Buying vs Renting
Buying or Renting your
New York City apartment should be dependent on a number of factors.
Consider your particular lifestyle, your finances and any other
additional features you might want in your home. With more than ten years of experience in the local
real estate market, Elika Associates can assist you with every step.
and comfort in your home
The decision to purchase New
York City real estate requires a long term financial commitment
so it is essential that it is done while considering numerous
things. Some choose to move to New York for reasons related to
their employment, others becuase of family and there are a many
other reasons for moving which may require a change in lifestyle.
Purchasing property is more time consuming
affair than the practice
Someone who has purchased their home, will usually be eager to settle down in their new new abode. The primary concern
for the homeowner has to deal with their privacy
and comfort. The new homeowner will also want to
think of ways that they can personalize their new
home and this might mean some renovation
or modifications to the existing floor plan.
However most people usually stick with upgrading
kitchen appliances and bathroom remodeling.
Owning a New York City apartment isn't simply about having a place to call home; it also comes with a number of major financial advantages. Buying property means that the property owner isn't wasting money on rent and even if they do decide to move homes, the property can always be rented and become a source of income. The many benefits of property ownership are why it is an important option. People who bought five figure homes in the 70's were delighted to sell the same homes for seven figures and more in the later part of the 90's. This huge rate of growth isn't always guaranteed but it does not make owning New York City apartments any less rewarding.
Tax benefits in terms of owning a NYC apartment, come from the ability to deduct mortgage interest and property taxes from your income statements. People who choose to rent do not have such benefits. A substantial amount of money can be saved and reinvested from such gains and can also lead to a sizeable reduction in terms of expenses incurred monthly.
Despite all this, it is essential to note that those who choose to rent are not tying down their capital like those who purchase property that earns them no income. The fact that it is possible to yield a large Capital Gain from the resale of a property makes the decision to buy a smart one.
If you require additional information about tax benefits that accrue from purchasing property, contact an accountant or other relevant professional.
Well Equipped and Maintained property
People who demand a higher living standard should note that condominiums and co-operative buildings tend to come built with higher standards compared to rental buildings. They typically feature larger living spaces, better finishes, high end appliances and greater overall amenities. In addition those that own a condominium or co-operative can choose to be actively involved in management of the building.
Substantial Capital Commitment
The main reason people choose not to buy a home is the large amount of money required for the down payment. A one bedroom apartment costs seven hundred thousand dollars on average in New York City and at least 20% is required as a down payment to buy it.
Expensive closing costs are an additional expense as well as insurance costs and attorney’s fees. A detailed explanation is provided in our First-Time Buyer's guide. Anyone who wants to purchase a New York City apartment should have no less than $100,000 in their bank accounts as well as a cash reserve of up to six months for mortgage payments and common expenses.
There will also be requirements you need to fulfill prior to the purchase, such as a credit check, rental and owner history and approval by a condominium association or a co-operative board.
Learn More: Purchase
Long Term Involvement
Another reason while people may not be so eager to purchase a New York City apartment, is the long-term commitment required. Buying real estate is a large financial obligation that can impact on a buyer's lifestyle with the loan financed having to be repaid over an extended period of time. Buyers' will be legally responsible for every aspect that comes with home ownership.
Dealing with Condominium Associations and
People who wish to move into a condo or a co-op apartment will first require approval from the management overseeing the building. In the case of condo boards, the rules are not as strict as co-ops and most people don’t experience too many difficulties. People applying for co-ops may find that things tend to get more complicated. When it comes to approval requirements for co-operative buildings, New York City co-ops have the most stringent requirements.
More information is available about co-op boards and condo associations in our Condo vs Co-op piece.
If you have neither the money nor time to buy a home, renting one can be a quicker and cheaper way of living in New York City. The legal and financial commitments are less complicated than buying a property and it is a much quicker process. Many people who come to New York City choose to rent whether they come to work, to search for work or just to experience residing in the Big Apple.
Renting offers the opportunity to live in the city, understand it better and prepare thoroughly to make the right decision when purchasing a home.
No Long-Term Commitment
Clearly renting an apartment is the least expensive option for short term purposes, with no large down payments, mortgage, attorneys, insurance or closing costs. There is also no monthly maintenance, repair fees or property-related taxes when renting. The only commitment is utilities and in some instances a brokerage fee equal up to 15% of the annual rent.
Renting does not build Equity
The major disadvantage when renting is that regardless of how long you have lived in any apartment, you do not own property or equity when you move out and the money spent on rent is also not tax deductible. All these are substantial benefits you would enjoy when owning your own apartment. Building equity
Buildings and Apartments not as well equipped
and maintained as condominiums and co-ops
Rental buildings are rarely the same quality as cooperatives or condominiums. There are a few exceptions however most co-ops and condos tend to be built according to higher standards.
Lack of Control over Living Conditions
Renters are always obligated to accept different living conditions when it comes to various buildings. Some major problems may include the lack of an elevator, old staircases, leaking roofs, problems with kitchens and bathrooms, electrical faults etc. Landlords might allow renters to customize their apartments but sometimes the costs are so prohibitive that renters stick with whatever is available.
This is the most important aspect in any renters’ position. A great landlord can make your stay an enjoyable one and a terrible landlord can make you regret ever signing the lease. The best thing to do is have a meeting with the landlord first and assess the person's demeanor and understand what they desire from their tenants and what they can provide in return.