1win kzmostbet casino mosbet1 win1win1vinlucky jet crash1 win aviatormostbet kzpin up1 winpin up casino india1 winpin upmostbetmostbet kzparimatchparimatchpin-up4rabetmosbet casinomosbet4r betmosbetpinupmostbet az1 win azonewin casinopin-up4a betpin upmostbet casinomostbet aviator login1win apostas4era betmostbet casinolucky jetpin up betmastbet1win uz1xbet lucky jetmostbet online1win online1win kzpinuplucky jet online1win aviator1win aviatormosbet indiaaviatorpinup indialucky jet
Scroll Top

Benefits of Buying vs. Renting in NYC

Should you rent or buy in New York City?

Should you rent or buy in New York City? This is a question you should be asking yourself at least six months before you: move to NYC, find a new rental or renew your lease. To determine your answer, you might start with a simple online search that will yield plenty of calculators.

I tried one and while it gave me a quick response (spoiler alert: it said I should rent). I didn’t agree with the result because it did not take into account a number of non-tangible items which will impact your quality of life along with the very real exposure renters have to rents going up.

Many times, I have seen people run the numbers and underestimate the cost of what it will take to rent an apartment they actually want to live in! You might start with a reasonable budget and find options online only to view the property in person and find some deal breakers leading you to decide spending more is a reasonable solution. If you want to control costs, buying in NYC is a great way to lock in your monthly payment.

Owning for five to seven years will protect you from escalating rents. Do some online shopping. If you want to rent on the Upper West Side take a look at Upper West Side condos for sale and see what you can get.

You can also get creative. Perhaps you don’t have the money to own an entire Harlem brownstone or a Brownstone in Murray Hill but you could live in one of the apartments and rent out the rest.

Certainly, renting is more common with approximately 69%-75% of the NYC population renting. Yet as a renter you may end up paying a greater percentage of your monthly income on housing than you would if you owned. Instead, lock in a mortgage rate and that monthly cost will stay steady.

As an owner, you will also pay a monthly fee toward real estate taxes and the cost of running the building. Unlike your landlord, who is in the business of making a profit, most buildings only charge what is necessary to keep the building running (pay the staff, turn on the hallway lights, keep the elevators running etc.) If the cost of running the building stays about the same, so will your monthly costs. These monthly costs are likely to increase at the rate of inflation but so will your rental costs.

Landlords are not shy about passing on their increased costs. Apart from normal rental increases due to inflation, if there is suddenly an increase in rental demand, your landlord will raise your rent as high as they possibly can.

Those renters who took advantage of very low rental prices in 2020 were shocked to discover a year or eighteen months later that their rent went up anywhere from 30-50% forcing them to move. Moving by itself is an expensive proposition and time consuming.

One woman reached out to me who had moved three times in five years because she kept finding places she thought would be suitable, only to discover each time that the rent was going up or the landlord wanted to move back into their place.

By July 2023 rental prices were no longer skyrocketing, yet the average monthly price was $4,500 — a 7% increase from the year before.

The benefits of buying vs renting

If you want to stabilize your housing costs while living in the city, you should be purchasing. Otherwise, you have no control over this cost which can be up to 40% of your income. One wise family purchased a condo on the Upper East side for a family member to avoid high rents.

Take some time to familiarize yourself with the difference in the quality of a rental versus an apartment for purchase. One difference is that in general the room size of a rental will be smaller than an apartment for purchase. Buildings designed strictly for rentals lean heavily on amenities selling a lifestyle while skimping on room size. This will be more striking if you are looking for a larger apartment with three or more bedrooms.

The quality of the finishes is also different. Naturally the exception is a luxury rental building but you will pay a premium for those. A short stay in the city of two to three years might make a rental the smart choice but be certain there is an end date to your time renting. Many renters caught up in the excitement of building their careers and all that city life offers, suddenly notice seven years have gone by and they forgot to purchase. This is a missed opportunity.

Taking a look at what it costs to purchase versus rent is worthwhile as the cash outlay for a purchase can exceed what it takes to rent. However, as an owner you will be getting something in return – protecting your assets.

From 2013-2022 The Corcoran Report reveals that all apartments in Manhattan had a ten-year annual growth rate of 3.8%. This number was either larger or smaller depending on the neighborhood. If you are more granular, it will also depend on the building you chose. For a rental you will be expected to pay the first month’s rent and a security deposit of one month’s rent.

The downside of renting

You are also likely to be asked to pay the agent’s commission, which is roughly 7.5-15% of the first year’s rent. If you happen to have enough cash to pay a full year upfront and are tempted to jump ahead of your competition by offering that lump sum, you should know that the NYC rental laws changed in 2019.

A landlord may only collect two months upfront and they typically require one of those months to be a security deposit. You must also pay a small fee for your credit report and provide; your tax returns, pay stubs and a reference letter from your past landlord. This is not a complete list of documents but it gives you a sense of what is expected.

As a rule, landlords typically ask a prospective tenant to prove they earn 40X the rent. If you are renting an apartment for $4,500/month you will need to show you earn at least $180,000 per annum. If you don’t earn enough and have a guarantor that person needs to show 80x the rent in annual income.

The cash costs associated with purchasing are much higher which is a big reason many chose to rent versus buying. Down Payments are typically 10-20% of the purchase price and closing costs will run from about 4-7% of your purchase price. If you are purchasing in a Co-op the board is likely to want to see that after you make your down payment and pay your closing costs, you still have money in the bank which totals anywhere from 12-24 months of your total housing cost (mortgage and monthly building payments).

While a high bar for entry it does give your finances some stability and making a wise purchase can increase your wealth. There are also some entry level options that are great buys. For example, you might search all apartments for sale on the Upper West Side and discover one of the many charming homes located in historic brownstones with low monthly costs.

Here are some ideas for making good investments when buying:

  • Begin by getting pre-approved for your mortgage so you understand how much you qualify to borrow and what the monthly payment will be for budgeting purposes.
  • Then choose the areas which make sense for your lifestyle and start looking online for possibilities.

Pay close attention to the following:

  • How much are the additional monthly payments?
  • Does the building have an assessment and what is the rental policy if you are looking at co-ops?

If you really want to maximize your investment, try finding buildings with tax abatements which can save you thousands of dollars. There are still some Condos for sale in Harlem with plenty of time left on their tax abatement.

Buying is always a heavier lift than renting in most cases but for a longer-term option it always makes good sense to buy in NYC.