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Karen, Other/Just Looking in 55408

Will my son ever be able to buy in Greenpoint?

Asked by Karen, 55408 Mon Apr 14, 2008

He and his fiancee, both in their mid-twenties, are freelance film editors. Thus their income is unpredictable. Generally speaking, they make about $40K/yr each. They are both really frugal, and carry no debt other than student loans. My son is allergic to borrowing, and has no credit cards (and perhaps little in the way of a credit history). They are renting in Greenpoint now (moving up from a group share in Bushwick) and rebuilding their savings, which they depleted living in Budapest and traveling Europe for 9 months. They would very much love to buy in Greenpoint in a building that permitted them to rent out their place when they are traveling. What would it take for them to do that? My husband and I don't make the big bucks but we have a great credit rating and equity in our home, and we would be willing to cosign for them. However, the NYC real estate market is a wild and woolly beast to us midwesterners. What do you all think?

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Karen Hello.

Greenpoint Brooklyn is a great area, and because of that it has upped in price in the past couple of years. Many new developments went up in that time and they are still building on wahtever space is left. The problem your son and his fiance will face, is that Condos are more expensive than Co-ops. Most Condo's still require only 10% down, which means a much higher mortgage for them to carry if they get approved. Since they do not have any Credit History, it will all be on your hands, and you may need to physically come to New York to deal with that issue if and when it arises. If possible you may want to include the fiances parents if thats an option to help with financials, or you can gift money into their account. Realistically speaking, they may want to wait until they have jobs which are more secure and stable which show a steady flow of income.
If you like I can email you a breakdown of Closing Costs for buyers on a Condo apartment to give you a better idea of future expenses.
They should also look at Long Island City, many good projects which are going up there and well priced.

Please email me or call me so that we can share more info.

Best of Luck Karen
1 vote Thank Flag Link Sun Apr 20, 2008
Here's some contrarian advice.

Maybe your son and his fiancee should wait a while before buying. Not that now's a bad time to buy; in many ways, it's a very good time to buy. And not that they're unable to buy; there are a number of strategies (and I liked Afs' comments) that would allow them to buy.

It's just that it sounds like your son and his fiance are free spirits. And that's great. They're freelancers. They're frugal. They traveled in Europe for 9 months. (Your son's probably been described more than once as "marching to the beat of a different drummer.") Are they sure they're ready to be tied down by ownership?

And if your son, at this point, is so allergic to debt that he doesn't have a credit card, how's he going to feel about a mortgage and the documents that'll show how much in interest he'll be paying over the next 15-30 years?

If he thinks he might want to buy, then maybe a lease-option would work. It'd let him control a property, but really only be obligated for the lease. If he decided in a year or two that the property...or ownership at this point in his life...wasn't for him, he'd just allow the lease to expire, the option would terminate, and he could move on.

Also, whether or not he decides to buy, the should talk to a mortgage broker just to determine how to strengthen his credit rating. Possibly getting a credit card, making a few charges, and paying it off each month would help, while not making your son too uncomfortable with the idea of a "credit" card.

Good luck to you, your son, and his fiance.
2 votes Thank Flag Link Tue Jun 24, 2008
Don Tepper, Real Estate Pro in Burke, VA
As a freelancer myself in the same business, I can say that no one needs to commit to a staff job. It's not, in fact, a very realistic way to make a living in this business - you need to diversify, and work with as many people on as many projects as possible to build your reputation and bring more work in. That's also what makes people keep working - because that kind of change is fun. But you will often work with the same people on repeat business, and I recommend that your son cultivate a couple of those repeat customers - anyone who maintains a payroll - and when the time comes, I've had such contractees vouch for me as a part of their payroll, even though I wasn't on staff. The bank will want to see some pay stubs, and if the same company has doled out a few of those in the pile, then you can use them as references. It helps to make some friends in the company, but that isn't too hard, if you're doing good work. So keep freelancing and keep the records to prove that it's as 'stable' a lifestyle as anyone's - oftentimes moreso, because your professional fate is in your own hands, rather than in those of the CEO of whatever company you drudge around for.
2 votes Thank Flag Link Tue Jun 24, 2008
Greenpoint is still a fairly hot market but it lacks some of the ammenities of the other popular neighborhoods in Brooklyn such as WIlliamsburg and Park Slope. The borrowing is becoming more difficult as the lenders are looking for 20% on average for loans in Brooklyn. There a number of new developments that are starting to sprout but won't be available for at least a year or so and there is also a number of smaller 4-6 story developments of various quality. The pricing is very expensive if you compare to pricing in suburbia, with 1br apartments going for 400-500k and 2br starting around 600k
1 vote Thank Flag Link Tue Apr 15, 2008
Buying in Greenpoint can be more difficult than buying in Manhattan right now. This is due to a combination of rising prices and lack of inventory. Greenpoint is truly a seller's market at the moment. Good condos tend to fly off of the market in less than a week. Half a million bucks might get you a cozy one bedroom ... if you're lucky. In general, you want to have enough cash for a 20% down payment, plus about 5% to cover closing costs and taxes, and then additional money for moving and new furniture. Although it is possible to get a mortgage with a down payment of less than 20%, that lower down payment will usually require additional mortgage insurance by the lender. This effectively adds an extra charge of a few hundred dollars a month. Ouch. Try to buy with 20% down so as to avoid extra mortgage insurance requirements. On a more positive side, no matter what size property you decide to buy in Greenpoint or Williamsburg, odds are you'll make a healthy profit if you decide to sell in the future.
0 votes Thank Flag Link Sat Nov 10, 2012
Well, I wouldn't say what my husband has is 9-5, he is still a producer/director within the industry, he just decided to pursue a staff position in a production company...so maybe that is better to him?

We are putting down 15%, if that helps to know. in brooklyn. good luck!
0 votes Thank Flag Link Tue Apr 15, 2008
Thanks for your answers.

Carissa, my son is willing to make some pretty significant sacrifices to avoid a 9 to 5 situation, so although I'm sure you're right about the bank's preferences, he just isn't going to do it.

Tin, thanks for your take on the market and what lenders are seeking. That is a big part what the kids need to know - just how hard are they going to have to work for how long? If they need 120K in savings, that is a tall order, but those two cheapskates could probably do it three years.

If Carissa's right, though, being freelance will be a huge problem. Unless the mortgage market has changed significantly by the time they are ready to buy.
0 votes Thank Flag Link Tue Apr 15, 2008
My husband was just approved for a big mortgage and is in that industry- he makes a larger salary, but that didn't matter, the only thing the bank wanted to see was that he was staff...which he is now. I would suggest to your son that if he could get a staff job, it would be worth keeping for the time being.

cosigning only helps for the money side (the way I understand it) and not the credit score side...so it all depends on his scores.

I do think he should get and maintain a card, to beef up his score...but not if he is just about to try for a mortgage because it takes time to help.
0 votes Thank Flag Link Tue Apr 15, 2008
Talk to a mortage borker or bank and see what are your options. I know a few mortgage people that I have worked in the past.

you can email at Henry@HenryCunalata.com
0 votes Thank Flag Link Mon Apr 14, 2008
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