11 April 2014 17:41 My wife (US) and I (EU) are both doing PhDs in the UK and hope to move to NYC after graduating in mid-2015, bringing one child. Presuming one of us will find a long-term position, we would like to buy an apartment in the city and stay for good. We are hoping for a 2 BR (ideally 3 BR) in N Manhattan / S Bronx, maximum budget $ 500,000. Our initial household income would... [more]
11 April 2014
17:41
My wife (US) and I (EU) are both doing PhDs in the UK and hope to move to NYC after graduating in mid-2015, bringing one child.
Presuming one of us will find a long-term position, we would like to buy an apartment in the city and stay for good. We are hoping for a 2 BR (ideally 3 BR) in N Manhattan / S Bronx, maximum budget $ 500,000.
Our initial household income would definitely be below $ 100,000 - i.e. well within the range of most income-restricted apartments in the area. However,
- Neither of us has much of a recent track record in the US (in terms of income, credit, tax), given that we haven't lived there for years. My wife has declared her taxes every year, of course, but has not paid any taxes as an overseas graduate student living off a small stipend.
- Our household income could rise over $ 100,000 in the future in case we both started working full-time.
There are some interesting income-restricted apartments in this price range (for now) - but would we actually have a chance to be considered? And if not, what are the chances of finding something within that budget on the open market? (from initial search = 0!)
Your thoughts appreciated - Thanks!
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Response by PhDxUK
almost 12 years ago
Posts: 4
Member since: Apr 2014
Thoughts, anyone? Cheers!
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Response by Triple_Zero
almost 12 years ago
Posts: 516
Member since: Apr 2012
Hi, PhDxUK; I'm in a very similar situation to yours. I too will be finishing a PhD in the next year or so, and also am looking to move back to NYC with a wife and (hopefully) a child in tow. We too want to stay in NYC for many years and since she probably won't be able to work (her English is... less than ideal), our income will always be laughed at by Manhattan's elite.
Since renting in the city will probably be out of reach, one thing you might want to look into is buying an HDFC apartment. You haven't mentioned how much you've saved -- if you have decent savings you might be able to buy it outright. I must state in advance that I've never visited these buildings and know absolutely nothing about them beyond what's on the site, but NYC UHAB (Urban Homesteading Assistance Board) lists cheap apartments in dodgy "up-and-coming" neighborhoods that are ridiculously reasonable:
This one has an income limit (for 2 occupants) of $80k and a purchase price of $55k. Right up your alley, particularly if you don't yet have a kid who will be entering the school system. Other HDFCs have income limits in the $50s and 60s. You could even rent somewhere cheap and far from the city, scraping by, until you have the cash to buy one of these.
If your wife has declared US taxes, then she's in a better position than someone who makes more money but has no US tax record. I too have no US income or tax liability but, having maintained a full-time job the entire time, have filed every year, creating a solid chain of proven income. Whether you've *paid* taxes to the IRS doesn't seem to be important; a New Jersey bank I had preliminary talks with had no problem with my Form 1040 showing nothing but overseas income; all they cared about was the number on the 'gross income' line and that it matched up with the foreign equivalent to the W-2 that I also showed them. I was looking into a mortgage, though, and I'm not sure if a co-op board would make an issue of it.
HDFCs seem to require a *lot* of pre-purchase homework, but when it's that or never live in NYC, I think they can be worth it. There's plenty of info on this board about HDFCs and I'm sure other people can give you better info that I've got.
And sorry for not seeing your post sooner -- today's RE prices are so depressingly high that it's depressing to come to this site and see how much further out of reach everything is!
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Response by Flutistic
almost 12 years ago
Posts: 516
Member since: Apr 2007
Best of luck to the par a dox!
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Response by PhDxUK
almost 12 years ago
Posts: 4
Member since: Apr 2014
Hi Triple_Zero, thanks for the info! Good to know about UHAB. It seems like they only need proof of the last three months of income, not several years - so that shouldn't be a problem, considering we will be renting for at least the first months anyway. We're in a good position re savings - not that it makes a difference in NYC where our life savings are probably the same as one month's income for the average Manhattanite...
Best of luck with finishing the PhD! Are you thinking about going into academia? I am not, but getting somehow affiliated with an NYC college or university would be nice. And good luck with your plans re moving to the city!
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Response by REMom
almost 12 years ago
Posts: 307
Member since: Apr 2009
You would be in a position to buy an income restricted property. Income limits vary and could be 120% of median income but increase based on number of people in the household. Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited. The big problem is having enough savings to make a downpayment sufficient to make the monthly carry acceptable from a debt to income ratio. I sometimes see these on Streeteasy. Search for 2 or 3 BRs under $600k and they may turn up.
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Response by REMom
almost 12 years ago
Posts: 307
Member since: Apr 2009
You would be in a position to buy an income restricted property. Income limits vary and could be 120% of median income but increase based on number of people in the household. Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited. The big problem is having enough savings to make a downpayment sufficient to make the monthly carry acceptable from a debt to income ratio. I sometimes see these on Streeteasy. Search for 2 or 3 BRs under $600k and they may turn up.
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Response by PhDxUK
almost 12 years ago
Posts: 4
Member since: Apr 2014
Thanks, REMom, that sounds like good advice! A limited buyer pool seems almost too good to be true for the NYC market - do I understand you correctly that there are simply not that many people with sufficient savings to buy a place (let's say 100k and more) who also fall below the income restrictions?
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Response by REMom
almost 12 years ago
Posts: 307
Member since: Apr 2009
PhDxUK, yes. Most people with 100k in income would only qualify for 200 to 300k in mortgage, so if the seller wants 400 to 500k, they would have to have 100 to 200k in downpayment to buy the unit. Without an inheritance or parental help, most people in that income bracket can't come up with a sufficient downpayment to qualify for the mortgage and keep their debt ratio reasonable. Hence, a very limited buyer pool and competition.
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Response by Triple_Zero
almost 12 years ago
Posts: 516
Member since: Apr 2012
PhDxUK, as REMom has said, NYC being as expensive as it is, accumulating a down payment on a modest income is much tougher than it is in most places. (London, I'm sure, is the same.) It's much easier if you made your fortune in another city, where saving $100k-200k on a $50k income isn't unusual or difficult. (I'm one of these people.)
This is what's so great about income-restricted units. I've seen some really insane ones -- there was an Upper West Side apartment whose selling price was 10 times the maximum income ($700k / 70k or something similar) and was all-cash-only, which almost seemed like a roundabout way of saying "retirees only, please". But others are much more reasonable, and (is this new?) SE will even let you specify Restricted Sales when searching. Here are Manhattan's 86 restricted-sale units as of today:
MEDIAN PRICE/FT²: $417 SIZE: 781 ft² PRICE: $299,000
If you have a wife and kid (or even two kids -- 781 SF is big), are earning $60k, and have $100k in the bank, suddenly things are suddenly looking a lot more reasonable now, aren't they?
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Response by wanderer
almost 12 years ago
Posts: 286
Member since: Jan 2009
Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited."
This is incorrect. From experience, many UWS and South Harlem income restricted buildings are selling much closer to market value. I follow several buildings in these areas (may apply to other areas) and the people that are buying them tend to be trust kids/students with rich parents. Most income restricted buildings allow gifting, so people who would not qualify to own a unit buy it outright for a child, who does qualify in their own right. I see this for many income restricted buildings facing Central Park on 110th. So, the nicest buildings will get bought by the rich and given to trust kids who have money but don't have or need an income.
I talked about this a couple of times in previous posts. This seems to defeat the object of income restriction but the nicest units have a large buyer pool and are not as cheap as you may think
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Response by wanderer
almost 12 years ago
Posts: 286
Member since: Jan 2009
Saying that, a good broker should be able to tell you which income restricted buildings are flexible and will allow people to buy that are above the limits. But that doesn't apply here methinks.
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Response by semerun
almost 12 years ago
Posts: 571
Member since: Feb 2008
Even further north in the Hamilton Heights section of Harlem, I am beginning to see outrageous asking prices that are nearly aligned with properties without income restrictions. The problem is that there are only so many buyers that qualify- and if they do, do they really want a tenement conversion? Sure there are some buildings that were initially built as luxury buildings that fall into the HDFC program - but those are the few that are likely to get snapped up at the dramatically inflated prices. Seriously- buildings that have income restrictions in the neighborhood of 100k/year have apartments with asking prices in the 600-650k range. Now these are large apartments- but even the 500-600 sq ft "2 beds" are asking north of 300k.
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Response by PhDxUK
almost 12 years ago
Posts: 4
Member since: Apr 2014
Thanks, everyone, for the comments. Our baby was born last week, so things are getting a lot more real...
Triple_Zero, the London RE market is equally dreadful but in a different way. Much less regulation, so no hope to snap up a place at below-market rates. Perhaps even more international buyers than in NYC, if that's even possible...
Thoughts, anyone? Cheers!
Hi, PhDxUK; I'm in a very similar situation to yours. I too will be finishing a PhD in the next year or so, and also am looking to move back to NYC with a wife and (hopefully) a child in tow. We too want to stay in NYC for many years and since she probably won't be able to work (her English is... less than ideal), our income will always be laughed at by Manhattan's elite.
Since renting in the city will probably be out of reach, one thing you might want to look into is buying an HDFC apartment. You haven't mentioned how much you've saved -- if you have decent savings you might be able to buy it outright. I must state in advance that I've never visited these buildings and know absolutely nothing about them beyond what's on the site, but NYC UHAB (Urban Homesteading Assistance Board) lists cheap apartments in dodgy "up-and-coming" neighborhoods that are ridiculously reasonable:
http://www.uhab.coop/homeownership/hdfc/boroughs/bronx/577
This one has an income limit (for 2 occupants) of $80k and a purchase price of $55k. Right up your alley, particularly if you don't yet have a kid who will be entering the school system. Other HDFCs have income limits in the $50s and 60s. You could even rent somewhere cheap and far from the city, scraping by, until you have the cash to buy one of these.
If your wife has declared US taxes, then she's in a better position than someone who makes more money but has no US tax record. I too have no US income or tax liability but, having maintained a full-time job the entire time, have filed every year, creating a solid chain of proven income. Whether you've *paid* taxes to the IRS doesn't seem to be important; a New Jersey bank I had preliminary talks with had no problem with my Form 1040 showing nothing but overseas income; all they cared about was the number on the 'gross income' line and that it matched up with the foreign equivalent to the W-2 that I also showed them. I was looking into a mortgage, though, and I'm not sure if a co-op board would make an issue of it.
HDFCs seem to require a *lot* of pre-purchase homework, but when it's that or never live in NYC, I think they can be worth it. There's plenty of info on this board about HDFCs and I'm sure other people can give you better info that I've got.
And sorry for not seeing your post sooner -- today's RE prices are so depressingly high that it's depressing to come to this site and see how much further out of reach everything is!
Best of luck to the par a dox!
Hi Triple_Zero, thanks for the info! Good to know about UHAB. It seems like they only need proof of the last three months of income, not several years - so that shouldn't be a problem, considering we will be renting for at least the first months anyway. We're in a good position re savings - not that it makes a difference in NYC where our life savings are probably the same as one month's income for the average Manhattanite...
Best of luck with finishing the PhD! Are you thinking about going into academia? I am not, but getting somehow affiliated with an NYC college or university would be nice. And good luck with your plans re moving to the city!
You would be in a position to buy an income restricted property. Income limits vary and could be 120% of median income but increase based on number of people in the household. Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited. The big problem is having enough savings to make a downpayment sufficient to make the monthly carry acceptable from a debt to income ratio. I sometimes see these on Streeteasy. Search for 2 or 3 BRs under $600k and they may turn up.
You would be in a position to buy an income restricted property. Income limits vary and could be 120% of median income but increase based on number of people in the household. Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited. The big problem is having enough savings to make a downpayment sufficient to make the monthly carry acceptable from a debt to income ratio. I sometimes see these on Streeteasy. Search for 2 or 3 BRs under $600k and they may turn up.
Thanks, REMom, that sounds like good advice! A limited buyer pool seems almost too good to be true for the NYC market - do I understand you correctly that there are simply not that many people with sufficient savings to buy a place (let's say 100k and more) who also fall below the income restrictions?
PhDxUK, yes. Most people with 100k in income would only qualify for 200 to 300k in mortgage, so if the seller wants 400 to 500k, they would have to have 100 to 200k in downpayment to buy the unit. Without an inheritance or parental help, most people in that income bracket can't come up with a sufficient downpayment to qualify for the mortgage and keep their debt ratio reasonable. Hence, a very limited buyer pool and competition.
PhDxUK, as REMom has said, NYC being as expensive as it is, accumulating a down payment on a modest income is much tougher than it is in most places. (London, I'm sure, is the same.) It's much easier if you made your fortune in another city, where saving $100k-200k on a $50k income isn't unusual or difficult. (I'm one of these people.)
This is what's so great about income-restricted units. I've seen some really insane ones -- there was an Upper West Side apartment whose selling price was 10 times the maximum income ($700k / 70k or something similar) and was all-cash-only, which almost seemed like a roundabout way of saying "retirees only, please". But others are much more reasonable, and (is this new?) SE will even let you specify Restricted Sales when searching. Here are Manhattan's 86 restricted-sale units as of today:
http://streeteasy.com/for-sale/manhattan/status:open%7Csale_type:H
Now look at those numbers on the top:
MEDIAN PRICE/FT²: $417 SIZE: 781 ft² PRICE: $299,000
If you have a wife and kid (or even two kids -- 781 SF is big), are earning $60k, and have $100k in the bank, suddenly things are suddenly looking a lot more reasonable now, aren't they?
Even the nicest income restricted properties will sell for a fraction of market value since the buyer pool is very limited."
This is incorrect. From experience, many UWS and South Harlem income restricted buildings are selling much closer to market value. I follow several buildings in these areas (may apply to other areas) and the people that are buying them tend to be trust kids/students with rich parents. Most income restricted buildings allow gifting, so people who would not qualify to own a unit buy it outright for a child, who does qualify in their own right. I see this for many income restricted buildings facing Central Park on 110th. So, the nicest buildings will get bought by the rich and given to trust kids who have money but don't have or need an income.
I talked about this a couple of times in previous posts. This seems to defeat the object of income restriction but the nicest units have a large buyer pool and are not as cheap as you may think
Saying that, a good broker should be able to tell you which income restricted buildings are flexible and will allow people to buy that are above the limits. But that doesn't apply here methinks.
Even further north in the Hamilton Heights section of Harlem, I am beginning to see outrageous asking prices that are nearly aligned with properties without income restrictions. The problem is that there are only so many buyers that qualify- and if they do, do they really want a tenement conversion? Sure there are some buildings that were initially built as luxury buildings that fall into the HDFC program - but those are the few that are likely to get snapped up at the dramatically inflated prices. Seriously- buildings that have income restrictions in the neighborhood of 100k/year have apartments with asking prices in the 600-650k range. Now these are large apartments- but even the 500-600 sq ft "2 beds" are asking north of 300k.
Thanks, everyone, for the comments. Our baby was born last week, so things are getting a lot more real...
Triple_Zero, the London RE market is equally dreadful but in a different way. Much less regulation, so no hope to snap up a place at below-market rates. Perhaps even more international buyers than in NYC, if that's even possible...