NY Suburbs - Rent or buy a Condo/Coop?

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chomsky81
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NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

Current Rent: $2,700
Down Payment: $100,000

Options:

1. Coop A: $270,000 (HOA: $800) (Interest Rate: 6.5%) - Zillow says $1,900/month
2. Condo: $380,000 (HOA: $600) - Zillow says $2,894/month
3. Rent @ $2,700/month for next few years till price goes up or move and invest into index fund

Questions:

a. does Zillow include all of the prices/fees that i'd pay and/or contribute to monthly cost versus rent?
b. any guides/advice on how to decide if I should take my $100k in savings and put it into my index funds or into a condo/coop

Thanks!
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
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leeks
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by leeks »

How will a condo improve your lifestyle? Would you get a better commute or better neighborhood? Do you expect to stay in this suburb indefinately?

Do not rely on Zillow for total costs. You will need to research/verify everything. Ask your mortgage broker to help with estimates on the options you are considering.
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chomsky81
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

Thanks! Currently no mortgage broker. My commute is currently fine. I am looking for the best financial decision. I'm trying to determine if I should just invest my down payment etc. in an index fund indefinitely or dump it into a condo/coop.
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
gips
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by gips »

Does ny suburbs = nyc suburbs?
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leeks
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by leeks »

chomsky81 wrote: Wed May 15, 2024 7:37 pm Thanks! Currently no mortgage broker. My commute is currently fine. I am looking for the best financial decision. I'm trying to determine if I should just invest my down payment etc. in an index fund indefinitely or dump it into a condo/coop.
It doesn't cost anything (or require a commitment) to get a mortgage broker and the broker can help you predict ownership costs. You can't predict the mortgage costs without having a quote about the interest rate for which you personally qualify.

There is no "best financial decision" that applies to all people. It depends. Different people derive different value from various location and housing amenities. You have to look at what is valuable to you, what stage you are in life, etc. If you expect to move within 5 years then probably don't buy one.

If you love your suburb and are eager to own your own home because it will give you satisfaction of feeling settled and independent, then get one.

If you can see the likelihood of any reasons that this condo might not suit your needs for very long (you might get a new job, new romantic partner, children), it may not be the right time to buy.

If you are nearing retirement age, want stable housing costs, are single, and can see yourself being happy in this suburb forever, it might make sense to get one.

You are also looking at two very different prices. Which is right for you depends on what value/amenities you would get from the more expensive one. If you think the more expensive one will suit you for a longer portion of your life, it might be worth getting that one.
Grt2bOutdoors
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by Grt2bOutdoors »

Number 1 thing I'd look at is the level of reserves in the condo association. All it takes is one bad event to jack the maintenance fees up, having low reserves compounds the potential issues. Same goes for co-op. You never know who sits on the board and how good/bad the management is.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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chomsky81
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

Really good lifestyle advice here! I will read it a few times again to double check where I am at. Most likely will be dating in the near future, 40s, no kids (no plans for them either).

I'm looking for a purely financial decision. If my long-term ROI is better renting, i'll rent and invest, if it is owning a condo/coop then i'll buy. Was hoping to get advice on how to do that math.
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
eskouster
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by eskouster »

If you just want a financial answer, use a rent v. buy calculator https://www.nytimes.com/interactive/202 ... lator.html
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chomsky81
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

Good calculator - forgive my naive quesiton - but would there be a benefit in comparing "Buying vs. Investing" calculator? Let's say it says over 20 years of ownership i'd save $150,000 vs. renting, how do I compare renting and investing versus buying with less investment cash? In NY, if I bought a condo my monthly payments would be the same or less ( not including closing etc.) but not sure if the 100,000k in downpayment is better utilized in an index fund versus a condo in NY
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
muffins14
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by muffins14 »

chomsky81 wrote: Thu May 16, 2024 7:02 am Good calculator - forgive my naive quesiton - but would there be a benefit in comparing "Buying vs. Investing" calculator? Let's say it says over 20 years of ownership i'd save $150,000 vs. renting, how do I compare renting and investing versus buying with less investment cash? In NY, if I bought a condo my monthly payments would be the same or less ( not including closing etc.) but not sure if the 100,000k in downpayment is better utilized in an index fund versus a condo in NY
This is in the calculator.

You can input the mortgage or no mortgage, the rate, and the assumptions on your rate of return from the stock market.

I think it’s generally quite safe to have the baseline assumption that the stock and bond market will return more than real estate. The decision is more about (1) do your prefer a house and the things that come with it like maintenance and perceived stability, and (2) do you want to protect against the downside risk that rental inflation will be more painful than taxes, maintenance, upkeep, insurance etc
Crom laughs at your Four Winds
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chomsky81
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

First off - I love the Conan tagline!

Second, What it is showing is that if I can buy a coop/condo for 400k or less with 100k downpayment i'll be better off than renting at $2700 or above for the next 20 years. I was just not sure how to guestimate what an index fund would return over the next 20 years with 100,000k down payment as it isn't clear if they're calculating my 100k down payment?
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
muffins14
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by muffins14 »

chomsky81 wrote: Thu May 16, 2024 7:46 am First off - I love the Conan tagline!

Second, What it is showing is that if I can buy a coop/condo for 400k or less with 100k downpayment i'll be better off than renting at $2700 or above for the next 20 years. I was just not sure how to guestimate what an index fund would return over the next 20 years with 100,000k down payment as it isn't clear if they're calculating my 100k down payment?
Yep that is built into the calculation. They are assuming the down payment is otherwise invested.

You can put in a value for assumed inflation. Maybe 2.5-4%
You can then have a value for the market return. Maybe 6.5-8%

They use the latter to calculate what your 100k down payment would grow into, if you rented and invested it rather than buying the house
Crom laughs at your Four Winds
Topic Author
chomsky81
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Re: NY Suburbs - Rent or buy a Condo/Coop?

Post by chomsky81 »

Thanks! Every calculator is telling me to rent but NYT is saying to buy - I am going to risk a little and put my down payment into an index fund in my brokerage taxable account for the foreseeable. If life changes and I'd prefer to own something (i.e. a gf/partner wants to move in, find a deal/location/setup I like better than what i have now) then i'll cash that out and buy. If the market took a deep/correction etc. I'll just have to wait then or eat the loss if owning is more valuable to me. Currently have my down payment in VUSXX and USFR as well as T-Bills. I'll move a decent chunk of the Vusxx/USFR into VTSAX or VUG and do the same with TBills once returned to me.
"Governments that issue their own currency are never in fear of default but only constrained by inflation"
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