Home Buying in White Plains>Question Details

Jackie, Home Buyer in Danbury, CT

We were thinking of buying a condo in W.Plains but realized its beyond our budget so want to look for a co-op

Asked by Jackie, Danbury, CT Fri Jan 30, 2009

but not sure what are the advantages or disadvantages of a co-op vs renting. We might move out of w.plains in 3-4 yrs so what are the possibilities of renting and sustaining the co-op through the rent if we move out of w.plains in 3-4 years?

Thanks

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12
To be honest, I prefer a five year frame. However, given the stable nature of the Westchester market - a lot of people are going to be kicking themselves for years if they don't take advantage of this window of a buying opportunity. The stability of the Westchester market has made a lot of buyers ANGRY. They were denied their big bargain. They were waiting for a nice 50% dive...and it hasn't happened. However, that stability means that buying here is rarely a losing proposition.

The reasons for said stability are several - but it has a great deal to do with our geography and ease of the Manhattan commute. Because Manhattan is an island, there are relatively few locations outside the city where a commute to the city can be accomplished with relative ease. The other factor stabilizing these markets is that the area is already developed. Although we had more high-rise luxury condo construction than I would like to have seen - there was not enough room to put up thousands and thousands of units as happened in Florida or Las Vegas which were very hard hit. Also, although we also had our share of exotic loans, we didn't have anything close to the percentage that the hardest hit areas had.

Is renting throwing money out the window? Most of the time it is. When you add up the tax deductions from the mortgage interest and the property taxes it often costs less to buy on a month to month basis than to rent. I just did the numbers for several first time buyers - and a purchase worked better out three times out of four. It also STABILIZES outlay for housing as the loan amount is fixed and the maintenance/taxes are the only variables. Rents have an annoying habit of rising which can be very disruptive to tenants. The mortgage payment creates amortization. So every month you are gaining capital in your unit or home. That's the wonderful stuff of ownership...When you pay for your unit each month you are gaining CAPITAL, and paying interest on the loan, property taxes and maintenance fees. Both the interest on the loan and the taxes are deductible. What is deductible on a rental ? NOTHING. Do you gain any capital when you pay the rent? NOPE!

But unless someone has at least 4 years - I say rent. I prefer 5. Three? Don't even think about buying.
1 vote Thank Flag Link Thu Feb 19, 2009
As much as I would LOVE to help you buy a coop in White Plains, I'm a bit concerned about your time frame. Four years would probably be fine, but three might be problematic.

From the questions you are asking it appears as if you are looking in Yonkers and White Plains. My suggestion is that if you can stick to a 4-year plan - then expand the search to include smaller towns and villages and create a search around "sellability" (not a real word) factors. Look for an area and complex that are near train stations and have a high walking score. My reason for this is that these areas will hold value better and improve faster than the rest of the market. Rents are VERY high around here. After tax deductions, many are paying far more for rentals than for home ownership.

This one is a tough call. If you choose to buy - your purchase must be based on location, location and LOCATION.
1 vote Thank Flag Link Sun Feb 8, 2009
Hi Jackie,

If you read the “about me " section of my profile here on Trulia you will see what I have to say about the virtues of buying over renting in the long term.
For the short term, buying vs. renting is trickier. As Ralph says “renting is like throwing money out the window” but you do not want to risk capital either. What is your risk tolerance? Short term buying is always more subject to market fluctuations. Where do you see the housing market going? Have we hit bottom? Will prices slide further?
These are the questions you must ask yourself.
You should also calculate the cost of rent vs. buy (after taxes) and see if there is a significant difference in cost.

On a more personal level, since this will be your living space, how will you feel living in a space that is not yours and that you will not be able to change to your liking?

As far as renting out the coop if you move, not all coop boards allow it or and some allow it for a short term only. Investigate! You cannot know what rents will be in 4 years. A good broker can help you make a "guestimate" based on current and past information.

Good luck. Please Contact me if you need assistance.
Web Reference: http://joan.prucent.com
1 vote Thank Flag Link Sat Jan 31, 2009
Buying vs renting? Here's renting: open your window and throw money out of it. That's renting. Buying is opening a drawer and putting your money in there. If you're thinking about renting in 3-4 years, make sure you check with the individual coop board's restrictions on renting. Some prohibit it entirely and others you have to have the board approve the tenants. If you ever become interested in Queens, Nassau or Suffolk Counties or if I can answer any further questions, please don't hesitate to contact me.

Ralph Windschuh
Century 21 Princeton Properties
631-467-0009
rwindschuh@c21princetonproperties.com
1 vote Thank Flag Link Sat Jan 31, 2009
Hi Jackie,

I don't know if you are thinking of a 1 Bedroom or a 2 bedroom apartment, or a studio for that matter, but I will try to give some advice based on 26 years in the real estate business.

If you rent a one bedroom for $1500 a month you will have paid $72,000 in 4 years with no tax advantages.


There is a one bedroom at Bryant Gardens, a nice complex for $169,000 and the maintenance is $622.

If you put 20% down your payment would be about $800 a month plus $622 for maintenance your payment would be $1422.

The mortgage deduction would be about $640 a month and about $310 of the maintenance would be deductible. Assuming a 30% tax bracket it would be like getting $285 back per month.

So your payment would net out to about $1137. So you would save almost $400 a month.

The co-op market is not bad in White Plains as there are a lot of young people coming here for the night life.

I would not buy a co-op with the intent of renting it. The rules can change based on the number of owner occupied units, so they might change the rules after you buy.

I hope this helps

Kevin O'Shea
914.262.1931
0 votes Thank Flag Link Wed Sep 30, 2009
The original poster is probably not even reading this, so I guess we are just discussing amongst ourselves. There is a lot of (hopefully) well intentioned advice here from a lot of people - not much to add for now except I'd again say the writing is on the wall - prices will trend down for a while.

And the numbers you see here PRECISELY prove the point that I made - you need a finance expert and not a realtor to help you understand how you should look at it. The numbers start off correctly and then the arguments get muddy and flawed, no offence to other contributors.. If the OP comes back, I will explain in detail, else doesnt look like there will be any agreement on this thread. But then freedom of speech is what this is about !!!
0 votes Thank Flag Link Tue Feb 24, 2009
It is still cheaper in most cases to buy. You have to do each calculation by hand but I did one just the other day for a potential buyer/renter. The rental was $1500 a month - a significant reduction over what she could have gotten a couple of months ago. Using the asking price as my base and her current income for tax deduction purposes the following calculations were made. Gross outlay on bought unit would be $1675.00 a month. So it looks like renting is cheaper. But calculate in the tax savings, the tax deduction on mortgage interest and you see another story. Outlay after all of these variables are calculated was roughly $1320 or $180 a month less. Further over a five year period, the loan is amortized by over $13,500. That's pure golden EQUITY. So even if rents don't rise over fiver years - which I really, really doubt - this person saves $10,800 in outlay and gains $13,500 in equity. So the buyer comes out $24,300 ahead of the game. You can't beat that.
The renter just threw $90k out the window. No equity, no nothing.

People who do not take advantage of these record low interest rates and price breaks will be suffering serious injury from the shin kicking they will be giving themselves for missing out on a unique window of opportunity. Don't get GREEDY thinking you will wait until the bottom. You won't know you are there until you have lost the buyer's market altogether. Once you've lost the buyer's market, you lose negotiating advantage. Further, you have to look at interest rates AND price. Rarely are BOTH down at the same time.

The calculation was assuming a 30 year fixed loan at 5.5%. My last closing (last week) had a 5.1% rate. Deductions were based on the person's income and what they would save over a five year period.

Note: I bought my present home in 1996. Everyone said I was crazy. It was a very bad market. Not much different from this one. Prices were falling. My house lost money over 18 months or so. Do you know what I bought a house in White Plains for? $246,000. Does it matter now that the market had further to fall? No! Long term thinking is what is required - bear markets turn bull very quickly. Right now there is huge pent-up need to buy. So once the market turns - your advantage as a buyer is gone. You can not time the bottom.
0 votes Thank Flag Link Sun Feb 22, 2009
Well, some of the previous posts here are right about relative stability in westchester. We didnt see the kind of bubble that Miami saw - so the risk of owning at a high price is not too bad. It is your personal view on the emotinal gain of owning vs renting too.

One thing to remember though is relative pricing.

In terms of timing - no one can really predict but it is getting more and more evident that prices here are bound to go down - so you are better off waiting. Manhattan is down 10-20% already based on what some of my friends bought or sold for. And given how wall street is bleeding, it is very likely that manhattan will be down another 10-20%. With that happening, there is no way white plains can sell at todays level. The price per square foot here may go up from say 1/3 of manhattan to say 1/2, but cant be 3/4th of manhattan, right? so if manhattan is down 30% peak to trough, white plains needs to be down 20% or so at least.

Your rent vs owning also needs to incorporate future rents. Rents are also plummetting in the city and a smaller but delayed reaction will be felt here too. So renting will be quite cheap for the next year or two. Sellers on the other hand will have their expectations changed over time once reality hits them. So you will get better prices then.

As far as owning vs. renting goes, dont trust me or anyone else or a simplistic website based calculator. Do your own calculations that involve all the aspects and details. Ask for help from anyone who is good at cashflows and finance (preferably an accountant or a financial expert who understand things indepth). Then make your own decision on buying vs. renting. Most explanations in plain english are very simplistic (including mine) and you will fully appreciate it only after you do the math.
0 votes Thank Flag Link Sun Feb 22, 2009
If anyone tells you renting is throwing money out the window, they are either (a) in the real estate business or/and (b) dont understand mathematics. You should be able to calculate the cost of renting vs. the cost of owning. So if you hold for 4 years, how much rent you pay vs. how much interest would you need to pay on the mortgage (alternatively what money can you earn on the cash that you use i.e. opportunity cost). You can adust for taxes at your marginal tax rate and transaction costs on buying and eventually selling. Only then can you decide what is cheaper. The comparison is easy to make (and if more people did so, the housing bubble wouldnt be so bad). However, you have to make some assumptions on cost of capital, future rents etc. Given that home prices are only likely to go further down (at best stagnate), my opinion is renting is best for now with a 3-4 year time span. But thats my opinion. Now the emotional factor of owning your place is worth a bit too. To me its worth very little. The freedom of being able to break a lease and move is also worth a bit for the renter. To me thats worth a lot more in this kind of economy and having lived in 3 different continents.
0 votes Thank Flag Link Thu Feb 19, 2009
Hi,

Check this out. It might help you decide to buy instead of rent.
http://www.prudentialrand.com/makeyourmove.aspx

(The catch is ...you need to buy by March 31, 2009)
0 votes Thank Flag Link Sat Jan 31, 2009
Jackie, maybe it will help if you see some comparable for rent prices/trends..Try these sites...
http://www.zilpy.com/ ......and.......http://www.rentometer.com/

You will decide what is best for you in this situation, so just find all the info you can, compare it and if you feel you might need the assistance of an agent then be prepared to interview them so you can find someone who will work for your interests...Remember talk is cheap, your financial situation isn't...
This might interest you if you need to interview...http://www.trulia.com/blog/rockinblu/2008/12/i_ve_got_my_fin…

Whatever you decide, be sure it's your decision and it is an informed one...Best of luck, Dunes
0 votes Thank Flag Link Sat Jan 31, 2009
Hi,

"The facts don't lie", but they also don't always tell the whole story...and that can lead to misinformed judgments & decisions. Please contact Laurette Young at the parent information center. (lauretteyoung@wpcsd.k12.ny.us / http://www.whiteplainspublicschools.org. I was born and raised in White Plains. It's a great community. I've been in the real estate business for 20 years...and I would love the opportunity to discuss your needs with you.
0 votes Thank Flag Link Sat Jan 31, 2009
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