Will You Regret Buying an Apartment in NYC?

Will You Regret Buying an Apartment in NYC?


Will you regret buying an apartment in New
York City? This is something not a lot of people think
about but we have a lot of thoughts on this topic. My name is Nick, I am with Hauseit. We are the largest reduced commission platform
for buyers and sellers here in New York City, established in 2014. So, let’s get started. So, will you regret buying an apartment in
New York City? There are a lot of ways to approach this question. I think on a personal level the most important
thing to think about when you’re buying is where you’re going to be in two- or three-years’
time. Buying and selling an apartment in New York
City using traditional brokers is very expensive. Buyer closing cost for a condo can be 4% or
more, for new construction they can be 6% and seller closing cost can exceed 10% if
you’re paying a 6% broker fee. So, will you regret buying an apartment? Yes, if you have to sell it after only a year
or two. Unless you’re in the strongest of markets,
your appreciation will not be able to keep pace with the actual cost of buying and selling. So, as a general tip try to make sure you’re
staying at your apartment for at least 3 to 5 years. Another regret buyers may face when buying
an apartment is just having to deal with all of the headache of having neighbors particularly
in small buildings. In a small building whether it’s a condo
or a co-op, you are bound to become intimately familiar with your neighbors and in particular
when it comes to running the building, making decisions, board meetings, controversies,
everything can get quite personal very quickly and very intimate. So, you’ll want to make sure that you understand
this and the fact that rental building is very different from being in a building where
the people you are living around might be there for ten years or more and they’re really
not going anywhere in good times and bad. Buying into a large building on the other
hand, can feel a bit more like living in a rental building. So, you’ll have a very large management
company and you’ll have so many people who live in the building that you can feel somewhat
anonymous. So, to the extent that’s something you’re
looking for, buying into mid or large size building is great but if you are looking for
a community and that’s part of your objective as a buyer you might have some degree of regret
if you move in to a really big building. One other regret, possible regret of buying
an apartment in the city is if you don’t necessarily know where your job will take
you geographically. As I’m sure you’re aware most co-op building
in New York City have some number of restrictions on subletting and in some cases a building
might only allow subletting for a few years in a lifetime of the ownership. Now this is less common in Manhattan but is
certainly as prevalent in Brooklyn and in Queens. So if you have the kind of job that you might
get reassigned to London for an indefinite period of time you might not necessarily want
to just buy a co-op in particular because if you end up staying in London, say for more
than two or three years, the co-op might actually force you to keep the apartment empty without
a tenant which would cost you a lot of money or of course you’d have to sell the apartment. And that could certainly induce a feeling
of regret to some degree. Another possible regret of buying an apartment
is the reality that it simply costs a lot of money to keep things well maintained. If you lived in a rental building in New York
City since you moved here or for a number of years, you’ll know that as a renter you
basically don’t have to ever open your checkbook and pay for anything. So, as renter yes might’ve paid for a lightbulb,
you might have gone to home depot had a bit of fun, bought a can of paint and out of fun
just painted your living room but when something serious need to be replaced and you’re an
owner it can cost big money. For example, if you have a bathroom and one
of your tiles is cracked, well the cost of removing a tile, removing all of the thin
set below it, chiseling it out, buying all the supplies, finding the same tile, installing
it without cracking any of the other tiles around it. Well you’re looking at a thousand dollars
over the course of a few days. So, if you have a couple of things that go
wrong over the course of a year, owning a property can cost you thousands of dollars
of upkeep. Now the silver lining in New York City is
that a) It’s one of the best cities in the world, it will always be relevant from a cultural
and economic standpoint and pretty much everybody in the world would love to be in New York
City and spend some time here. So, you own an asset that will invariably
appreciate at a healthy rate over time. The other possible regret or buyer’s remorse
of buying a property in New York City is simply the time and mental energy you may have to
dedicate to your home. Particularly if you’ve bought a fixer-upper
or if you’re in a building that really needs a lot of work or its self-managed or if it’s
just a small building where the owner’s need to really get involved. Going back to our previous example, even if
you just need a tile replaced to your apartment, sure money is one thing, a thousand dollars,
drop in the bucket if you live here and have a good job. However, the real issue there is managing
that project and dealing with construction in your own apartment. Having contractors come in and out particularly
if you’re at your office and not being able to supervise them creates a lot of mental
aggro and headache which can really distract from your career. If you are quite sensitive to distractions
in your home it really can antagonize you mentally. But at the end of the day if you do plan on
living in New York City for five or more years and you’re tired of renting, buying could
be a great way to build equity over time. New York City real estate has historically
appreciated at a very healthy rate on an annualized basis. But more so than that buying a property is
one of the only ways that you as an individual can take out considerable leverage in the
form of very inexpensive money to lever up your investment. So, if you are buying a 1-million-dollar apartment
in the City taking out a loan of $800k 30-year fixed rate mortgage with zero margin call-risk
or any other conditions associated with that money is extremely rare. You cannot get anywhere near the same type
of terms to lever up your investments say in the stock market. It’s a unique opportunity really to increase
your leverage and really benefit from appreciation over time. Another way to think about real estate is
over the course of 30-year whole period. If you buy a property today and you make the
payments for 30 years, in 30 years you will own a fully equitized asset that will generate
cash flow, it will not have a loan balance. So, if you do this and you buy 2, 3, 4 ,5
properties even if you rent 4 of them out and even if the rent may not cover all of
your carrying costs, think about it as you basically just paying a few hundred dollars
every month and then in 30 years owning millions of dollars of real estate which can generate
a very healthy cash flow stream and help contribute to your retirement income. So, we hope you found this video helpful. There are a number of ways you can feel buyer’s
remorse as a buyer here in the city but if you make the right decision, you buy the property
for the right price, in the right area, in the right time, it can certainly be an amazing
opportunity and it can also make you feel like you’ve accomplished a bit more in life
than simply going to work every day and spewing out and giving away a large portion of your
income every month for something that you don’t build any home equity from. I’m Nick at Hauseit. Visit our website https://www.hauseit.com
if you’re looking to buy or sell, we have ways to help you and save money on your closing
costs. So, check us out and if you like the video
please do subscribe and like. Leave us a comment as well if you have questions. Thank you so much!

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