Co-op Rental Inquiry

3500. Buy still does not make sense in lots of cases, but this is nyc. I am looking to buy just because the borrowing rate is low and interest is tax deductible.

Is this the quaker ridge?

Testing the Market Price: $3,500+ (would take the longest to rent, likely into the spring / early summer month's)

Market Price: $3,000 - $3,200 (Likely for a 3/15 to 4/15 move-in date considering below parameters)

Aggressive Price: $2,900 - $3,000 (In hopes of bidding up closer or above market price)

These numbers are contingent upon the processing time of the coop board, when (or if) they meet at a particular time, and the total up-front costs. Also adjust for renovations, views, light, etc.

On the economics of the rent/purchase front:

Your net annual cost of home ownership is approximately $42,323 after adjustments on tax savings of interest deductions, property tax, and principal reduction in mortgage. The stipulated number is also assuming that your home is traded at 949K with a annualized maintenance about 17K, a loan amount (25 down) of 744,750, 30 year fixed rate loan @ 4.1%,and an overestimated HOI of $700 per annum.

If the property was leased at around $3,200/month, (my stated market price) your total annual cost of renting including all fee's will range around 41K over 3-5 years (+ adjustments in increased rent, board application renewal fee's, etc.)

If you think the apartment is worth more on the lease end, and the unit is indeed on the market at 949K, then adjustments may need to be made as accordingly.

Hope this helps.

I would make two adjustments to takk's numbers: one is that on the income front, you can't count on 12 months of income. When mortgage lenders look at income properties, they assume a 25% vacancy rate. You may be able to do better than that, but with a terrace unit (a type that tends to sit when the weather is lousy) and a co-op board to deal with, you can't count on it.

So I'd say you're renting this at $3300-$3400 times nine, not times 12. Your gross income is about $30,000 a year.

The second is that you're not renting for even as much as three years without doing work on the apartment. I don't care if everything is brand new, within three years the tenant is going to break something -- an air conditioner, a dishwasher. You probably have routine maintenance of the drainage on the terrace (I can't tell without seeing the specific unit). You may well have to reseal some stone somewhere, or repaint, or at least professionally clean in-between tenants. So you need an expense line of maybe $1000 a year to deal with that stuff.

ali r.
DG Neary Realty

Appreciate everyones input.

Good to hear some of the other factors to budget in for renting. Seems the math could potentially work, but it isn't a no-brainer - especially if you assign value to "inconvenience factor with board" as well as routine maintenance.

Thanks again for all of your thoughts.