Comments on: Can moving to a more expensive apartment be rationalized as an investment? http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/ Intelligent Criticism in the Service of a Better Nation Mon, 31 Oct 2011 18:43:41 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Josh http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/comment-page-1/#comment-227300 Josh Sat, 15 Jan 2011 17:59:26 +0000 http://americanmadness.com/2008/02/15/how-much-do-you-really-earn/#comment-227300 Andrew C: You no doubt live in the nice part of LIC by the water. I live in the Dutch Kills part (technically LIC, but between Queensboro Plaza and Astoria) in which there is almost nothing. Andrew C: You no doubt live in the nice part of LIC by the water. I live in the Dutch Kills part (technically LIC, but between Queensboro Plaza and Astoria) in which there is almost nothing.

]]> By: Andrew C http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/comment-page-1/#comment-210203 Andrew C Tue, 13 Apr 2010 01:32:12 +0000 http://americanmadness.com/2008/02/15/how-much-do-you-really-earn/#comment-210203 no cafe for half a mile? I live in long island city the place is jammed packed with cafes no cafe for half a mile? I live in long island city the place is jammed packed with cafes

]]> By: Josh Friedlander http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/comment-page-1/#comment-123482 Josh Friedlander Mon, 03 Mar 2008 15:44:45 +0000 http://americanmadness.com/2008/02/15/how-much-do-you-really-earn/#comment-123482 Thought I'd add a really good article with some of the same reasoning used by the NYTimes calculator, but done in longhand: <a href=" http://www.viewfromsiliconvalley.com/id316.html"> http://www.viewfromsiliconvalley.com/id316.html</a> As the article notes, "A buyer's true "cost" is their total outlay minus the tax deductions, minus the principle payments and plus the lost interest. " Thought I’d add a really good article with some of the same reasoning used by the NYTimes calculator, but done in longhand:
http://www.viewfromsiliconvalley.com/id316.html“>
http://www.viewfromsiliconvalley.com/id316.html

As the article notes, “A buyer’s true “cost” is their total outlay minus the tax deductions, minus the principle payments and plus the lost interest. “

]]> By: Eric Hazard http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/comment-page-1/#comment-121831 Eric Hazard Fri, 15 Feb 2008 20:52:10 +0000 http://americanmadness.com/2008/02/15/how-much-do-you-really-earn/#comment-121831 If your neighborhood is fundamentally safe, you have reasonable access to mass transit and your rent is that cheap, I see no greater return on investment in moving to a more expensive place. Let's say for the sake of argument you moved to the UES, in an area with lower rents (say between York and East End). On paper, you've moved up, you are probably paying more in rent, there are probably more services around you. But what have you gained? You will no doubt be further from mass transit, you still won't have people over because you realize your apartment is a mess no matter how much you spend in rent and you are not strategically located. I say, stay where you are at. And since I apparently have nothing better to do today, I put in the numbers we had for rent and the numbers we had for our purchase and came up with the conclusion that buying was a good idea. "Buying is better than renting after 2 years." Buying for us was seen as a) good investment (property next door to our put condos for sell at $2000/sq foot in November) and b) an important psychological point in our lives. No longer were we "throwing our money away" to a landlord, we were now building equity in a place we also enjoy living in. Even though the first year was not easy, we still believe committing to purchase was a good decision. There is one other factor to consider, though probably not as big a consideration in your neighborhood: apartment to condo conversions. Our last place kicked us out because it was moving from for rent to for purchase. We no longer have that worry. If your neighborhood is fundamentally safe, you have reasonable access to mass transit and your rent is that cheap, I see no greater return on investment in moving to a more expensive place. Let’s say for the sake of argument you moved to the UES, in an area with lower rents (say between York and East End). On paper, you’ve moved up, you are probably paying more in rent, there are probably more services around you. But what have you gained? You will no doubt be further from mass transit, you still won’t have people over because you realize your apartment is a mess no matter how much you spend in rent and you are not strategically located. I say, stay where you are at.

And since I apparently have nothing better to do today, I put in the numbers we had for rent and the numbers we had for our purchase and came up with the conclusion that buying was a good idea. “Buying is better than renting after 2 years.”

Buying for us was seen as a) good investment (property next door to our put condos for sell at $2000/sq foot in November) and b) an important psychological point in our lives. No longer were we “throwing our money away” to a landlord, we were now building equity in a place we also enjoy living in. Even though the first year was not easy, we still believe committing to purchase was a good decision.

There is one other factor to consider, though probably not as big a consideration in your neighborhood: apartment to condo conversions. Our last place kicked us out because it was moving from for rent to for purchase. We no longer have that worry.

]]> By: Josh Friedlander http://www.americanmadness.com/2008/02/15/how-much-do-you-really-earn/comment-page-1/#comment-121830 Josh Friedlander Fri, 15 Feb 2008 20:24:42 +0000 http://americanmadness.com/2008/02/15/how-much-do-you-really-earn/#comment-121830 Matt C: that's why I include the NYTimes calculator. It isn't necessarily an investment in your future in all circumstances. If your rent is much much lower than the cost of the mortgage, even factoring in the deduction, it can make more sense to rent and not buy. In your case that's certainly true even if you pump in inflated assumptions about the appreciation value of Manhattan real estate. Because you and I pay so little in rent, we get to keep the difference between the rent and the mortgage payment, which can be invested. At the end of thirty years, it's possible (actually probable) to have more money in pocket than you would if you were to monetize the house/apt you've bought. Like I said, in no instance should I buy at my current rent for financial reasons unless I can find a place for less than $285,000. The chief reason for me to buy a home more expensive than that would be personal reasons: desire to own a home and be able to outfit it the way I like. Matt C: that’s why I include the NYTimes calculator. It isn’t necessarily an investment in your future in all circumstances. If your rent is much much lower than the cost of the mortgage, even factoring in the deduction, it can make more sense to rent and not buy.

In your case that’s certainly true even if you pump in inflated assumptions about the appreciation value of Manhattan real estate.

Because you and I pay so little in rent, we get to keep the difference between the rent and the mortgage payment, which can be invested. At the end of thirty years, it’s possible (actually probable) to have more money in pocket than you would if you were to monetize the house/apt you’ve bought. Like I said, in no instance should I buy at my current rent for financial reasons unless I can find a place for less than $285,000. The chief reason for me to buy a home more expensive than that would be personal reasons: desire to own a home and be able to outfit it the way I like.

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