New York City is a town of renters. Most of its denizens will never own a piece of real estate because in many instances, renting is less expensive than buying, at least for the short term. But if you live in the city, what if you could one day have the means to invest in your future by purchasing real estate? No, you’re not dreaming, and I’m not crazy when I say that it could very well be worth your time to at least think about it.
I realize the funds needed (a 20-25% down payment plus additional monies left in a bank account after closing) aren’t easy to come by for the average person. And you might not be so eager to leave a neighborhood you love like Hell’s Kitchen, to move to Washington Heights so that you can own property. You could be spoiled by your large apartment rental, and maybe you’re not willing to downsize for the sake of investment.
But if you are willing to explore other neighborhoods and change your living situation, or sell real estate elsewhere so you can invest in NYC, think about these reasons why buying in the Big Apple could be for you.
1. Mortgage rates are still low
We can all hope that low rates will continue as we move through the new millennium, but most likely rates will increase, eventually. Buying in the not-so-distant future is a smart idea so you can take advantage of some of the lowest rates in our country’s history.
2. Your mortgage won’t increase
If you go with a fixed loan, your monthly note will never increase for the life of that loan. Even the costs of rent-stabilized apartments increase, and there’s always the chance that your building could be sold, and the units could then be rented at market value, which you might not be able to afford. (Or, the price could end up being sky-high ridiculous and you’ll refuse to pay it.)
Maintenance and tax payments are a factor and will increase, however. Know this if you are considering becoming a homeowner in NYC. But this fact brings me to the next point.
3. Tax deductions
Not only will you be able to deduct your mortgage interest but you’ll also be able to deduct a portion of your building maintenance. The percentage varies by building but could be anywhere from about 40% to 60%. A major deduction like this means that you could reap a heavier refund when tax time rolls around.
4. You might know your neighbors a bit better
For all I know, you might be BFFs with your current floormates, but there’s also the chance that you barely know the people who live next to you. When you buy a unit in an apartment building in NYC, there’s a stronger possibility that you’ll feel part of a community. Many of the residents plan to stay for the long haul, and you might make a few new friends rather than feeling like you’re living next to a complete stranger. Who knows? You could even grab drinks at happy hour or walk your dogs together.
5. You’re building equity
When you’re writing that rent check every month, you’ll never see that cash again. However, owning real estate enables you to build equity, which means that you purchased your apartment for once price, but a few years later, barring any economic catastrophe, the value should be higher.
6. The NYC real estate market is pretty much bullet-proof
Even in a weakened economy, people still move to New York and still buy real estate. Now that the economy is on an upswing, apartment prices are at another all-time high (like they were in 2008 before the recession), which is just one more reason why you should give some thought to buying in New York City if it fits your budget and lifestyle.