For the most part, being a renter vs. being a buyer is a personal choice, and often dictated by individual circumstances, such as the real estate market, the payment amount you can afford per month, and how long you plan to live in a particular place. Have a look at this online calculator from the New York Times, which tells you how long you’ll have to live in a home for your investment to start paying off.
In New York City, nearly 70 percent of its residents rent for various reasons, including the high cost of buying and the long-term commitment involved. If you aren’t fortunate to live in a rent-stabilized apartment, chances are, you’re paying an exorbitant amount each month. If this is the case, buying might be an option to consider. Read on for six reasons you should think about buying instead of renting.
The number one reason to consider buying real estate anywhere is the tax deductions. Any interest you pay on your mortgage loan is deductible from your gross income, as is a portion of your monthly maintenance. Combined, your mortgage and maintenance could save you thousands of dollars in taxes per year, which means less paid to the IRS and more money in your pocket.
NYC is a bulletproof market
Even in a recession, prices hold fairly steady in desirable areas of town. Manhattan prices might have dipped in 2009, but they recovered faster than any other real estate markets in the country. Today, NYC apartment prices are at an all-time high, which signifies that homes in the city will remain a profitable investment.
According to Bankrate.com, interest rates are hovering around four percent in the metro area, so depending on how much you pay per month in rent, you could pay less if you own. Granted, coming up with the down payment is no easy feat, but if you have a nest egg and can continue adding to it, or you’ve sold property elsewhere and made a profit, then looking into buying in New York City might be worth your while.
No rent increases
The beauty of a fixed rate mortgage is that your monthly note will remain the same until you sell the apartment or pay it off. Your maintenance, however, will increase a percentage annually since building taxes and operating costs will also increase.
You’ll build equity from day one
In June of this year, The New York Post stated that rents are at their highest: Manhattanites pay an average of $4,081 a month. Rather than throwing thousands of dollars out the window every year, when you own a slice of real estate (no matter how small), you start building equity immediately. That’s a pretty good feeling when you realize that you’ve made a sound investment, and you’re not writing a fat check to a management company or landlord every month.
The vacancy rate is low, so rental inventory is more limited than sale inventory
Depending on your needs and the time you start your apartment search, you’ll probably have more for sale options to choose from than you will for rental options. New York’s vacancy rate stays unbelievably low. Currently, it’s at about one percent, which means scoring a great rental in your preferred area of town might be next to impossible.