As most know rent in NYC is stratospheric. I was tempted to purchase in order to not just transfer money to someone else, but doing the math is sobering.
Let’s say you need to borrow $1m to pay for an appartment that would normally rent around $5,000 per month.
With a mortgage interest rate of 4.5% (which apparently is considered low), this means that in the first few years you need to pay approx 40/45k a year just in bank fees.
With a real estate tax rate of approx 1.8%, on a $1.5m house you have to pay $27,750 a year in taxes.
Add MOAs that can easily be around $10,800 annually.
This means you have to pay $6,500/month at least for the first few years. Before you even start contributing to your equity.
I know that there is the appreciation of the appartement can make it worth it, but that’s a pretty big gamble and a game of very average return over the last decade.
Ultimately I just don’t see how buying makes sense in this market. I have seen other regions where it can (lower taxes, no MOA, half the mortgage rate), but in this kind of city, I don’t see it. Am I missing something?
Submitted November 01, 2018 at 05:39AM by shannister https://ift.tt/2Pu6Mjx
