How much can you spend on condo in NYC?
Have started looking at more long-term condo/coop options in Manhattan/Brooklyn and feeling a little bit of sticker shock.
For reference I've been paying around $3k per month in rent since I became an associate in IB (now a junior VP). Some of the apartments I've seen so far in the 700K range in manhattan are complete dumps and I'd be embarrassed to tell people I spent that much for what you get and they normally have higher monthly payments than I spend in rent now for much lower quality/amenities.
Seems like to get a place that doesn't have critical flaws you need to be $1mm+ range and probably closer to like $1.5mm. For reference I have a 1st year associate on my team who bought a $900K place in west village and a VP friend at a similar EB to mine that bought a $2mm place, both of which I always thought was insane.
Is my budget just out of whack with reality? Always thought they were spending way too much on living situation relative to comp, but I guess if your base is $250K and total comp double that what is the price range you can comfortably be in?
Manhattan is expensive, and you are right, what you can buy relative to rent usually doesn’t make much sense.
You need to consider the following:
1) monthly mortgage
2) HOA and taxes (HOA probably 800-1200 a month, taxes I would say ~$1k a month)
3) if a condo, mortgage recording tax
4) All other closing costs (including down payment) - if you are over $1mm and condo expect this to be ~$35k excluding down payment
5) coop/condo rules (co-ops tend to be much stricter) - this will come into play with down payment requirements (some can be as high as 50% or all cash) and then what you can do with your unit. As an example, if you decide to rent your apt out you may have restrictions on this. And of course, things like land lease buildings need to be researched.
With that, if you make $250k in salary (not sure if that’s what you say you make) you can reasonably be ~700-800k in mortgage so ~$1mm for a condo/coop - that is about as far as I’d go.
That would place you around $5.5k a month, with ~$20k a month before taxes in income and not accounting for your bonus. Then of course you have to consider other expenses (kids? Student loans? Etc).
Anyway, as for affordability, in nyc there aren’t many great apartments less than $1mm, and you have to consider how long you may want to own this for (if you want to get a bigger place if planning to have a family, etc).
This is a good post
When thinking about buying a house, I like to not only thing about the asset I am buying but the liabilities I am assuming too. The mortgage is the most obvious but HOA's, real estate taxes, any type of maintenance / upkeep can start becoming material quick. You are introducing a lot of long term fixed costs into your budget, which is generally not good
This was fine for NYC residential when you are printing HPA 3%+ per year for years but not sure you can bank on that going forward. Maybe if you find a good COVID deal it could be worth it
What's your view on apartments with tax abatements? Brooklyn Point, One Manhattan Square, and etc.
I would say with building like the ones you mention there are a few things to consider:
1) tax abatement length
2) number of units
3) percent sold (since these are new)
You ask about the first, but the other two are pretty important if you are ever considering reselling (especially as these are new construction). So on these:
tax abatement: it is great for you in terms of savings, the things you have to consider: is the price inflated (relative to comparable units/buildings) because of the tax savings? Remember that anything that is baked into the price will roll off with every year that goes by (this is worth less every year, maybe not enough to matter but I guarantee once you get to a few years left you can’t charge any premium in the price). So know that any premium right now will slowly go away, and obviously it isn’t really a savings if you pay more for the unit
For the other points, you are talking about new buildings. This is mostly a concern if you are thinking about reselling anytime in the next 5-7 years, but you are taking a risk to an immediate hit to your value if sales aren’t going well. Developers won’t want to reduce prices (they’ll increase incentives) but any drop there immediately shifts your units price. Additionally, if there are a ton of units, it can make resale harder if there are many others on the market. While no unit in nyc is really unique (there is always other buildings and competition) in these huge buildings it is common to have several, essentially identical, units for sale at the same time, so you have to consider that (you will be competing against the same apartment just a different floor or decorated differently, etc)
Finally, if sales are slow, outside of the risk to your units value, you should understand how well funded the building is, and who is on the hook for common charges if the building is only X% sold. You do not want to be in a position where your monthly HOA charges are going up significantly because the developer isn’t paying their share.
Off the top of my head those would be my main concerns.
Off topic but as someone who also rents in nyc, I could never justify the prices your friends are paying. If I had that kind of money, I would quit banking, move to a LCOL/MCOL city and buy 3-4 rental properties to manage for a living, and never work a 80 hour week again. That’s kind of my long term plan. I’ll be in your situation in a few years and I don’t plan on ever buying real estate in this city
First post gave you everything you need to know, but I’ll add a couple as I kinda looked last year.
This is probably included in the first post’s math but once you hit $1mm then you get with another 1% mansion tax that increases as you go up the price ladder.
I think I found one spot for $749k that would be survivable. But they wanted 40% down.
Coops are cheaper in theory but the process sucks and there’s some weird quirks with them. Saw a good coop last year for $550k that was in good shape. However, the coop’s lease was going to be up in 2021. You need to find a decent broker and real estate attorney to help wade through the bullshit.
If you’re thinking about renting it out when you move out of the city, good luck. I couldn’t get the numbers to pencil because of real estate taxes and possibly HOA, depending if you can pass to the tenant (have heard both ways on HOA being passed or eaten by the landlord).
How much can you spend? $100M+ is about as high as you can go. The CEO of Citadel did hit almost $250M for a condo.
Now let's get serious. Do you work downtown or midtown? You can likely save money by living in Jersey if you work downtown. Not living in NYC means you can skip the ~3.5% city tax. You'll get killed with notorious NJ property taxes though. The PATH is about as easy as the subway. I dislike Hoboken, but downtown JC is nice.
there are some really amazing places you can get across the river in Hoboken and just a couple miles north of hoboken on the hudson river water front.
for ~800k, you can get huge place that very nice inside...and is a short commute into the city. My friend just bought a place there and its amazing...has a loft that can be used as a 3rd bedroom...a garage space for 1 car...much nicer custom finishes than you see in Manhattann
for example, look at this place 800k
https://www.zillow.com/homedetails/6607-Hudson-Ave-West-New-York-NJ-07093/38947450_zpid/
2800 sqft, 5 bed, 4 bath, 1 garage space, a small backyard, very nice kitchen and bathrooms, very spacious, 25 minute drive into midtown
this is just a random place i pulled off zillow....there are TONS...and it makes living in a small Manhatan apt embarrasing...we are not in college anymore.
if you want waterfront views and newer construction....you pay more per sqft....but very nice..like this place...with a community that has a pool, on the waterfront
2 bed, 3 bath, 1,444 sqft, 875k
https://www.zillow.com/homedetails/17-Lydia-Dr-West-New-York-NJ-07093/52961958_zpid/
there are tons of restaurants and bars in the Hoboken area...lots of young people.
Sorry, little late on this post, but quick question -- do you have to live in Manhattan or Brooklyn? Not sure where your office is, but you could find much cheaper units around the South Brooklyn / Queens area if you'd be willing to deal with a slightly longer commute. I'm not sure if you're working from home or in the office now, but regardless I think you'll be back in the office in a year or two tops, so something to consider.
I had a summer internship in NYC, and the office I was working as was in Tribeca. Didn't matter -- couldn't afford anything near that area, even with my company paying for half of my rent. Rented out a small little loft in Park Slope, which was very far from the office but all I could get by with. Some of my coworkers were staying in Tribeca Penthouses and I couldn't fathom it.
Not sure if I missed this, are you looking for a 1br? Would you be willing to live downtown? There are plenty of condo listings in the $510-750k range in Battery Park City and FiDi. Obviously monthly charges are a different story as other people have noted, but you could start there.
I just checked and I see 59 1br listings in those two neighborhoods for less than $800k on streeteasy.
Nice buildings (typically on the older side), doormen, gyms, rooftops, etc.
I would MUCH rather buy there than buy in Jersey or BK.
I'm close to making MD (A2A, single and no kids), so I have a lot of liquidity and I still can't justify these prices.
The idea of tying up so much liquidity and incurring a long-term fixed cost in an industry where you could get pushed out at any point just seems insane.
Sure, different people have different risk profiles (outside of other obligations, etc). But as an MD (assuming standard comp package) spending $1.5-2mm on a condo shouldn’t be a major concern (even from a risk perspective).
It does speak to how much of a safety net people are comfortable with and the OP should also consider that when buying a place.
I own my place, but I also have multiple years of annual expenses liquid, and even when I first bought my apartment I still had 1.5-2yrs worth of living expenses relatively liquid. So unless you are comfortable with significant risk (as this poster points out, you could be fired at any point), I wouldn’t blow your savings on a down payment.
Temporibus blanditiis facere et et velit. Consequatur quos voluptatem dolores unde dolores velit. Sed et recusandae commodi quo quis. Maxime ut quas nostrum amet sit omnis dolorem qui. Quia autem enim velit aut exercitationem velit debitis.
Dolor qui dicta rerum sed. In non hic vel repudiandae doloremque ducimus.
Quae et ut et ratione placeat aut dolore. Adipisci eos ut dolorem non. Esse ut voluptas quaerat aut. Doloribus nostrum sed id fugit illo earum sunt.
Vel dolor tempore reprehenderit eos et voluptatibus voluptatem. Mollitia et modi reiciendis optio. Labore quam voluptatem temporibus deserunt necessitatibus iure.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...