How To FIND GOOD VALUE In Housing
A: Keep monthlys low and then focus on Location, Raw Space, Light/View. You'll do fine!
HEY, DID YOU CATCH THAT ARTICLE IN THE NY TIMES TODAY ABOUT THE HOUSING BUBBLE THAT'S GOING TO POP?
Is anybody else tired of this conversation?
I will NEVER argue that Housing/Real Estate = A Type of Market, and that as a market it is affected by basic fundamentals as well as outside influences. I will also NEVER argue that since housing/real estate is a market, that it could not go down in value. However, history has proven time and time again, that real estate is a very safe and wise investment for the main reason of tax benefits offered by the federal government & the ability to live in your investment.
No other investment can offer you the combination of these two principals.
To find GOOD VALUE in this city, you need to focus on the following notions first:
1. How Long Will You Live In Your New Home
2. Keeping maintenance Costs Low. See "Maintenece Charges: The Hidden Devil"
3. Knowing What Luxuries To Pay For
HOW LONG WILL YOU LIVE IN YOUR HOME
Ask yourself, WHY are you buying this apartment? Did you just land a new job and you are tired of renting? Are you expecting a child and you need to get a larger place? Do you plan on renting out the property for investment? Or, are you downsizing so that you can free up some money for your lifestyle?
There are so many different answers to this question, but the answer should always be enough information to answer this next question. How long do you intend to live at this property?
The answer to this question will allow us to determine which mortgage product best suits your needs. Its sad to me that so many people out there don't put enough time and energy into investigating what type of mortgage you will end up taking. This could be the most important financial decision you will have to make, AFTER deciding how much you can afford to spend on your new apartment.
For sake of ease, I created a visual chart for you to use as a starting point when talking to your mortgage broker.
*With The Interest-Only Options, Please Be Sure That You Are NOT Buying A Property You Cannot Afford & Then Using An Interest Only Payment To Rationalize The Purchase. You Should Keep Your TOTAL Housing Costs Per Month Under 1/3 of Your Total Income.
KEEPING maintenance COSTS LOW
One thing you must keep in mind when you are out there searching for your new home, is that eventually, you will resell this property to someone else for a nice tax-free profit!
Therefore, if you are going to resell, you should buy something now that would put you in a great position to get the highest asking price down the road. One of the biggest factors that affect buyers is the TOTAL maintenance CHARGES that they will have to pay every month.
THE LOWER THE maintenance CHARGES --> THE HIGHER PURCHASE PRICE THEY CAN AFFORD
So, try to stick to keeping your maintenance charges UNDER $1.25 a square foot. If your apartment is 800 sq. ft., make sure the maintenance charges are under $1,000/Month (800 x 1.25)!
KNOW WHAT LUXURIES TO PAY FOR
Knowing what features of an apartment to pay for is vital to making a smart and profitable investment. The 5 MOST IMPORTANT features that you should be paying for in your new home are:
1. LOCATION - Stay Near Mass Transit, Parks, Restaurants & Shops
2. VIEW/SUNLIGHT - Hopefully This Will NOT Change While You Own Your Apartment
3. RAW SPACE - Look For The Most Raw Space As You Can Afford Even If It Needs Work
4. DOORMNAN/CONCIERGE - Security Gives You Peace of Mind; Convienence
5. OUTDOOR SPACE - Increases Quality of NYC Lifestyle; Sets Your Apartment Apart From The Rest!
If you can find a place that satisfies these 5 criteria, then you are off to a GREAT START!
Now, there are also features that you should be wary of paying extra dollars for, as you are most likely paying a premium over what the features actually costed the original owner. These include:
1. KITCHENS/BATHS/FLOORS - You'll Pay 2 Times What The Owner Paid; Is It What You Would Want?
2. ROOFDECKS/GYMS - You Will NOT Use These Amenities As Much As You Think
3. PAINT JOBS - Chances Are You Will Re-Paint When You Move In
4. FURNISHED CLOSETS - Are They How You Would Do It?
You get the picture!
Follow these 3 GUIDELINES and you should be just fine with your next purchase, even if there is a downturn in the housing market!
