NYC Real Estate vs. Investing in the Stock Market (2019) | Hauseit®

NYC Real Estate vs. Investing in the Stock Market (2019) | Hauseit®


Buying an apartment can be a very good idea
if you are currently renting and have enough savings for a down payment. There are a number of advantages to buying
which include leverage, tax benefits, capital upside and greater quality of life. With that said, it’s important to buy the
right apartment as not all apartments in NYC are good investments. If you’ve been renting in NYC for a few
years, chances are that you’ve saved up enough money to cover the down payment on
a co-op apartment. Many renters believe that it’s more appropriate
to continue renting and invest their savings in the stock market instead. While it’s true that stock market returns
are typically higher, this analysis ignores the fact that you can take out a large amount
of leverage when buying an apartment. Let’s say your down payment is $200k. You can either invest $200k in the stock market
or invest $1,000,000 in real estate using an 80% loan. Even if the annualized return is higher for
stocks, you will have more capital upside with the real estate investment since you
are putting more money to work, so to speak. Furthermore, owning real estate will give
you a number of tax benefits including a capital gains exclusion if you sell your primary residence
or the ability to take large deductions if you’re using real estate as a rental property. Buying instead of renting can also be advantageous
from a quality of life perspective. This is because living in a property you own
feels much more stable than renting and having to worry about a lease renewal or moving out
each year. Furthermore, as an owner you’ll be able
to add value to your real estate asset by making renovations over time. After all, who doesn’t want to own an apartment
or a brownstone in New York City? With that said, buying an apartment in NYC
requires a long-term mindset, both emotionally and financially. This is because home ownership can come with
unanticipated expenses as well as other headaches from time to time. Let’s say you close on a $700k condo in
Park Slope, only to receive a special assessment bill a week later from your condo board for
roof repairs in the amount of $10,000. Here’s another example: you complete a $70,000
renovation of your new apartment only to be told by the condo board that you bought windows
that aren’t permitted by the condo board and that they need to be replaced at the cost
of $15,000. Therefore, being a homeowner in an apartment
building means that you have to navigate the politics of having neighbors. Looking to buy or sell a home in New York? Learn how you can save on commission and closing
costs at www.hauseit.com

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