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NYC guys, should I buy this apt.? - Page 4

post #46 of 55
6/29/11 at 5:39pm
Quote:
Originally Posted by RSS View Post
Interesting. The S&P 500 Index closed at 135.75 on 31 Dec 1980. It closed at 1257.64 on 31 Dec 2010.

Dividend adjustment is needed over that period. I had looked at Jan 1, 1980 to Dec 31, 2010 which is about 28x, starting at Dec 31 is more like 21x

It is true though that real estate lets you invest with way more margin than anybody would give you to buy stocks...but the effect of that benefit is removed if you hold the investment until the mortgage has been paid off. Then you have paid the full value plus whatever the bank thought the time value of the money they would be accepting 30 years later was worth.

If you can make a small down payment, and sell at a significantly higher price in a few years (where you have barely paid down any principle), then the real estate investment becomes a little personal LBO.
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post #47 of 55
6/29/11 at 5:53pm
That seems like a poor apartment for investment, because the loft and decor targets a single person or young couple. If you consider the apartment as an ends, go for it, but there isn't much you could do to create more long term appeal for wealthier buyers. If I end up buying a place in the next few years, I'm going to buy the best value of natural light and ceiling height I can find, because those are the most important components of potential value. Materials and fixtures can always be upgraded. Invest in housing with the mindset that you will eventually want to sell to a couple in their 50's. That's where the money is.
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post #48 of 55
6/29/11 at 6:11pm
Quote:
Originally Posted by otc View Post
It is true though that real estate lets you invest with way more margin than anybody would give you to buy stocks...but the effect of that benefit is removed if you hold the investment until the mortgage has been paid off. Then you have paid the full value plus whatever the bank thought the time value of the money they would be accepting 30 years later was worth.
I do agree ... if one holds 30 years ... and there are other mortgage terms: 15yr, 7 yr, etc. ... which offer less time to play with leverage. Moreover a little money invested early on has the potential to offer better returns than more money invested later. Still, one must also take into account a rise in rents. As I noted ... as the time I sold, that apartment was bringing in 7x the rent one would have paid at the date of purchase. A $5K per month mortgage is so much nicer than $35K per month rent.
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post #49 of 55
6/29/11 at 6:25pm
I recall a chart in the NY Times a while ago showing that after a run up in values in the 70's , NY apartment selling prices bounced along sideways throughout the 80's. They took off like a rocket again in the 90's of course. But that was 10 years of no real increases on average.

Just a reminder that we might go sideways in RE even in Manhattan for a long period of time, especially when interest rates eventually rise.

Of course, exceptional properties will always be a little different.
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post #50 of 55
6/29/11 at 6:43pm
Quote:
Originally Posted by pocketsquareguy View Post
I recall a chart in the NY Times a while ago showing that after a run up in values in the 70's , NY apartment selling prices bounced along sideways throughout the 80's. They took off like a rocket again in the 90's of course. But that was 10 years of no real increases on average.
I think you may have your decades reversed. NYC real estate prices skyrocketed in the 80s. From Crain's:
Quote:
Citywide, real estate prices declined 12.4% between 1974 and 1980, then jumped 152% between 1980 and 1989. They fell 29.3% from 1989 to 1996 and increased 124.2% from 1996 to 2006.
http://www.crainsnewyork.com/article...FREE/903119970
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post #51 of 55
6/29/11 at 9:45pm
Quote:
Originally Posted by pocketsquareguy View Post
I recall a chart in the NY Times a while ago showing that after a run up in values in the 70's , NY apartment selling prices bounced along sideways throughout the 80's. They took off like a rocket again in the 90's of course. But that was 10 years of no real increases on average. Just a reminder that we might go sideways in RE even in Manhattan for a long period of time, especially when interest rates eventually rise. Of course, exceptional properties will always be a little different.
http://www.luxuryrealestate.com/resi...-united-states I wonder what the taxes + maintenance (including house staff, and frankly security staff) are.
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post #52 of 55
6/29/11 at 10:01pm
Quote:
Originally Posted by imageWIS View Post
http://www.luxuryrealestate.com/resi...-united-states



I wonder what the taxes + maintenance (including house staff, and frankly security staff) are.

Fairly easy to estimate.

Some key staff:
Butler: $100-120k yr
Exec. Housekeeper: $80k yr
Housekeepers: $40-50k year. 1 full time housekeeper per 5000 sq ft for a formal household
Chef: $100-120k per year
Head of Security: $120k

Adds up but if you're purchasing that property you shouldn't care
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post #53 of 55
6/30/11 at 11:11am
I bought my first condo last year when I was 25 and it seemed like a no-brainer. Even if I saw zero appreciation in value a real estate pretty much gives me a place to park money and giving me a piece of mind of knowing what my payments are going to be. Rents are on the rise again and long term will continue to grow. Certainty of my cash outflows keeps me at peace. Plus, being a single, unmarried, corporate America worker taxes suck the life out of me. The interest write-off pretty much at this point makes renting and owning on the same playing field. People always say that you can rent for cheaper and this and that, but honestly making a mortgage payment helps my money hold value whether increasing or decreasing because if it were just sitting in my checking account there is no doubt I would be expensing it.

I think my place is a different situation than the OP though. It is in a "better" neighborhood slightly bigger and a condo not a co-op. My maintenance expenses are close to nothing and the building is brand new, I am the first owner.
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post #54 of 55
7/2/11 at 7:04pm
Quote:
Originally Posted by StephenHero View Post
That seems like a poor apartment for investment, because the loft and decor targets a single person or young couple. If you consider the apartment as an ends, go for it, but there isn't much you could do to create more long term appeal for wealthier buyers. If I end up buying a place in the next few years, I'm going to buy the best value of natural light and ceiling height I can find, because those are the most important components of potential value. Materials and fixtures can always be upgraded. Invest in housing with the mindset that you will eventually want to sell to a couple in their 50's. That's where the money is.

Fair points, but it is quite ironic how you mention natural light and ceiling height as your most important factors when that is pretty much all the OP's apartment has going for it.
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post #55 of 55
7/2/11 at 7:36pm
Quote:
Originally Posted by HotlantaHoward View Post
Fair points, but it is quite ironic how you mention natural light and ceiling height as your most important factors when that is pretty much all the OP's apartment has going for it.
Is that a Louis Poulsen artichoke in the LR? That alone is worth a fair amount. Faux perhaps?
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