Buy Curious

Buy Curious: My rent's gone up. Should I buy instead?

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When you're facing an almost 10% hike in rent, you may find yourself asking, should I just buy a place already? Guest broker Michael Weiner of Town Residential counsels a couple facing just such a predicament in this week’s Buy Curious.

THE WISH LIST:

“My partner and I are currently renting a 1-bedroom in the West Village and were just informed that our rent is going to go up $300 when we renew our lease. That will have us paying $3,500 a month. We’re thinking at this rate we could buy something.  We’d love to stay below, say, 30th Street, though not necessarily in the West Village. We have about $130k saved up for a down payment. Can we find something where the monthly outlay would be comparable?”

THE REALITY:

I always tell clients that owning can be better than renting, but only if it makes sense for you. Ask yourself some questions: Can you afford to put up to 20% down right now? Will you save money in the long run by buying? Do you plan on staying in the city long-term? Do you want to use the place as an investment property? The answers will give you a better understanding of whether renting or owning is right for you.

You are currently paying $3,200/month to rent your property. That calculates to $38,400/year that you and your partner are paying solely in rent—without getting any additional tax benefits or any of the other advantages of home ownership (such as building equity and possibly having a say in how your building is managed and run).

With the $3,500 that you are slated to pay after your renewal, you could probably afford to purchase something priced around $650,000. That would keep your monthly payments in the $3,500 range (following a 20% down payment of $130k), while providing a huge tax benefit via the deduction in the interest of your mortgage, as well the reduction of the tax deductible portion of your monthly maintenance.

In searching for 1-bedrooms below 30th St. that are under $650k, I found that there are a number of properties that fit the bill.

But first, you’ll have to decide if a co-op or a condo is a better fit for your temperaments and lifestyle. Condos are considered real property and usually don’t have sublet policies, so you can consider it an investment if you ever decide to move. Co-ops are usually a better value when it comes to price-per-square-foot, so you’ll get more space for your money, but there are strict financing guidelines and you’ll have to face a board interview, which can be an intimidating experience in many buildings.

Before you finalize your purchase (should you decide to go that route), make sure that you and your broker examine the financial stability of the building and take a look at some comparable apartments in the same area. This can be a solid indicator of what type of investment you are making. In today’s NYC real estate market, there is a definite shortage of inventory. When something goes on the market and is priced correctly, it usually sells within a very short amount of time.

If you want to stay in the West Village, try this listing:

  • West Village 1-bedroom/1-bathroom co-op, $675,000: Although it’s technically a little above your price point, the low monthlies for this pre-war 1-bedroom at 87 Barrow St. between Hudson and Greenwich Sts. might just make it worth your while. Maintenance is just $608/month. With the minimum 10% down (around $67k) and a 4.75% mortgage rate, your monthly mortgage payment would be $3,169, with your total monthly payment at $3,777. The apartment features an open-plan living room with hardwood floors and a fully renovated kitchen with new stainless steel appliances. But it’s also a fifth-floor walk-up, which might make it a less attractive option to some buyers.

If you’d rather try a different part of downtown, check out one of these locales:

  • Murray Hill 1-bedroom/1-bathroom co-op, $585,000: This sunny 1-bedroom at 16 Park Ave. between E. 34th and E. 35th Sts. has a windowed kitchen, a windowed bathroom, and spacious closets (including one walk-in). It also boasts ample pre-war charm with high ceilings, original wood floors and wood moldings. The quiet building—which has only four apartments per floor—offers a full-time doorman, a live-in super and on-site storage. Subletting is permitted in the co-op building, so if you do ever decide to move and want to rent it out, you won’t have a problem. As for your monthlies, maintenance is $1,678, so with the minimum 20% down ($117k) and a 4.75% mortgage rate, your mortgage payment would be $2,441/month. Your total monthly outlay would be $4,119/month.
  • Murray Hill 1-bedroom/1-bathroom co-op, $599,000: This 1-bedroom triplex at 215 E. 24th St. between Second and Third Aves. has 12-foot ceilings, hardwood floors, lots of closets and an updated kitchen and bathroom. The elevator building has a roof deck, a garage and laundry on every floor. Maintenance is $963/month. With the minimum 20% down (around $120k) and a 4.75% mortgage rate, your monthly mortgage expenses will be $2,500, and your total monthly payment will be $3,463.
  • Chelsea 1-bedroom/1-bathroom co-op, $575,000: Located at 221 W. 21st St. between Seventh and Eighth Aves., this renovated 1-bedroom co-op offers an open kitchen, a decorative fireplace, exposed brick and crown molding. Monthly maintenance is $1,105. With the minimum 20% down (around $115k) and a 4.75% mortgage rate, your mortgage payment would be $2,400/month, bringing your total monthly payment to $3,505.  
  • Kips Bay 1-bedroom/1-bathroom condo, $515,000: Although it’s technically a large studio, this condo at 350 E. 30th St. between First and Second Aves. can be configured as a 1-bedroom. Amenities in this elevator building include a full-time doorman and a live-in super. Common charges are $320/month and taxes are $450/month. With the minimum 10% down (around $52k) and a 4.75% mortgage rate, your monthly mortgage payment would be $2,418, making your total monthly outlay $3,188.
  • Gramercy Park 1-bedroom/1-bathroom co-op, $550,000: This spacious 1-bedroom at 317 E. 18th St. between First and Second Aves. has large closets and a windowed bathroom and is located in an elevator building with a live-in super. Monthly maintenance is $1,469. With the minimum 20% down (around $110k) and a 4.75% mortgage rate, your mortgage payment will be $2,295/month. Your total monthly payment will be $3,764.
  • Financial District studio loft/1-bathroom condo, $645,000: While this pre-war property at 88 Greenwich St. between Rector and Carlisle Sts. is not quite the 1-bedroom you were hoping for, it’s a decent-sized studio, boasts in-unit laundry, high ceilings and a walk-in closet, and might very well fit your needs. Common charges are only $605 per month and monthly real estate taxes (which would be tax deductible) are $425. With the minimum 10% down (around $65k) and a 4.75% mortgage rate, your mortgage payment would be $3,028/month. Altogether, your monthly total would be $4,058/month.

Buy Curious is a weekly column in which NYC real estate brokers help buyers develop a realistic search strategy. Want some advice on your search? Send us your wish list.  

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