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Simple question for new yorkers - Page 6

post #76 of 102
Quote:
Originally Posted by kwilkinson View Post
That's not what I meant. You mentioned sending your kids to private school, going out more nights than staying in, going on vacations, and paying for your kid's education are part of living comfortably. I was just saying that that's not what most people consider comfortable, it's what they wish they had the ability to do.

Well the private school thing isn't a definite. I think it's good to give kids the opportunity to be boarders, but it isn't necessary. NYC luckily has some good public schools so that isn't a must. Also keep in mind that doing all I listed is much easier if you're living in the suburbs, so it's not like I'm talking about bathing myself in luxury. I don't have a compulsion to live in NYC with a family partly because all the basics are so much more expensive.
post #77 of 102
Guys, it is very easy to live comfortably in NY on less than $100k. $100k gross is take home of $5k per month. Spend $2k on rent, $2k on food and living expenses, and you still have $1k per month in savings.
post #78 of 102
Quote:
Originally Posted by gdl203 View Post
The rent vs. buy decision is far more complex than a simplistic "money towards nothing" vs "building equity". It is based upon critical assumptions about property appreciation, alternative investment opportunities for cash, expected length of stay in said property and differential/arbitrage between rental trends and property price trends. Many far far smarter financially than me are making a very conscious decision to rent rather than buy and invest their cash elsewhere.

I ran models and sensitivities for months to try to convince myself that buying was a sound proposition - I could never make that case without key property appreciation assumption of 5%+ a year over the next 5 years (and we know where this kind of assumptions got us in the last few years). We still made the decision to buy but it was much more emotional then a sound risk-adjusted financial decision IMO.

I ran a similar model and came up with closer to 7-8% at 2007-8 prices. But asking prices were 20-25x annual rent costsn which I cannot justify. NYC real estate has been my major hobby for about 1.5 years. Are you on streeteasy?
post #79 of 102
The major cost in NYC is housing and there has been an insane housing bubble in NYC over the past 8 years or so. Those people who bought in the 90s or who have rent stabilized/controlled apartments are likely doing fine. It is those people who have trying to move into NYC who will have the greatest hurdle in terms of housing costs. It is changing, and I think housing costs are starting to go down b/c of all the financial turmoil.
post #80 of 102
Quote:
Originally Posted by poorsod View Post
The major cost in NYC is housing and there has been an insane housing bubble in NYC over the past 8 years or so. Those people who bought in the 90s or who have rent stabilized/controlled apartments are likely doing fine. It is those people who have trying to move into NYC who will have the greatest hurdle in terms of housing costs. It is changing, and I think housing costs are starting to go down b/c of all the financial turmoil.

The downturn will likely be quite temporary.
post #81 of 102
Quote:
Originally Posted by poorsod View Post
Are you on streeteasy?
I was when we were looking for a place but I recently cancelled my subscription (I'd rather not know right know if our property is losing value, to be honest). Like I said, we bought against our financial instinct and that was more of an emotional decision than a sound investment (not too different from buying an Attolini suit or a Lange rather than a RL or Omega).
post #82 of 102
Quote:
Originally Posted by poorsod View Post
But asking prices were 20-25x annual rent costsn which I cannot justify.

As an aside, is there a 'normal' __x annual rent in the rest of the country? For example, does it usually cost 10 times the annual rent to buy?
post #83 of 102
Tucker Max has high standards.
post #84 of 102
I was all over downtown NY this weekend and I was going to start a forum about this myself. I about pooped when I read that people were renting ROOMS in NY for >$1500 a month. I had no idea Manhattan was so expensive.
post #85 of 102
Quote:
Originally Posted by crazyquik View Post
As an aside, is there a 'normal' __x annual rent in the rest of the country? For example, does it usually cost 10 times the annual rent to buy?

http://piggington.com/historic_house..._vs_rent_ratio
post #86 of 102
I got a job out of college for Arthur Andersen, a "big 5" consulting firm, at the time before Enron. I started at 50k per year + $10k moving/signing bonus in January 2001. I couldn't afford a place in the Manhattan, so I bought a 800 sqft, 2 bedroom condo in Jersey City for $92k. Since I was a first time home owner, I only had to put down 3%, which came out of my moving bonus. My payments with taxes were around $800 / month, plus $220 maint fee / month.

8 years later, my place is appraised around $250-$300k. Closer to 250 now that the market has tanked. But, this would have been money I would have thrown away had I rented, like most of my friends that started at the same time. If you have to pay for a place, why not start building equity. They could have put their moving bonus towards a down payment instead of paying the apartment broker to find a place in NYC. Brokers charge 15% of the first years rent to find you an apartment and I'm told, you really need to broker to find something good. With first month, security deposit, and the broker fee that's around 10k right there. Down the drain, IMO.

About 4 years ago, I started my own business doing the same thing I was doing for Andersen, and now clear about 300k / yr. I paid off my place and should have moved up to something better, but since I fly every week to my clients from EWR airport, my condo is a convenient 20 minutes to the terminal.

Some of my friends are still renting in Manhattan or in Hoboken. I can't imagine they're saving very much after their big rent bill. I can't believe how much they lost out by not jumping in when we first moved there.

I think the big thing is that you have to live within your means. You can do it even if you make $50k / yr. Pay yourself first by funding your retirement, and try to build equity.
post #87 of 102
Learn basic math and then we'll discuss it.
Quote:
Originally Posted by Tummy View Post
I got a job out of college for Arthur Andersen, a "big 5" consulting firm, at the time before Enron. I started at 50k per year + $10k moving/signing bonus in January 2001. I couldn't afford a place in the Manhattan, so I bought a 800 sqft, 2 bedroom condo in Jersey City for $92k. Since I was a first time home owner, I only had to put down 3%, which came out of my moving bonus. My payments with taxes were around $800 / month, plus $220 maint fee / month. 8 years later, my place is appraised around $250-$300k. Closer to 250 now that the market has tanked. But, this would have been money I would have thrown away had I rented, like most of my friends that started at the same time. If you have to pay for a place, why not start building equity. They could have put their moving bonus towards a down payment instead of paying the apartment broker to find a place in NYC. Brokers charge 15% of the first years rent to find you an apartment and I'm told, you really need to broker to find something good. With first month, security deposit, and the broker fee that's around 10k right there. Down the drain, IMO. About 4 years ago, I started my own business doing the same thing I was doing for Andersen, and now clear about 300k / yr. I paid off my place and should have moved up to something better, but since I fly every week to my clients from EWR airport, my condo is a convenient 20 minutes to the terminal. Some of my friends are still renting in Manhattan or in Hoboken. I can't imagine they're saving very much after their big rent bill. I can't believe how much they lost out by not jumping in when we first moved there. I think the big thing is that you have to live within your means. You can do it even if you make $50k / yr. Pay yourself first by funding your retirement, and try to build equity.
post #88 of 102
Once again GDL is the voice of sanity in these threads. The definition of "comfortable" is key. Really, if living by yourself in Manhattan is so crucial, you have to compromise in some way or make a lot more money. NYC rents are awful. But if you can compromise on roomates, you can find deals. I have a friend who rents a room in a 3 bedroom in Hell's Kitchen. Yeah her space is tiny, but she pays $800 a month and has roof access. That rent leaves a lot of room for savings or entertainment. My first job out of school--in a notoriously underpaid profession--paid only $27k. I rented a relatively large full-floor one bedroom by myself at the top of a house in then-unfashionable Gowanus, Brooklyn. I made it work. It was not the most comfortable budget, but I still went out with friends, traveled some, and most importantly, had my own space. That was my priority. Oh, and there's nothing wrong with renting. Undeservedly, it gets a bad rap.
post #89 of 102
Quote:
Originally Posted by Tummy View Post
8 years later, my place is appraised around $250-$300k. Closer to 250 now that the market has tanked.
No offense, but JC is ghetto. Not the nicest area to be living in regardless of the money you are making. Yeah, you can have close access to Path and NYC, but JC is a far cry from Hoboken or Newport. Its also hard for me to believe that a 2BR condo in JC would be appraised at 250K. Not saying its not possible, but just hard to believe.
post #90 of 102
Quote:
Originally Posted by chorse123 View Post
Once again GDL is the voice of sanity in these threads. The definition of "comfortable" is key. Really, if living by yourself in Manhattan is so crucial, you have to compromise in some way or make a lot more money. NYC rents are awful. But if you can compromise on roomates, you can find deals. I have a friend who rents a room in a 3 bedroom in Hell's Kitchen. Yeah her space is tiny, but she pays $800 a month and has roof access. That rent leaves a lot of room for savings or entertainment. My first job out of school--in a notoriously underpaid profession--paid only $27k. I rented a relatively large full-floor one bedroom by myself at the top of a house in then-unfashionable Gowanus, Brooklyn. I made it work. It was not the most comfortable budget, but I still went out with friends, traveled some, and most importantly, had my own space. That was my priority. Oh, and there's nothing wrong with renting. Undeservedly, it gets a bad rap.
I haven't seen anyone outside of realtors or someone who can't do basic math advocating buying right now in NYC. Renting is the way to go right now.
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