Buying vs Renting in NYC – Pros and Cons (2019) | Should You Rent or Buy in NYC?
The question of whether to rent or buy is one of the most commonly debated topics in New York City. In this video, we comprehensively explain the pros and cons of buying vs. renting in NYC. So, what is the main benefit of buying vs. renting in New York City? Buying Real Estate Builds Your Net Worth Owning real estate in NYC is the easiest and most passive way to build your net worth over time. While it’s true that a monthly rent payment in NYC is often lower than a mortgage payment for the same apartment, this simplistic cash flow analysis ignores the fact that buying allows you to borrow a huge amount of money at a low interest rate for decades Even if annual stock market returns are higher than those for real estate, your total net worth gain is higher for real estate because you can take out a mortgage when buying a property. Investing $200,000 in the stock market may give you a 6% annual return. But what if you used the same $200,000 as a down payment on a $1,000,000 apartment? Owning the apartment would give you the economic upside on a $1,000,000 investment compared to a $200,000 stock market investment. Buyer Closing Costs are High, But So are Rental Broker Fees Is it really a good idea to pay a 15% broker fee every year or two when you rent a new apartment because you feel that buyer closing costs are too high? Buyer closing costs in NYC are between 1.5% to 5% of the purchase price, but you only pay them one time. To estimate your buyer closing costs in New York City, visit our industry leading closing cost calculator at www.hauseit.com Hauseit’s Closing Cost Calculator for Buyers in NYC is the most accurate closing cost estimator available in the industry. Not All Apartments in NYC Are Equally Good Investments Profits are made in real estate when you buy, not when you sell. In NYC, not all apartments are equally good investments. Buying instead of renting only makes sense if the apartment you decide to buy has attractive fundamentals. As a buyer, you should pay close attention to price per square foot, carrying costs as well as the cost of anticipated future apartment and building repairs. The length of your hold period also impacts how you analyze each of these items. Renting Is Better If You Anticipate Moving Frequently If you anticipate moving for work every few years, then renting in NYC is a better financial decision than buying. The reason for this is that the high buyer and seller closing costs in NYC will take a bite out of your net worth every time you buy and sell. Buying Real Estate Requires a Long Term Mindset Buying an apartment in NYC requires a long-term mindset, both emotionally and financially. This is because home ownership in NYC, despite the wealth it may generate for you, can come with unanticipated expenses as well as other headaches from time to time. So what do you think about buying vs renting in NYC? Let us know by leaving a comment below, right now. For a more in-depth comparison of buying vs. renting in NYC, visit our blog at www.hauseit.com