Advice Please: Purchasing my 1st APT

First, decide on a unit size (S/1br/2br) in consultation with your family. That will lead to location options, as you figure out where you can get that size unit for $750K. (If you hate the answers, you can go back a step and downsize the unit.)

You will almost certainly want a condo, not a co-op. That may refine the location options somewhat further, as a few neighborhoods simply won't have many condo options.

Final thought - is your family really going to gift you $150,000, help pay your monthly costs, and rely only on trust (rather than any legal mechanism) to ensure they see some kind of return on what you seem to imply is a financial investment for them?

if you keep your price sub $500K, you will actually be able to pay monthlies yourself. that leaves you in a studio/small 1 br. if you go for the higher price, make sure that you can get a 2 Br and be willing to live with roommates.

Why spend 600-750 when you could get a 1bdrm or 2bdrm for a max of 450k.If you are seriously looking please email me at aeddie18@aol.com.

Hi JBG,

I was in the same situation recently. Just a few questions/advice.

1. Are you sure that you can even get a mortgage by yourself for that amount? Assuming you have a down payment of 30% on a 750K payment, your looking at a mortgage amount of 525K. Which makes it a jumbo loan meaning that interest rates will be higher.At 4% your looking at a mortgage amount of $2506, even before maintenance. Your debt to income ratio will probably be too high for most banks and definitely too high for Co-ops.

2. Ideally maybe consider getting a junior 4. For the short term you can keep it as a 1 bedroom with a living room and separate dining are. But if you have a kid or need to take on a roommate, you can throw up a wall and create a second bedroom. This is the option that I went with as I felt it provided me with the most flexibility.

3. Depends what you are going for. I found mine on the Upper East Side, but looked at 1 bedrooms through junior 4's in midtown, upper west and upper east. Your unlikely to find a true 2 bedroom in any of those neighborhoods for the price range you are asking. Unless you are fine with a low floor, no doorman, long trek to subway, and probably no elevator. I can't guarantee that as when I conducted my search, I needed a doorman, elevator, minimum 4th floor, and within .4 miles of a subway stop.

Anyways, hope this helps.

Why not get a 2, and stick with the roommate for a bit to help with costs. Would allow you to afford a lot more.

Overall, I still don't think it is a great time to buy for investment purposes, but if you will be living in it for a while, it could make sense on a consumption basis... and if you get the 2, you are more likely to stay in it and not sell it (which, if you did sell, would probably make the transaction a money loser, with transaction costs and a short time frame).

Next thing is... you have lived here a year... don't you know neighborhoods you like yet? If not, maybe keep renting until you have a better feel for where you'd really like to be?

You might call it an investment, but this is really a consumption play...

1). To find out if it is a good time to but, use the NY Times rent buy calculator and make sure your inputs are very reasonable, preferably conservative. It will almost always tell you it will take around 7-10 yrs just to break even buying. This is because there is a premium to nyc real estate because everyone seems to act as i there will be price appreciation above and beyond the expected. Your choice if you want to make that bet. Rates are low, so if you find the right property, then yes the rates would only then further encourage the purchase.

2). It's almost always going to make more sense to go with the 2 bed over a studio all else equal. With 750k it will be tough to get a 2 bed 2 bath in a prime Manhattan neighborhood, but possible. since you claim you want to rent it out, condo will make it harder to find. Go with a 2b/2ba and have a roommate pay market rate for their half... It will help a lot. Seriously, how long are you really going to want to live in a studio???

3). Te location wildly depends on your taste. You should know nyc very well by now to know what you like. If not, wait and dont buy or spend a lot of time visiting neighborhoods.

Hey JBG -

Welcome to the boards! Now is a great time to be thinking about buying. Here are some of my responses below:

1. Considering the low rates, tax deductibility of a mortgage and the high rental prices in Manhattan, am I on the right track to thinking that I should purchase?

In this market, if you can afford to buy, you should. There is a reason that the current market (in a good amount of neighborhoods) has shifted to a seller's market, especially in the studio and 1 bed range. Mortgage rates are extremely low, and chances are you can purchase an apartment and keep your monthly costs lower than they would be renting. You'll get the tax benefits from the mortgage (and from the building's mortgage if you purchase in a co-op) and you'll begin building equity. If you weigh that against throwing away money in rent, I think it's a 'win' situation.

2. While I assume my family would prefer that I purchase a 1/2 BR apartment, my current living situation and needs would be more suited to a nice studio/small 1br in a nice area with, preferrably in a new building (not married or looking to marry / have kids for 5+ years). Considering that this purchase is a long term play, would it be more "safe" or advisable to go witht he 1/2br that may be in a less-prime location and older building? I am unsure of how a pricey studio in a newer development would fare in terms of a future sale or renting it out.

A lot of this does depend on the neighborhood and the building itself. If you are looking at co-ops (which will keep your purchase price a bit lower, in general, as opposed to condos), you will have to find a building that will allow your parents to co-purchase with you or gift you the money to purchase....and one that will allow subletting in the future, if you are considering that route. For a co-op, if your parents are merely gifting the money, you'll have to stay at a purchase price that keeps your monthly payments below the $2200-$2700 zone. (I don't know your exact financials so I'm basing that off of the figures you wrote.) Most co-ops have sublet policies that put a short limit on the amount of time you may sublet. Also, in some co-ops, if you are charging a roommate rent to live with you, that individual may have to go through a board approval process to be allowed to live in the apartment. It certainly will be easier for you to purchase with your parents in a condo - and then be allowed to sublet to whomever you choose. Location is always a prime factor in renting and resale.

3. Following the previous question, while I understand it is mostly personal preference, would you be able recommend any good locations/developments for a studio or a 1/2br which would fit my price range and needs?

I'm happy to chat with you about locations and specific buildings. I would have some questions to help narrow down neighborhoods that might work for you.

Please feel free to check out my site at www.BuyingNYC.com I can also forward you a copy of my neighborhood guide - that lists all of the NYC neighborhoods with pros/cons/info, and I can also give you a copy of my "Purchasing an Apartment in NYC" document for first-time buyers.

Happy hunting, and let me know if you need anything!

Brad Malow
Rutenberg Realty
www.BuyingNYC.com
bmalow@crrnyc.com

Brad, have you met Daniel?

Thank you all very much for the help. I wasn't expecting such a helpful group of individuals! I am sure that I will be using this forum much more going forward. From the responsees and advice it seems that I should be looking for a condo over a co-op and it seems to be a better idea to go with the 2BR renting route than a small studio/1br.

I plan on reading over all of your comments a few times while continue this process. I am sure I will be back with a few more questions soon!

Thanks again!

I'm helping a family member search for around your price range for a condo. These are some of my thoughts. The spread between coops and condos leads me to believe that there is either a huge amount of speculation in the condo market at the moment or rental prices are rising at a higher rate on the high end in Manhattan. Expect to pay near the highs of 2007, bidding wars are happening at new construction condos. Property tax is rising very quickly. If you go with new construction remember to subtract off the tax abatement when you comparing properties down to the dollar. New properties are always being built, don't believe anyone that tells you that Manhattan is built out, they can always buy an older building and build a new construction apt right next to yours, making yours look old. All buyers prefer new, the flasher the better. Cash buyers that you are competing against aren't really cash, they are just borrowing from somewhere else. Since you need a mortgage, this will hurt you. Cash is maybe 50% of what is going on from what I see. Don't get too hung up on one property, there are many to choose from.

Typically it takes some time to find the apartment you want and to go through the "process". if your parents are helping you out, it may be a good idea for them to transfer as much money as possible to some of your bank accounts ASAP. Later down the road during purchasing you may find a coop that allows unlimited subletting and everything else is perfect. Good to have a few months of statements with that cash to either use as a downpayment or use as liquid assets to qualify for the purchase during the coop board review.

There are a lot things to consider about an condo/coop. Since I was in your situation and I am also fairly young, I'll share my thought process:

To be comfortable with my monthly payments (mortgage monthly carry), I had to stay at under $2200, which ended up being ~$350,000. After that, location seems to be the most important. Honestly there's no way I could afford something in Soho, even though people love to live there. However, I took a bet and decided to buy in a building in BK Heights right across Manhattan and is around the corner from the 2,3,4,5 train and two blocks from A,C,F,R. I personally took a bet that the edge of downtown BK that borders BK Heights would gentrify a little bit. So far a Panera bread and Shake Shack and seems like some of the storefronts on Fulton are being remodeled for new tenants. Also, my apartment is a coops, which works for me since I am freshly out of my MBA and my soon to be wife is in the medical school route, so we will in NYC for several years straight as she finished up and I solidify my new career. Other than that BK Heights is a great place and I can get to anywhere in midtown Manhattan in 30 min.

I think my story fits me and makes sense for a purchase. Besides that, based in what I think is a fairly conservative estimates, my rent buy multiple at purchase was 15.5... not too bad.

>The spread between coops and condos leads me to believe that there is either a huge amount of speculation in the condo market at the moment or rental prices are rising at a higher rate on the high end in Manhattan

I agree I think condos will be in for a rude awakening. In addition, the changes to the co-op 80/20 rule haven't taken affect yet as some of the co-op ground floor sweethearheart leases haven't expired. When these co-ops start collecting proper rent, their much lower maintenances will increase their value.

Your first step is to see about the mortgage. That is your reality check. And you need to have much more than your downpayment and way more if you opt for co-op. If you want to rent condo is better (but watch out for those application packages). But go see about the mortgage first and have the conversation with the folks. They might be surprised when you ask them for $200,000. This guy Jason was really great in terms of explaining mortgage side (and he does not try and hard sell you): JPrussian@wcslending.com (his name is Jason).

After that I think you'd be out in Brooklyn. You could get a nice small place in a new unit over there. You can also find stuff in small one-bedroom in nice downtown bits in Manhattan, but they will be old or really small, or both.

It sounds to me like at the end of the day, if your folks are going to help you with a gift, your best bet is an entry level alcove studio in a prime area. If you really look at things rationally, a large gift can leave you with enough to put 50% down and end up in a prime area with a much higher resell value.

You need to have a long and very serious talk with yourself young man. Look yourself in the mirror and ask the tough questions regarding your dreams, wants, needs and goals. This is a very important decision and if you approach it with a certain amount of clear and precise thought, you can find great success.

Good luck with your plans, keep us posted and if you need any help, feel free to write us at thehometeamNYC@gmail.com

To your success!

How much are Mom and Dad willing to help you with your monthly mortgage and maintenance?

Even with 30% down on "just" $600K, that's a $420K mortgage (minimum $2100/month payment). Monthly maintenance (or taxes/dues on a condo) will be running you close to $1500/month. Even someone earning $160K/year would be stretching it.

I've said it before, and I'll say it again: Studios and one-bedrooms are for RENTING, not buying. If push comes to shove and you lose your income, you'll wish you had that extra bedroom (and ideally, extra bath) to rent out to help with your mortgage and maintenance. Dial back your neighborhood expectations so that you can afford a nice 2-bedroom in Brooklyn or Queens rather than a nice 1-bedroom in Manhattan.

I also advise against buying a studio/1br. Try Williamsburg/Greenpoint for 2br within your price range.
If you really must live in manhattan, Griffin Court on the westside is nice. Great amentities, reputable new development from Alchemy. You can negotiate the price by looking at the recently closed units.

http://streeteasy.com/nyc/sale/498193-condo-800-10th-avenue-clinton-new-york
offer $750k and see what they say. You can get one of those rebate broker and go upto $765k to fit your bill.

"Why spend 600-750 when you could get a 1bdrm or 2bdrm for a max of 450k.If you are seriously looking please email me at aeddie18@aol.com."

Ha ha...this is pretty funny.

jbg - How old are you? You say you're just out of college and banking 100-130k/year? That makes you one of the highest paid 23 year-olds in the country, which means you must be pretty smart. If that's the case, you need to do all the math and as suggested by others, dig deep and decide if you are prepared to be stuck in this apartment and limit your mobility at such a young age. Also, make sure your parents are prepared to carry this place 100%, because if you're really that young, you can't have much saved in the bank and if you lose your income, you certainly aren't helping pay for the mortgage.

And for all of those who keep asking how Condo prices continue to climb? Here you go...another young person who's parents are planning to drop $200k to help him/her buy into Manhattan.

We're seeing a lot of that on here these days.
Lucky youngsters.
When we were that age all we could hope for was to afford to be able to rent a nicer, bigger apt in a better neighborhood. Hoping for a raise at work.
Maybe a parent would help out on a new car purchase.

re: Maybe a parent would help out on a new car purchase.

try $500 to buy a few starter suits at Syms

(right out of college and buying a 3/4 million manhattan apartment - yup, that's why they hate us)

You want some advice? Tell your parnets thank you but they should keep their money (pay the college tuition of the grandkids or the great grandkids) ...work and save on your own.

I know it was a typo, BLOOMSDAY, but you just coined "parnets" as the word to describe that parent/kids
type of set-up.

The parnets are driving the condo market up and they put Syms out of business due to lack of starter suit demand.