matsui and Riversider - can you address the first paragraph of my post? Does everyone's income go up in such leaps and bounds after 5 or so years that they don't need the original down payment + any appreciation to be able to buy something else?

"Does everyone's income go up in such leaps and bounds after 5 or so years "

If you work in MTA or public union gig, sure

'Though Dominick Masiello's base salary at the LIRR was $75,389, he made $250,401 last year thanks to "arcane union work rules."'
http://gothamist.com/2011/05/15/lirr_workers_tripled_their_2010_sal.php

I also think real estate is a pretty good investment these days, prices are down and interest rates are low. I am in contract to buy a junior one bedroom condo as an investment. There is already a tenent in place and the rent that they are paying will cover 90% of my carrying costs. The problem is that my lender, Bank of America has been really slow (incompetent) to close the loan and I believe part of the problem is that it is an investment property, not my primary residence. In your case, if you are going to be getting a mortgage and if it is primary residence now, it should be alot easier. In any case, try to avoid using Bank of America unless you are working with a loan officer you are very confident with. My experience with them has been a disaster. 5 months since signing the contract and still not closed yet. Good luck.

ph41. It's gosh darn hard to predict the future but there are some trends that would suggest rents go up more in the next ten years than they have in the prior ten years. Personally, I look at increased rents as a plus and an inflation bet. If I were doing this, I'd prefer to know that rents exceed costs of funds up front. I could better deal with a 2% cap rate coupled with a lower growth rate in rents more so than a negative cap rate and a higher growth rate due mostly to the uncertainty of it all(e.g what if Europe throws the U.S. into a huge recession)

Income doesnt have to go up for you not to have to sell your apartment when time to move.

If one moves in 10 years you could well have saved enough to put aside for a deposit on another property (which could be less expensive in the suburbs, for example) without having to sell. You may want to downsize. You may want to rent. You may have a new job overseas where you would not be buying, but might want to keep and rent your new york apartment. You may have a few children and would like to leave a property to them in your inheritance so want to acquire more.

There are many situations I can think where one may want to move out his apartment but keep it and rent out.

> Even with the events of the past several years it amazes me that people still think of buying condos in New York for "future investment rental income" What am I missing?

You're missing the fact that someone who bought a condo XX years ago is paying a fraction of what it costs to rent it today. It's a pure cash cow, once DECADES of inflation raise rents to a MULTIPLE of your carrying cost. In other words, MONEY MONEY MONEY.

ph41, the reason you're stupid is b/c you base your entire outlook on a few recent outlier years. Look at the 100 year history. Anyone who bought and owned eventually was sitting on a powerhouse cash cow and/or a lottery caliber jackpot when they sold.

dealboy, http://streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment

No dealboy - YOU'RE stupid. I am the one sitting on as "powerhouse cash cow", but I did it the old fashioned way - living within my means, not going way out on a limb financially with real estate, and not depending on "appreciation" to finance anything else in my lifestyle.

You could also look at a condup, a coop with condo rules. Just make sure you do not buy any property with a land lease. If you are buying a condo with a 421a tax exemption, remember that the taxes will go up considerably in time. There are some decent buys out there now mostly if you are looking to live there for years. Also look at the school districts. If you can find something in one of the better districts, it could be better for your own children and a good selling/rental apartment.

> I am the one sitting on as "powerhouse cash cow", but I did it the old fashioned way - living within my means, not going way out on a limb financially with real estate, and not depending on "appreciation" to finance anything else in my lifestyle.

So, what's your point? Why don't you understand that NYC apts have been one of the best investments on the PLANET in our generation. That is why people expect similar results. Imagine buying something for $120k, and selling it for $3.8 million dollars (Or renting it out for more than most people's salaries, long after it's fully paid for) ? Holy shit, my head is spinning.

Here is what you to look out for if you want to buy a condo for potential investment.

1 Here is a biggie--Find out exactly what the building rental policies are. How much does a rental application cost, How much do they charge tenant for move in expenses, How much do they charge if tenant wants to renew. What are the policies if you want to paint or repair your apt. What is the tenant approval application process and how long does it take. What type of paperwork is necessary for tennat to complete.

2. Find out now exactly what you can rent this condo for if you had to do it today. Do not listen RE brokers for they will inflate rental price or tell you how fast they can rent apt.

4. Check the amount of inventory that is available in your building or neighborhood.

5. Common Charges--Make sure they are reasonable, compared to other buildings in the area. How often do they rise.

6. Some condo's charge all these hidden fees to rent that your broker or real estate attorney does not explain to you.

Very tough to speculate on the rental market a few years out, which is essentially what you're doing.

I'm with renterjoey that you want very much to look at the building -- but I would go beyond what the sublet procedures are. Worldwide Plaza, for instance, is a condo with a very tough, co-op-like sublet app, but it doesn't mean that landlords there don't make money.

Let me throw in one additional criteria: take a look at how well the building is run -- because if you're not going to be there to take care of things, you want a responsive super/staff to look after your tenants.

ali r.
DG Neary Realty