What are the things I should know to buy APT?.

If you plan to finance the purchase, with all the all-in monthly costs including mortgage it will be likely difficult to break even on rent you can charge because sale prices are very high now. There is also a lot of competition to get condos rented out because so many investors have purchased and then put back on the market as rentals. Lots of price drops to be seen around StreetEasy. You are probably better off waiting to buy until you are actually going to live in the apartment. Prices may be starting a decline right now too so you may get better prices next year.

CCL3..You are giving advice to potential buyers to "time the market". Quite frankly I can't think of anything worse. If your life situation presents itself where the time to buy is at hand and you have the financial means to do so then my advice is to go ahead and buy. Don't worry about trying to catch a quick drop in price or whatever. In the long run you will have made the right choice and the sooner the better. Nothing like paying off that mortgage principal sooner.. :)

Well the first part of my advice has nothing to do with timing the market. Do you think that if he is financing his purchase he will be able to cover his costs through renting it out?

Are you a broker btw? Full disclosure please. :)

Let's take as an example this apartment that is both for sale or rent in the Adeline. Now keep in mind this is a building with a generous tax abatement. If you buy the apartment at the listed price, the monthly costs are over $8k per month. The same exact apartment is sitting on the market as a rental at $5850, No Fee (meaning the owner will also be shelling out the $15k+ broker's fee to get it rented).
http://streeteasy.com/building/the-adeline

^^Apt 10E btw

Plus no mortgage interest deduction if not your primary residence, and say the amount of mortgage going towards actual equity building (amount of mortgage not going towards interest) is about $1k per month. Not a winning proposition.

CCL3...what help is full disclosure? The advice either makes sense or doesn't. I will give u this much. I am certainly not a sales agent. Anyhow you are going to have a nervous breakdown. Sometimes people complicate things that are really not complicated. Get your finance in place and buy an apartment for a price that is competitive with everything else out there and enjoy your life...cheers.

CCL3 I have to say you sort of cherry picked a not so great example. Almost $1400 a f2 near 5th avenue?? And what I have found first hand (by owning) and analysis of data, how long you plan to live in the home you purchase is a critical part of the analysis. I personally don't think you should purchase unless you plan to own for 7+ years (ideally longer). Prices go up and they go down (to paraphrase JP Morgan); long term they go up. Not too long ago this board was filled with your type of view on the buy/rent conundrum, however things worked out well for many buyers (like myself) that purchased 2, 3,4, 5 years ago, who knew? Even those that purchased in the hysteria of 2007 or at least most of them are not in bad shape either.

If you can afford to buy and it will not eat up a majority of your savings, employment is stable and the monthlies are affordable for you and you love the place! I think owning your home in NYC may not be such a bad thing and a nice part of your overall long term portfolio. Full disclosure: I started my company in 2007 to offer discounted rental commissions. I did not begin to work with buyers until mid 2009.

Keith Burkhardt
The Burkhardt Group
*funny you thought steveF was a broker :)

I did not mean to side track the thread. Is your advice to the original poster that he buy a condo now even though he won't be living in it right away, or that he should wait? Are there other good examples of apartments where the monthly costs can be easily covered by the amount of rent that can be charged?

I agree with Keith that how long you plan to own should play prominently in the decision. For example anyone who bought in 1986 was screwed if they had to sell before 1995 no matter how good a deal they got on the purchase. Conversely anyone who bought in the first half of the 1990's made out like a bandit if they held for more than 4 years even if they tremendously over paid.

stay on track

I agree with SteveF: "If your life situation presents itself where the time to buy is at hand and you have the financial means to do so then my advice is to go ahead and buy.

Are you in a position personally, financially and emotionally to be a landlord on a property in New York with negative carrying costs? Are you ready to work with a broker to find you a good tenant? Are you ready to offer a lease that gives you the flexibility to move in when you need? Are you prepared to respond to maintenance or tenant problems? Do you realize that Eric Holder may be looking to make sure you have appropriate tenants? Are you ok lacking liquidity on the amount of money you invest?

Countryboy,
You can breakeven in a condo without tax abatement if you only count the interest portion of your mortgage (not in new condos). The key is to find a good price on what you like and have a long holding period (as Keith pointed out). Without the long holding period of at least 7 years, transaction costs of appx 8-10% will be hard to cover. I am seeing some good deals in the market but you have to look. If you get lucky, you can even get a full finished condo (not new development) for $1100-$1200 per sq ft. Do not forget to use Keith who will give you a rebate.

1. Find a real estate agent (who will give you a buyer agent rebate)
2. Get a Pre-Approval letter from your Mortgage Lender
3. Make sure you have enough to cover closing costs in NYC

CCL, am curious which bldgs you consider ideal or good value? Thx

Very relevant question: Does this guy need a mortgage? Or does he have a million dollars burning a hole in his pocket? If it's the latter...you know, rental properties seem to me like an ok proposition from an investment standpoint, particularly if you plan to then convert them to your own place down the line. Lot more complicated than buying a mutual fund, to be certain, but run the numbers on the place you're looking at and if it's good value relative to the stock market, then why not?

In terms of where in the city...man, I don't know. Live where you want to live -- I don't see the point in buying someplace you don't want to live because you think the rental income will be better. Ultimately you'll have to live there, so buy where you want to live.

But the Real Estate asset is a lot less liquid and transaction costs are at least an order of magnitude higher. If either market starts to crash it can be a lot more painful getting away from a condo when you want to than dumping a mutual fund.

Nonetheless, it can be a good asset in your portfolio, particularly if -- like I said -- you plan to move into it a few years from now. Why does that matter? Because if the market starts to crash then you just don't sell at that time because you either (a) live there or (b) intend to live there soon. As a result you don't care that the asset is illiquid or that you have to hold it for a long time.

Investing in apartments, in my view, makes the most sense if either (a) you're very rich and plan to use real estate as a way to diversify, or (b) you plan to live there. This would fall in the latter category.

Hi Countryboy, If you are serious about buying, I have some ideas for you. We can sit down and discuss it inperson at my office. Best regards, Karen Weinberger, Douglas Elliman, 1995 Broadway, NY, NY 10023, 917-456-2919.

But the Real Estate asset is a lot less liquid and transaction costs are at least an order of magnitude higher. If either market starts to crash it can be a lot more painful getting away from a condo when you want to than dumping a mutual fund.

Dumping a mutual fund because the market goes down - great ideal. Sell in March 2009 at the low.

I just read Karen's bio.

Countryboy..how's it going sir?

NOT WORTH IT. Midtown East apt owner here and native New Yorker, and I wouldn't purchase in Manhattan again. Co-op and condo boards impose hundreds of rules related to renting/subletting your apt, amongst millions of other rules. Though condo boards are generally less governing since you own your space, they may still impose fees and restrictions on the length of time you can rent. Many will also require an interview with the potential renter, not to mention your neighbors will instantly rat you out if you use your apartment as an Airbnb sublet. Trust me, it's not worth the headache and since you make some decent change, I'm pretty sure you have better things to do than to play mediator between your renter and a potentially incompetent, slow-to-react board.

My two extra cents:
(1) If you really want to buy, budget 800k-1000k for a condo in NYC and then separately, buy a small house in a CT town and rent that out for extra income. Dealing with a renter directly is much better than having a separate, governing 3rd party breathe down your neck. Plus, you won't have an occasional weirdo in your primary quarters.
(2) Most new condos built after 2000 are outrageously expensive in purchase price and maintenance. $1m will get you a studio or a small 1BR/1BA (think 600 sqft). I would aim for a pre-war (high ceilings) or post-war building (larger sqft). Of course, check out the maintenance of each building but which type really depends on the aesthetic that you prefer.
(3) Battery Park is your best bet for condos. Pro: the neighborhood is fairly quiet and tree-lined, a breathe of fresh air from the rest of busy NYC. Con: Common charges and taxes are unreasonably high. For condos with cheaper common charges and taxes, check out the few in Murray Hill and Midtown East. Most of them lie along the East River though.

I'm inclined to agree with nycdweller4lyfe. Someday I wish to leave this co-op/condo scene altogether and have my individual, own free-standing home without neighbors. It's incredibly inefficient to have a condo board and management company especially for a smaller building - say 7 units.

Moreover, what happens when you have disputes with your neighbors and such? What if one neighbor stops paying? Lawsuits are another danger to watch out for and can make your unit unmarketable. Plus, remember you are in NYC so there are TONS of crazy people who we all have no idea made enough money to buy a home here. Remember these potentially CRAZY people may end up being on your board.

Don't just trust them at the beginning to behave normally, there are tons of emotionally unstable people here in NYC and they will be your neighbors.

With that said, if you HAVE to live in the city, at least make sure your transaction costs don't absolutely kill you. That means being smart and taking advantage of buyer agent rebates when you buy a place so you effectively eliminate the Mansion Tax (http://www.hauseit.com/how-do-i-get-a-buyer-agent-rebate-in-nyc/) and doing a quasi-FSBO if you need to sell so you don't have to pay 6% in broker fees (http://www.inman.com/2016/07/25/the-underground-for-sale-by-owner-movement-in-nyc/).

Even after those moves you still have to make sure you understand what closing costs are in NYC. They get updated all the time - for example this article http://www.hauseit.com/closing-costs-nyc/ has the most updated mortgage recording tax rates which increased recently (city just gets greedier and greedier) with a special additional 0.25% tax.

One other thing, make sure your the apartment you are buying owns its land. Some of those condos and coops that look like good deals are actually "land lease" buildings. Depending on how much time is left on that lease, the value of your apartment could actually go down over the years.

condos have to own their land, but you are right that some coops are land lease buildings. there are other threads on streeteasy that list these buildings.

Except in Battery Park City.