Living in greenwich as an analyst?
Junior here currently in a BB internship (one of the less grindy top BBs). My father very recently passed away. My parents are divorced and I was his only child, so I have inherited a pretty nice place in Greenwich about a 1 hour morning drive to the city. Of course, I could enjoy the step-up tax relief (reset cap gains on inherited property), but I really like the house, know my neighbors well, and I don't have the time to properly invest in selling it. I go to school in chicago, so not gonna be using for the next year anyway.
I am not very knowledgable about real estate at all, so looking for some advice.
The way I see it, I have 3 options:
- rent it out for the foreseeable future (and rent in manhattan) though this might not be viable for the price range of the house. Not sure who'd be renting at that value. Plus probably going to damage my relationship with the neighborhood.
- Keep it idle for the next year and then live in it when I work as an analyst and beyond.
- Sell at my leisure in the next year or so (don't really see it as a great investment at my current age and desired risk profile).
My main concern is, is it at all viable to have a 50+ minute commute as an analyst?
Sorry for your loss (and congrats on having a place in Greenwich lol).
I think the bigger question is whether you see yourself staying in Greenwich long term. After 2 years in banking, there are plenty of HF/PE opportunities nearby. If the answer is yes, I probably wouldn’t sell. Assuming you can comfortably afford the carrying costs, I’d hang onto it.
As for the commute, it’s probably technically doable (and you’d save the NYC tax by living in CT), but I’d still recommend something within ~15 minutes of the office. A few people in my group commuted 45–60 minutes from their parents’ houses (so it is technically doable) and were totally miserable/sleep deprived.
Assuming you can afford it, I’d pay someone to clean the house, go back on weekends when you want, enjoy living in the city while you’re young, and then revisit the decision after your analyst stint. By then you’ll know whether you’re staying in banking, moving to a HF/PE role, or doing something else.
I don’t know your financial situation, but if you don’t have a large trust fund to fall back on, I would sell. Even if you want to live in Greenwich long term.
The carrying costs on that house will be comparatively enormous for someone living on analysts salary. You will be burning cash on property taxes, insurance, upkeep, and all of the other blessings of home ownership.
It may be delayed gratification, but sell it, turn the proceeds over to a money manager, and forget you have it. Enjoy your time in the city, meet a nice girl, and you’ll have a sizable nest egg when you’re ready to settle down in 10 years. Future you will thank you.
Everything else here is nonsense. This is the only correct answer. I’m concerned that OP and anyone else is even entertaining the idea of keeping it lol.
Sorry for your loss.
You can do the commute but it will take a toll on you and you'll be tired for most of the summer. The cost of upkeep on the house is probably more than paying rent in the city with a roommate too. Would sell unless there is some sentimental value to keeping the house in the family
You'll have a better sense as to whether the math can work, but it's clear most of the naysayers aren't actually homeowners in greenwich.
That said, your options will be more limited. Goldman or Citi from Greenwich is a LOT harder than PJT or JPM
Currently at a quant fund in Greenwich as an intern, so please discount my input accordingly, but figured I could pitch in. Every morning from 6 to 7 am, I see countless people board the train to commute to the city. MTA generally is much cleaner (especially if you compare it against NJ Transit or NYC Subways), consistently on time, and is overall a reasonable ride if you want to nap/get work done. For banking, I would imagine the bottleneck is your commute back - last trains go around 2-3 am, so if you ever stay in the office past that, you’d be ubering (as I type this, I realize you might be getting your Ubers covered by the bank, but still consider the train situation as it’s likely the faster of the two commutes depending on traffic).
Overall definitely a great place area to live in, especially for a family with kids, but that doesn’t seem like the most immediate concern for you — would highly second that comment above that suggests deciding based on what your plans for the future are. There are 7 hedge funds/private equity shops in my building alone, so exit opps could very likely point you here as is.
Hope this was any helpful, good luck, and sorry for your loss
Rent it out. Neighbors in all these suburbs are cranky and can never make them happy. You probably won’t be in a position to really live there for 10+ years (wife + kids who are walking). Neighbors might even be gone by then to be mad at you.
The train ride to Grand Central is like at least an hour before wherever your office is - not going to work as intern or even full time.
The headache of renting it out as a junior analyst doesn't seem bueno
Buy land AJ, God ain’t making any more of it!
Maybe some RE guys can give some guidance on a fair cagr, and wealth guys on a portfolio with 10+yr horizon.
Option 1: hold and rent - 8% cagr
Option 2: sell, invest in moderate portfolio, buy in 10 years. About the same before tax, behind after
Hold and rent
Median house price in Greenwich is $2.5m.
Median rent is $6k per month, or 3% gross yield.
If you budget 2% holding costs (1.25% tax, 0.5% insurance, 0.25% R&M), that's $50k p.a. hold costs.
Net yield 1% rented out.
Capital growth is a thumb in the air, 7%?
Total return 8%.
Sell and invest, then buy
Sale costs: 7%? Buy costs in 10 years: 3%?
So 0.93 compounds at say 9% for diversified portfolio.
On these numbers, you end up within 1% before tax, and slightly behind based tax drag.
Conclusion
Based on above, I would say if you're set on living in this house in Greenwich in the next 15 years, keep it. Otherwise, if you might want to live somewhere else, or in a different house, or you don't like the concentration risk, sell and diversify.
Other
This doesn't consider how old the house might be when you move in / have a family and whether you want to do a renovation then (or if easier to buy a house/layout more suited to your lifestyle at that time).
Also, although it's a pain to sell, it's also a pain to hold a house with annual costs / admin. A property manager will clip rent, tenants may slightly increase r&m.
There are so many more costs associated with ownership that you are leaving out, in addition to vacancy and turnover costs with renting. It’s simply bad financial advice if he is not going to live there within the next 3-5 years. Financial considerations aren’t the only factors, but under any extended period in history the better bet is selling and investing in a diversified portfolio.
Please tell me where I can rent a multi million dollar house in Greenwich for 6k a month . To be fair I totally agree with your conclusion.
Everyone saying don’t rent it out because it’s going to be difficult to handle is incorrect — find a local asset manager and give them a 10% fee or whatever it is. If you know anyone who has CoStar (proptech software) ask them to check the projected asset price growth in your neighborhood of Greenwich.
You’re in IB — model out your options, price in property value growth, rental growth, property management fee, the accountant you might need to do your taxes, taxes, etc, and then compare that to the income from selling.
Selling might be the right decision. But make sure you do your due diligence on the other options.
10% fee to a property manager is insane for a single asset landlord. If there is a mortgage, that likely eats the entire margin and means you’re out of pocket on top of all other expenses associated. If there’s not mortgage, it’s just a dog shit return.
Assume $2m house, can likely rent for $20k/mo, minus $2k for prop management, 1.2% prop tax+ $2k maintenance reserve+ $250 landlord insurance+ $1k vacancy loss reserve+ broker fee you are probably looking at ~$6-10k of expense per month associated. That’s generously $14k of rental net income per month at the end of the year. Oh, then you pay income tax. So ~$9k. That is at best a ~5% return. Most of these costs scale with value, so the more expensive the house doesn’t necessarily mean better return. And if you have a mortgage, again you are out of pocket real dollars. Imagine choosing to do that, with all the stress associated, rather than ride the market and enjoy being young in NYC.
I’m not sure what the property management fee is, 10% is just a guess.
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