The value of my apartment has tanked.

soon w67 will call you a lemming, and talk about coolaid.

When did you purchase? What year?

2003

When the comparable apartment sells, you can gloat. Are those listing prices justified by actual sales?

>soon w67 will call you a lemming, and talk about coolaid.

FLMAOZ SQUATZ PIZZAZ

An annual ROR of 3.8% over the past 9 years (assuming you get full ask - 6% to the broker, and nothing else) isn't exactly fabulous. So what?

probably will sink further....

but so what? as long as you are not moving in the next 3-4 years.

so, ask 145%, get 140% now lets do the math

140-100-6-5(closing costs in)-2(closing costs out)= 26/9 yrs = 2.88%

i could've gotten the same avg return in a high yld internet bank account. with a 10 yr cd taken out in 2003, i would be ahead now. so what is your point?????

The era when NYer's will become millionaires doing nothing is over! And paper millions mean nothing until you sold! Be happy to take some profits while you can, soon, you'll only break even which is still remarkable!

>i could've gotten the same avg return in a high yld internet bank account. with a 10 yr cd taken out in 2003, i would be ahead now. so what is your point?????

Have you factored in the rent you were paying to your cash flow model?

So bitter. People will still become millionaires by doing nothing.

Dealboy, what percent did you put down & what was your mortgage rate? What are the monthlies and equivalent rent as a fraction of the purchase price? I'm sure you're sitting on profit, I just want to see how much exactly.

Your calculations are all wrong. You need to use the down payment amount as the denominator and your return is your equity. You will be quite surprised at your actual return.

you also need to add the compounded inflation over 8 years multiplied by the mortgage balance.This adds a very significant profit to your bottomline, and yes tax free.
I wouldn't be surprised if your total return was in the 400% range (from down payment).and yes you got to live in it.

"Your calculations are all wrong. You need to use the down payment amount as the denominator and your return is your equity. You will be quite surprised at your actual return."

A lot of returns look good when you leverage them 5 or 10 to 1. Of course, when things go badly, the look really bad leveraged to 5 or 10 to 1 as well.

"you also need to add the compounded inflation over 8 years multiplied by the mortgage balance."

I am sure you are trying to say something that makes sense here, but this is not it. Maybe you're talking about trying to do some real/nominal conversion, but this certainly wouldn't be how you'd try to compute that.

Bottom line is that unless it was 100% cash transaction, the returns were considerably higher.

>Bottom line is that unless it was 100% cash transaction, the returns were considerably higher.

Maybe, what was the after-tax interest rate? Does the appreciation exceed the amount of the interest?

And as I pointed out before, and as inonada pointed out, we also need to know the equivalent rent over the ownership period.

3.8% per year return is fabulous

^ Anything could be fabulous, *if* you're selling. If you're not, it doesn't matter if it's 238% or flat. The OP purchased in 2003, but the OP has not yet sold, so what exactly are we talking about?

It's just like the stock market --- you don't have a loss unless you *sell* at a loss. And you never pay taxes on capital gains, unless you actually *realized* those gains.

[Not sure why this thread is even here.]

A lot of missed sarcasm here. OP seems like a pretty happy camper.

45% on 20% down is a return of over 200% over 10yrs, thats almost unbeatable in most other markets over the last 10 yrs, particularly the equity market. theres no need to include the cost of the mortgage as thats a wash with the only other comparable method of habitation...rent, provided the market is efficient.
and if you paid 100% cash, then this was definitely the best investment, odds are if you hadnt bought a house with it you would have invested it in the equity market and be flat like the s&p if you were lucky.

I havent missed any sarcasm. The OP could have made money in two ways. First is purely on value, so we need to look at the leveraged appreciation. Second we have to look in comparison to the cash flow from renting. I'm quite positive that the second is well in the money over 8 years, and I bet the first is still attractive to a 2003 buyer.

"theres no need to include the cost of the mortgage as thats a wash with the only other comparable method of habitation...rent, provided the market is efficient."

There's ample evidence on this board that the market is not efficient in this regard. And you only need to look at the trend in rental prices versus the price of owning over the past ten years to know this can't possibly be the case.

"and if you paid 100% cash, then this was definitely the best investment, odds are if you hadnt bought a house with it you would have invested it in the equity market and be flat like the s&p if you were lucky."

Yeah, because no one has ever had a diversified portfolio other than via real estate...

It truly sucks that I am only sitting on a 50% profit now. On the bright side, I have been living below the cost of market rent for 8 years now. If I added up all the money I save each month, and multiply that by 96, damn, that's a whole 'nother bonus jackpot. I'm STILL gettin' paid to house-sit.

Dealboy, what percent did you put down? What was your mortgage rate? What were your monthlies and equivalent rent as a percent of your purchase price?

"and if you paid 100% cash, then this was definitely the best investment, odds are if you hadnt bought a house with it you would have invested it in the equity market and be flat like the s&p if you were lucky."

The S&P is up 58% since the start of 2003, FYI. Sell today, and you're left with 44% after-tax. Bonds leave you in the same ballpark: a bond fund like TLT is up 102% w/ dividends reinvested, so something like 65% after-tax.

For NYC RE, Streeteasy has prices up 37% since the start of 2003. Sell today, and you're left with 25% after transaction costs. But you got 8 years of rent benefit minus monthlies, call it 3% a year or 24% in aggregate. So up 49% assuming we're talking about a place under $2M, otherwise take out some capital gains.

So, it'd have been about a wash for a cash purchaser.

Ah, the old real estate to S&P500 comparison. Two remarkably different asset classes. And the TLT with volatility only it's mother could love.

100% down.
$600/mo
Equiv monthly rent was 1.2% of purchase price + full renovations.

So annual rent is 15% of price. Where / what do you live in?

100% down????
then how many units do you have? one to ten: no more than that.that's not investing. that's saving.like little people.
You might as well rent and put money in your profit sharing plan.

It was 15% of price in 2003.
Now, it's about 8%, after the 50% appreciation.

since all sellers in NYC highball, so ideally, the actual selling price should be just 72.5% of what you paid in 2003, do the math

Most of you overestimate the closing cost. Assume 2b/r $1.5mm. Coop closing cost going in -1% (if you use a broker which gives you a part of the commission back plus paying 1% mansion tax - based on actual experience). Selling cost 5% broker, 1.4% tax, 0.5% closing costs roundtrip. Round trip 6%.

inonada, can you explain your use of the rent to price ratio? How do you use it to determine fair value or over/underpricing? What is your take on my experience buying when annual rent was 15% of the price. And now, where annual rent is 8% of market prices.

Be sure to factor in your cost of carrying the apartment after tax vs the non-deductible cost of renting. In my own case, this has added significantly to the return.

I'm not sure how 15% becomes 8% after a 50% rise in price, unless rents also drop by 20%. I would think the rise has been 35-40%, with a flat to 10% rise in rents. So that which is 8% today would have been 10-11% previously.

Regardless, I think the financial breakeven point (assuming normal monthlies) is 7%, so if you're at 8% or 15% I get where you're coming from. I am not sure what you have, but it is not a very typical price-to-rent for most apts in prime Manhattan. Maybe it is for things like that 200 sq ft place you posted the other day, I don't know. But for typical apts I think 5% is the more typical number. You start going into extreme outliers like what I have, it's 3%.

I was using the same rent figure in 2003 and 2011.

Rents have been pretty stable, but then again, I haven't really looked in a few years. (I just went and looked, and it seems rents are slightly higher than in years past.) Looks like my decision to buy was even better than I originally assumed, except that I'm now only sitting on 50% profit, and not 80% profit.

> You start going into extreme outliers like what I have, it's 3%.

So, in your case, you paid a premium, or simply overpaid?

In my case, using today's updated rent figure, I think annual rent is about 9 or 10% of market price, despite the drop in price.

No, I'm on the other side of that trade: I rent it. The monthlies on the place are 1.5% of the purchase price. Budget another 1% for amortized transaction costs and 0.5% for upkeep, the place provides no cash flow and I'm essentially borrowing it for free.

I'm curious about what you have that is 9-10%.

Typical nice 2b/r which sells for $1.3mm, 1150-1200 sq ft will rent for $5500 a month. Around 5% annual rental cost of the price.

My maintenance and taxes have continually less than 1/3 to 1/4 the cost of renting similar unit. That's real money

Riversider, what about financing cost? That will take the remaining 2/3 or 3/4.

Only the interest is an issue, but the principal is paid back to yourself. Of course if you have no mortgage, even better.

Of course. Interest component should be only one counted towards cost.

and of course as long as you don't sell, you never have to consider the potential loss of principal.

a 45% percent return sounds pretty good to me.

Don't worry if you are in a good location and have reasonable neighbors you can just ride any loss out. this is New York and there is always demand here so it isn't like the stock market where you see what your shares have done every day in the Wall Street Journal. Be patient and enjoy what you have and the security as well.

OP can sit on his 45% unrealized profit compared to 2003 prices. I won't be the greater fool to take an overpriced apartment off his hands.

Call me when the prices roll back to 2000-2001 levels. Until then, *yawn*, keep it.

Prices are never rolling back to 2001-2001 levels.

...they may roll back even further. Wouldn't it be fun to revisit lets say 1998?

Dream on - join W67th in his $500/sf fantasyland

What I find funny is someone gloating publicly about earning a 45% return over 9 years, and being proud of it. What is that, like, a 3.8% annual ROR? Pretty craptacular if you ask me. My gold holdings have repaid me 26% in the past year alone. Over 170% in the past five. That's something to actually be chuffed about. I hope the OP really likes where they're living, that's all I can say....

Good for you our Swedish friend next door.

Hey. I love Sweden. Don't be knockin' the Swedes.

I wasn't "knockin'" Swedes at all.

mjones: ur right. your gold did good. real interest rates are neg so of course.. I own a lot of it.
but real estate is STILL better than that.
I bought a few units in 2003 (dec), cookie cutter, walkup, I bought 5 in the same building. 237K each (small one bed).
20% (about) down, 15 years fixed, 5 something rate.
They go for 340K as of today (next door building is the mirror image,same llc)last sale 6 months ago. I stopped buying NYC 2003. came back 2010.
so down 46,closing 20? (don't rmember probably less),current 340, balance of mortgage 105,gain 169: 210%, 23% annualized (less than that coumpounded).
collected rent all along (started 1400/month up to 2000 in 2008 down to 1650, back to 1750 per unit per month).
I'm not counting depreciation, not counting inflation balance reduction, tax benefits.
Not counting trips to NY fully tax expensed (one per unit/year) (my main tax residence is in a non tax state).
You don't need to sell to collect profit: just refinance and cash out tax free (loan proceeds are tax free).
total return what? certainly greater than 50-60% annualized.

a no brainer. 500%/10 years is nothing extraordinary. some of my agressive landlord friends invest in fringe stuff (uptown, bk,queens) and achieve 20% cash on cash/year.unbelievable returns. I don't go outside mainstream Manhattan.

keep the gold.the exponential component is on the way.

Wow.

Rented every month without exception? No costs for any repairs? No maintenance/ real estate taxes? No insurance? No purchase/selling costs factored in? No cap gains or taxes on sale factored in? And of course, IF you can sell when you NEED to sell....

Gold = 600% - 700% increase during the same time frame. No worries about renting every month. No worries about repairs or maintenance. No insurance. Tax free to sell (up to 99 American Eagles per annum or 25 Kruggerands at one time). 100% liquid at a moment's notice to trade in and out whenever you want, as often as you want. And no dealing with renters/tenants.

I'll keep the gold. You keep the real estate.

mjones, you make a good point, but I think the bigger point is people dont factor in risk, and emotional sentiment of the buyers market in real estate. There is no VIX in real estate. While all investments have risk, stock and gold stocks/etfs etc which is what i assume you are holding can be liquidated and earnings realized or losses stopped in a matter of minutes. While real estate can tie up your cash for an indefinite amount of time and you can only realize certain gains and estimate what you will walk away with unlike stocks and futures etc...Therefore the risk factor is much higher and should always be factored in when investing your money, "risk vs return".

Precisely agree. And I hold SPDR, but also the real stuff too.

don't factor in risk?
I lost my futures account with MF. I went with jefferies, oBrien now still unfunded.
GLD and SLV are frauds. no metals behind , just unbacked derivatives: just read the fucking prospectus. Barclays and JPMorgan as custodials are red flags.
I own a large position of the metals. real metals. physical.
but that's not the point.
get the point.

> 3.8% per year return is fabulous

Incredible, I tell you.

What were carrying costs?