Icer, Home Buyer in Bronx, NY

I plan to buy a condo (1bd 1ba)/co-op in upper east side, but someone said renting is better than buying. Is that true? How much of bank saving?

Asked by Icer, Bronx, NY Wed Feb 9, 2011

should I have if the condo/co-op is $400,000, for instance?

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BEST ANSWER
Hello Icer,
Many renters are hoping to purchase a home as mortgage interest rates are ultra low, prices are much lower, and there is usually a good amount of inventory to choose from.
I suggest that you contact a mortgage broker or banker who can find you the best loan package available so that you will feel comfortable on what your down payment should be as there are a few programs out there.
Here are 7 reasons to own your home according to the National Association of REALTORS:

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Hope this helps.
Good luck!

Laura Feghali
Prudential Connecticut Realty
3 votes Thank Flag Link Wed Feb 9, 2011
Hi Icer. As an aside, I always enjoy Mack's responses. Here's another way to look at your question. If you're looking to purchase below 110th Street, you might not be able to afford a Condo (based on your $400K price point) as they out-price similar sized Coops. That being said, you may now have limited options. If you want a doorman building with many amenities, your options will dwindle further.

Coops are you best option but as Manhattan has essentially stabilized (though at slightly lower prices), $400K may yield studios, Jr 1's or a small 1 Bedroom if you're lucky. In short, you won't have a lot of option but you would most likely be able to find something. Good luck.
2 votes Thank Flag Link Thu Feb 10, 2011
Renting is better than buying, if you don't care that you're not an owner and you don't mind paying off somebody else's mortgage rather than your own.
2 votes Thank Flag Link Thu Feb 10, 2011
Whether renting or buying is "better" really depends on your criteria. If your criteria is simply your cash outlay per month, I've run literally dozens of "rent versus buy" financial scenarios for my clients over recent weeks, and in most cases the monthly payment was actually less for the prospective purchase versus prospective comparable rental. However, there are two key factors to consider: the big savings from buying come in from the tax deductibility of your mortgage interest payments. If you're going to be paying "all cash" for example, this is less of an incentive because you would not be getting that deduction. Also, you'll need to tie-up funds in your down payment. If you're a miracle investor earning 15% per year on your money, for example, you may actually find it more profitable to rent and keep your potential down payment invested as it is. But if you're like the rest of us earning a measly 1% in the bank, putting the money to work for ownership almost always pays off.

The other thing to consider is whether you believe property values will appreciate as they have done historically over time, or whether you believe some who believe real estate values will continue to depreciate or that the economy will face a "double dip." I'm squarely in the camp of believing we're in the midst of a slow but steady rebound, and that those purchasing today will be exceptionally happy they did in 5 - 10 years. I purchased my own apartment in 1996 during the last real estate downturn when everybody was telling me it would be the "biggest mistake of my life." My apartment value has increased nearly five-fold since then, even after the downturn.

With regard to bank savings, the amount you'll need to put down will depend on the co-op / condo, and whether you can qualify for an FHA loan, etc. If you provide some more specific details, I can better assist or refer you to a mortgage broker. With some co-ops, the board likes to see an adequate amount of savings to carry you in the event you lose a job, etc. This really can vary enormously from co-op to co-op. Some don't look at all, while others might want to see at least 2 years of maintenance + prospective mortgage payments.

Hope that helps!

regards,
Jeff Brenner, MBA
Senior Associate - CitiHabitats | CitiSales
Apartments | Townhouses | Multifamily
Rentals, Sales and Investments
By Referral Only
"Platinum Production Award - 2009" | "Top Rental Production"
"Top Overall Production (Sales + Rentals) Award - 2008"
Mobile 646-496-5333
jbrenner@citi-habitats.com
2 votes Thank Flag Link Wed Feb 9, 2011
With interest rates as low as they are, if you have a budget that would allow you to make a down-payment, this is an excellent time to purchase an apartment. The upper east side is also a wonderful area to look because there are still very good opportunities to get great deals. Since the downturn in our market, the general rule of thumb is be prepared to make a down-payment of 10% for a condominium. The co-op down payment is a different and more variable percentage, because it depends entirely on the requirements of each co-op board.

Whatever you decide to do, make sure that you look with a Licensed New York Real Estate Agent who is specialized as a Buyer's Agent. To not have your own representation would be like going to court, without having your own attorney there to represent and protect you. Plus, the best part is that buyers do not pay the Broker's fees, the seller does.

Lindsey Newman
Senior Real Estate Sales Associate
1 vote Thank Flag Link Wed Jan 11, 2012
Owning is always preferable to buying due to the buildup of equity, the tax deductions and and the pride of ownership. No single asset has performed as well over time as well as real estate, provided you have at least a 5 year horizon.
1 vote Thank Flag Link Tue Feb 22, 2011
Hi Icer. Please feel free to contact me regarding Forest Hills. Your budget will work with 1 bedroom and even very well sized 2 bedroom Coops in a fantastic location with easy Manhattan access via the E,F,R and M subway lines. As for time, be aware that Coops will take roughly three months or so to close.

You will need to get your paperwork together regardless of where you purchase regarding financing,credit, assets, income, pre-qual, etc. I am glad to be of service, if you would like to contact me. Good luck.

Joseph C. Hastings
NYS licensed associate broker
Prudential Douglas Elliman Real Estate
Cell: 1-917-579-1502
1 vote Thank Flag Link Sat Feb 12, 2011
Consult with your tax professional, he/she can best advise if purchasing at this time makes sense for you at this time and in the long run. As for how much in savings needed to purchase--there are other factors that determine loan qualification, therefore consider visiting with any qualified loan officer(s), after reviewing your overall financials, a determination on qualification can be made, the type of loan, how much, how much down, etc.
1 vote Thank Flag Link Thu Feb 10, 2011
There are many "rent versus buy calculators" on the Internet, just search for those words. Here is one from the New York Times:

http://nyti.ms/cjMOGK

A crucial consideration is how long you plan to live there, because closing costs are high, and you would need a lot of rapid appreciation to avoid losing money if you plan to sell soon.

If you need help estimating closing costs, please visit my blog post on buying in New York City:

http://bit.ly/bm79FF

I have an apartment on the Upper East Side and I would, of course, be delighted to help you find a place if you decide to purchase.

Karla Harby, VP
Rutenberg Realty NYC
kharby@crrnyc.com
1 vote Thank Flag Link Thu Feb 10, 2011
Thanks you all. I really appreciate all your answers. Actually, before considering upper east side, I watched some units in Little Neck, Scarsdale, Pelham and forest hills. They all have very good schools, but need 1 hr to Manhattan where I work. With $400,000, I can buy a nice 1000SF co-op/condo in above areas, while not enough even for a 500sf co-op in upper east side. So, Space and time, what can I choose? Thanks!
0 votes Thank Flag Link Sat Feb 12, 2011
Hi Icer,

What may be good for others may not be good for you. There is no correct answer to your question. The best way for you to determine if purchasing is right for you, is to go over your financials and mortgage options with a loan officer. By doing so, you'll be able to see what down payment is required, what your monthly payment would be, etc. If you would like additional information on mortgage products and options, feel free to contact me. Also, feel free to visit my website for some helpful information.

Best of Luck to you!

Rocco Guercio
Loan Officer
347-462-4210
0 votes Thank Flag Link Thu Feb 10, 2011
Hey there,

There's no straight answer to this question, it depends on a lot of things such as how long you plan to keep the apartment, how much money you are putting down, the size of your mortgage, how much of your costs are tax deductible etc. To answer this question based on your specifics I'd suggest gathering all the necessary information by working with a good buyers agent and a lending institute and do the math, it will decide for itself!!
0 votes Thank Flag Link Thu Feb 10, 2011
It depends on your situation, your financials, and your definition of better. You could always contact an agent (as myself) and together you guys could weigh in on the positive and negative consequences. That person who gave you that advice...what grounds do they have to make such a statement? To me, it sounds like they perhaps said a lot more to you than "Renting is better than buying." Am I right????
0 votes Thank Flag Link Wed Feb 9, 2011
Hi Icer,
There're are a lot of tax benefits associated with a real estate purchase. Depending on what type of property you purchase and in what building.
If you would like to speak with me, I would be more than happy to help navigate you through the process.
Feel free to call or email me.
Best regards,
Tommy James
Key New York Real Estate
tommy@keynewyork.com
917-667-7713
0 votes Thank Flag Link Wed Feb 9, 2011
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