<p>My son will be going to Juilliard in the fall for a two year graduate degree. They don’t really have housing for grad students. He is looking into sharing an apartment, but we have also been toying with the idea of buying a place for him to live–either by himself or with another bedroom to rent out. Has anybody done someting like this, and what are the pros and cons? Is two years enough for it to be worthwhile if we want to resell it at the end of that time? Thanks. This would ideally be somewhere on the West Side, probably north of Lincoln Center and south of Columbia.</p>
<p>Hunt, I can’t speak for most places but a friend of mine bought an apartment in new York and the building fees alone are more then my mortgage here.</p>
<p>I would think that if he’s only staying two years he should rent. If he’s staying longer then maybe consider buying… But for only two years the closing costs wouldn’t be worth it.</p>
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<p>I agree with fendergirl. NY real estate is not like other places. You will spend a lot more than you ever imagined to get something halfway decent. </p>
<p>NYC has many many people here for a year or two. He should be able to find a few people to room with – either on the Upper West Side near Julliard, or further uptown near Columbia.</p>
<p>If you bought a place for him, would you need financing (i.e., a mortgage or co-op loan) or would you be able to pay cash?</p>
<p>If you need financing, what you’d be looking for is a bank that will finance a “kiddie condo” or “kiddie coop” (you’re buying it for him to live in). These types of loans are getting more and more rare because banks prefer to lend to the actual person will live in the property. It might make sense as a second home for you (if you travel to NYC on business or pleasure) which makes financing more available and affordable.</p>
<p>Co-ops will typically want your son’s name on the stock certificate along with yours if he’s going to be allowed to occupy the unit.</p>
<p>Also, if you do decide to pursue this, become acquainted with the rules governing condos – in which you actually own the apartment – and the rules governing co-ops, in which you own shares of the co-op corporation, which allows you to live in the specific unit.</p>
<p>In a normal economy, 2 years really is not long enough to own. Also, in general, condos are much more difficult to sell. However:</p>
<p>1) This is not a normal economy. I don’t know NYC housing prices, but if they are really depressed, it may be an opportunity to buy with the idea of selling, not in 2 years, but 4 or 5 (with 2 of the years your son living in it). Also, if he is going to Julliard, is there a high probability that he stays in NYC looking for jobs?</p>
<p>2) NYC is mostly condos, so the rule may not apply.</p>
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<p>I wish! (D lives there, in a rental with 2 roommates.) They are just the opposite.</p>
<p>Also, Manhattan is mostly co-ops, not condos.</p>
<p>If you have someone in Manhattan you trust that is konwledgeable about the real estate and values, and if you have the money so that you are able to do it then discuss the pros and cons on buying with what you want to spend and what you want to do with the place. Do you want to keep it as an investment? Do you expect your son to stay in NY and keep the place, first as a share to defray costs, and then as maybe a permanent place? Is this an investment for you or for him? You really need to know someone who knows his/her stuff to make that decision. I live close to the city, and I would have to put in a lot of work and research to even consider buying. I don’t know anyone well enough to trust to work with me at this point which would mean a lot of work just getting there.</p>
<p>My brother is a long time New Yorker who has a number of friends who also are. A number of them are still in their college apartments now even with SO and children because they never could afford to or bear to move out and they are in pretty cramped quarters. Only in NY, is not just an expression. </p>
<p>My son’s friend’s parents were looking to buy for the last two years as, yes the prices are supposed to be low relative to what they have been in a while and there is an expectation that they will go up. They have three kids going to school there so they had a lot of money already going towards room to work with, plus they are well to do. Couldn’t do it. Kids are commuting. So it’s not easy to do.</p>
<p>NYC is most definitely <em>NOT</em> condos. Around 85% of the apartment housing is co-ops, and the financial requirements and paperwork will make FAFSA look like a cake walk.</p>
<p>If you pay cash, a two-bedroom apartment, depending on location, will cost you over $500,000, and in many locations will cost well over $1,000,000. </p>
<p>If this is a 2-year gig, you are crazy to buy. Even in a depressed market, NYC housing prices are insane.</p>
<p>I know. I own a 2-bedroom in Manhattan.</p>
<p>The apartment my friend bought was half a million for a large studio. Plus the building fees each month. This was in a nice area and the door men were very nice.</p>
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<p>I meant condo vs. single family residence (house). For resale purposes condo/co-op are virtually the same.</p>
<p>Co-ops and condos are definitely not the same in Manhattan.
Co-ops have rules governing everything, from whether they allow pieds a terre, or parents buying for children. Then, there’s the interviewing process, they can reject anyone without giving any reasons. Therefore if you have a buyer who seems qualified in every other way, they can reject them with no reason given. Plus, they may not allow sub-letting to roomates or renting after you move out in case you are not able to sell it.</p>
<p>Condos are easier to buy and sell, therefore they command a higher premium.
For 2 years, I suggest renting.
Here is calculator on whether to rent or buy.
<a href=“Is It Better to Rent or Buy? - The New York Times”>Is It Better to Rent or Buy? - The New York Times;
<p>Out here, condos have associations that can implement all the rules you mentioned, other than ownership.</p>
<p>Condos used to be easier to buy and sell, but FNMA has tightened many requirements for condos (pre-sale and reserve requirements) especially for new construction condos or recent conversions. A well established co-op, by comparison, may well present a lower risk in terms of obtaining financing and holding value.</p>
<p>Some condos now have boards, just like co-ops, and require board approval. </p>
<p>Condos have higher closing costs (title insurance and NYS mortgage tax, which is equal to 1.80% of the loan amount in the 5 boroughs). Co-ops don’t require title insurance, and there is no mortgage tax (because there is no mortgage – just a lien against the shares).</p>
<p>Rates for condos and co-ops are virtually the same for most loan programs.</p>
<p>Operadad, everything about NYC real estate is probably different from what you have experienced out there.</p>
<p>Well, I have lost 3 bids in the last 2 months, giving full offers. Real estate market is red hot in NYC right now. The price is definitely going up, but the inventory is very limited. </p>
<p>Terms to be familiar with when looking for real estate in NYC:</p>
<p>Co-op: you own shares to an apartment building. They could deny purchase due to lack of liquidity (most want 2+ years of mortgage/maintenance in liquid asset). Some do not allow subletting, some allow renting after living there for 2 years, some do not allow parental purchase. A lot of coops require 40-50% down. The board wants to review your financial, recommendation letters, and interview you in person. You get the picture.</p>
<p>cond-op - very much like co-op, but runs more like condo. There are 20+ cond-ops in NYC. The pricing is also a bit higher, maybe 10-15%.</p>
<p>condo - similar to owning a home. Some also have a board and may limit your ability to rent. Closing costs are a lot higher than coops - recording tax, luxury tax. Some banks also require interior insurance for condos in case of water or structural damage.</p>
<p>land lease - some coop buildings were built on land lease property, which means they don’t own the land itself. Some of those land lease expire in less than 30 years, which means no bank would give you financing. There is a a great risk when the time comes to negotiate for a new lease. Another thing is lease payment is not tax deductible, whereas mortgage payment is. There is a building at E 61 St, Trump Tower, built on land lease, and they can’t give the apartments away.</p>
<p>A lot of apartments are asking higher than appraised value, so you may not be able to finance as much. </p>
<p>I don’t think it’s a bad idea for you to buy a condo for your kid to live in. The consensus is that NYC real estate is going up and the interest rate is at all time low. If your kid should decide not to live in NYC after 2 years, you could rent it out or use it for yourself. You’ll need a very good broker to work with in this market to find something worth while. </p>
<p>streeteasy dot com has all the listings, brokers also use the site.</p>
<p>Thanks, everybody. It’s a lot of food for thought. I think we could make the financing work OK, but it sure sounds like a big headache. If I felt sure he’d stay in NYC, I’d feel more strongly about it.</p>
<p>Various ones I know with kids in NYC have spent significant funds just getting them set up in a rental! Co signing, deposits, first/last month’s rent…crazy how those things add up! NYC real estate seems VERY different from other places!</p>
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That’s the thing–renting will cost so much that I have to wonder whether buying could be beneficial. I’m not sure I can deal with fully investigating both options, though.</p>
<p>If you have a million floating around, why not? If you are at this level, you are not cocerned with the cost, correct? Normally, 2 years is not worth buying. But if one has $$ floating around, go ahead. My S. is in NYC. His appartment currently is close to this, but they baught it for $163k and have been living there for about 14 years. This kind of deal is definitely worth it. You will not find this kind of deal any more in NYC.</p>