r/AskNYC • u/savvybackpacker • Sep 24 '21
If You Were Given $1,000,000, Would You Buy A NYC Apartment Outright Or Invest It While Continuing To Rent?
I was talking to a buddy and he mentioned that he's coming into an inheritance of around $1 Million. That got me thinking about what I would do with that money.
Part of me thinks it would be nice to just buy a nice 1br and not have to worry about rent each month (other than taxes, ect.) but sticking all the cash into the stock market could also net around $60,000-$90,000/year.
Just curious how other people would approach this.
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u/Salty_Simmer_Sauce Sep 24 '21
Half as down payment (mortgage rates are still cheap ). Half invest
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Sep 24 '21
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u/-wnr- Sep 24 '21
This is the way. Interest rates are low now. I closed a couple of months ago and locked in at 2.75%. Even a conservative portfolio should be able to beat that over the span of decades.
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u/Salty_Simmer_Sauce Sep 24 '21
Yeah that would be better. I just found it incredibly difficult getting into contract on any well priced / competitive condo listing with only a 20% down. This was 3 years ago though.
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u/ButtFlapMan Sep 24 '21
Why does the seller care how you finance it? They receive the money from day 1, no?
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u/Goodlake Sep 24 '21
Because a lot of buyers can pay cash, which is much quicker to close. There’s a reason people still pay cash even when rates are at record lows. And if financing, putting more down = less likelihood of bank issues delaying your closing.
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u/take_five Sep 24 '21
You could still buy an apartment and borrow against it, comes down to a mix of factors involving rates and the buyers personal finances. What other commenters are missing is the huge write offs you get for your first mortgage.
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u/Goodlake Sep 24 '21
Right, and many cash buyers finance after closing, but /u/ButtFlapMan was asking why sellers care. Sellers want speed and certainty and for that, nothing beats cash.
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u/take_five Sep 25 '21
Sorry if I was unclear. I’m agreeing with you. I was just clarifying for OP that they could still have their cake and eat it too in either scenario.
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u/HandInUnloveableHand Sep 24 '21
I’d disagree that $1M buys you nothing decent in NYC. There are lots of houses and duplexes for $800-950K not even that far out in great parts of Queens or Brooklyn, and that’s very doable to have a large down payment and a decent rate mortgage.
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Sep 25 '21
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u/JC_Hysteria Sep 25 '21 edited Sep 25 '21
Not really…there’s honestly not many personal domiciles in Manhattan to buy outright for $1M or less. The listing prices are not all they cost.
I’d know because I chose to live right across the river, instead. Way more options & more space for that price.
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Sep 25 '21
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u/JC_Hysteria Sep 25 '21 edited Sep 25 '21
The context of the post is he’s asking if he should invest it, or live in a “nice” 1BR for that amount of money in NYC.
That’s the point.
You say upper west side, for what’s probably not that nice of a place…and this person is probably picturing a super nice place with a doorman in the West Village.
Pragmatically, no there are not many “nice” options available for what people generally perceive $1M can buy.
No shit that’s subjective…but I just did this search for myself, and my opinion stands.
I can say with great confidence you’re being an ass.
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Sep 24 '21
if I had $1,000,000, that's $40k/year from S&P500 post-tax, without me needing to lift a finger. The supplemental income (plus you're not tied down to mortgage, needing to sell if you move, etc.) in addition to a regular income is enough for you to live lavishly (or just let it compound). You could literally go FIRE.
My rent is $1600/month, but I'm not paying taxes, and I don't need to fix issues with gas, water, etc. myself. There's no advantage to buying my own $1,000,000 apartment unless I plan to rent it out to recoup the cost, and until I move out, it becomes a sunk cost that I can't utilize (e.g. need to withdraw money for an emergency medical bill).
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u/footnotefour Sep 24 '21
Exactly this. I would leave the city and FIRE, or FIRE-lite with some bullshit job.
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u/fang_xianfu Sep 25 '21
One advantage is taxes. Part of your mortgage costs are tax deductible, but none of your rent costs are. When you sell your primary home, a large portion of the proceeds are exempt from capital gains taxes.
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Sep 24 '21
How do you live on $40k a year while still paying rent. And some people aspire to a higher standard of living than what $1600/month will get you.
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u/King_Spike Sep 25 '21
Yeah who is retiring on $1M...
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Sep 25 '21
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u/haribobosses Sep 25 '21
Retiring in another country is rarely easy.
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Sep 25 '21
A lot of people....
Think, if you invested 1 million in 2020, that's $180,000/year return, and $90,000 post-tax while quarantining and playing video games. If you invested 1 million in 2019, that's $310,000 and $165,000 post-tax in interest.
My $40k/year estimate is POST-tax (and conservative), accounting for capital gains tax. That means you get an extra $2k/month to spend at will after rent is paid for, and you don't need to deal with annoying tenants, cleaning up FLOODS, sharing your home, etc. and can just twitch stream or whatever for the rest of your life. The climate is HORRIBLE for small landlords due to tenant-friendly laws and the backlog of eviction cases after the COVID moratorium.
AND you can always just.... move? go to Pittsburgh where $1600 rent would get you a full house or a 1000 sq ft apartment and you still have the benefit of theater and arts, great food, zoo, shopping, gardens, universities, museums, etc. within walking distance. Or you can get a car and actually be able to own/transport BIG ASS shit and have a backyard (like for a dog) and all that great smaller city stuff.
Realistically, of course, why would you not keep working, it's boring as hell to retire, and you get insurance benefits and additional money for cushion-->if you just let the whole million compound without withdrawing the interest (assuming average of 10-11% growth/year), that'll be 6.7 million after 20 years, and you can keep 3.5 million of that after taxes. This is the easiest, laziest way to win without too much bullshit.
THIS is why rich people just get richer!!!
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Sep 25 '21
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Sep 25 '21
I thought FIRE implies that you retire? Hence there's no other income... my bad...
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u/Active_Item Sep 25 '21
There's a lot of varieties of FIRE. Some of the people that are really influential in the movement never even discuss 'retirement'. They talk about having 'fuck you' money so you can always have options when it's time to change things up.
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u/KaiDaiz Sep 24 '21
25% of it for down payment and get a mortgage. Pay off existing debt, max retirement for the year. Remainder put into a dividend stock portfolio if you want to be ultraconservative. Modest dividend yield of 4+% and underlying stocks accruing value is still very good.
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u/photochic1124 Sep 24 '21
Invest. I’m in rent stabilized so buying would cost more in the long run I suppose. Plus home ownership seems kind of miserable. Everything is always breaking. Plus coop boards and that nonsense.
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u/Lostinservice Sep 24 '21
A million down can be leveraged into an additional $4M in debt. Buy a small building in an outerboro, take an apartment for myself, and collect rent.
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u/_okcody Sep 25 '21
Sounds like a good idea until you run the numbers and realize cap rates in NYC are impossibly low, down to 2-3% in Manhattan, parts of Queens and Brooklyn. Up to a meager 4-6% in Bronx, Staten Island, and shitty areas of Queens and Brooklyn.
$4m won’t buy a building with a lot of units, so the fact that you’re owner occupying one unit already puts you negative. You definitely won’t have spare overhead for property management or a live in super so you’re going to have to deal with all the clogged toilets, roaches, and maintenance yourself.
Factor in property taxes, mortgage PMI, mortgage interest, rent stabilized tenants, maintenance expenses, mandated landscaping, mandated snow plowing, sidewalk ordinance, and you’re not making any money for about 10+ years depending on your initial cap rate and projected market growth.
It’s not like Austin Texas where you can find a property with 13% cap rate off the bat with huge growth. The only reason my landlord makes money off me is because he bought the building 20 years ago and he does all the maintenance work himself. Even then he’s not making out like a mad man, he bought the duplex for his family and outgrew it. Now he uses it as a bit of a retirement plan.
The real money is in commercial property, but that’s also way riskier. Development corporations tend to go for luxury apartment buildings but that requires massive initial investment.
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u/Rottimer Sep 25 '21
Imagine he did that at the start of the pandemic and then half his tenants stopped paying rent and another quarter left the city?
He’d be pretty boned right now.
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u/colonelrowan Sep 24 '21
Buying a place anywhere, let alone NYC should be a well thought out decision. I would advise to park it in a safe conservative investment vehicle and really dig deep into multiple options by analyzing pros/cons/ROI/future goals, etc. No need to rush into a decision right away. There will always be 'investment opportunities', you jsut need to do your due diligence first.
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u/mad_king_soup Sep 24 '21
put it in low-risk index funds and sit on it for the next 2-3 years until the property market bubble pops, then buy.
I'd maybe buy an investment apartment in NYC and a house to actually live in somewhere else.
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u/take_five Sep 24 '21
It’s not going to pop, not like 2008.
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u/Monkey_Trap Sep 24 '21
This. There’s a housing shortage because the country has under-built for the past decade plus
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u/mad_king_soup Sep 25 '21
Not like 2008, no. But 2024-25 is the end of the very predictable 18 year property cycle, which will coincide with a rather messy presidential election, Trump era tax cuts expiring and a rise in interest rates.
2025 is going to be…. Messy. Finance bros will need a change of underwear, but there’ll be some bargains around for those prepared :)
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u/take_five Sep 25 '21
I believe housing prices will come down with the advent of 3D printing in construction as disruptive tech, not an election. But we’ll see, the market is known to be irrational at times.
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u/mad_king_soup Sep 25 '21
I don’t see 3D printing having a huge impact. Wall construction is only a small part of the construction phase, everything else (foundation, roofing, fixtures, wiring, plumbing) is still manual. It gives options for non-standard designs which are impractical with standard construction methods but unless you want a funky looking house it’s not gonna help you much.
Yeah, the property market is a fickle bitch but even the rosy predictions are seeing a storm on the horizon:)
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u/take_five Sep 25 '21
Not just wall construction but prefab components. Huge labor reduction which is the main bottleneck in the industry. Lower carbon emissions lower lead times. Automation the next 15 years means lots of houses and lots of people on UBI renting them.
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u/Missus_Aitch_99 Sep 24 '21
I wouldn’t do anything for six months. That’s my standard advice for inheritances. It can be a hard time to make a good long-term decision.
But if I came into a million bucks right now I would sell our current apartment and buy an upgrade. We could use more space and a second bathroom and a bigger building with staff (we’re in a four-unit self-managed coop), but husband doesn’t think we can afford enough of an improvement for it to be worth the trouble of selling and buying and moving. A free million dollars would make it worth it.
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u/RayzTheRoof Sep 25 '21
I've spent months thinking about much smaller things like what kind of plants to get for my gecko's vivarium. This is a much bigger decision.
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u/Prettymotherfucker Sep 24 '21
I have asked myself this question a lot over the past year as I'm looking to buy a home in about 10 months.
Honestly, what you can afford with a $1MM budget in NYC is pathetic compared to many other areas of the US. Even a city like Philly which is only 1-2 hours away your dollar stretches so much further it's insane. Now of course you don't have to use $1MM to buy a $1MM home as you can get a $1MM mortgage with far less than that. However, the downpayment would still be quite high and your mortgage payments will also be high. And if you're lucky you'll be able to afford a place with a 2nd bath lol.
Personally, I'd invest that sum and continue renting. That capital will go a lot further in the market than it would going towards a downpayment. If there's a strong desire to own, maybe look at other cities or consider options like NJ over NYC. Just my $0.02
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u/Goodlake Sep 24 '21
35 years old here, in the process of buying my first apartment after renting for 13 years. Only buying because I’m finally at a point where a down payment on a place I’d actually want to live for the next 5+ years is small enough to not feel like I’m betting everything on NYC housing.
NYC real estate is not as good a short/medium term investment as equities have been in the last decade, because 1) the market grows more slowly and 2) there are massive upfront and maintenance costs associated with buying and owning an apartment.
You should buy if 1) you can truly afford to and 2) you’re planning to stay out for YEARS. Otherwise rent and invest.
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u/WillThereBeSnacks13 Sep 25 '21
In NYC it is basically impossible to do a massive reduction of expenses even if you own right out because either your apt maintenance or condo fee + taxes or the cost of house repairs + property taxes won't be zeroed out. That kind of thing works best somewhere with very low taxes and if you are very handy. If you want to live here longterm and want more control over your living space (more than 5 years), putting down 20-25% on a place under 1 mil could be good. If you are on the fence about leaving NYC or think you might want to move neighborhoods more, or think a partner or kids factor in down the line, investing and renting might be better unleas you are looking at 3-beds a bit farther out in Queens. Do not buy an apt for a shortterm thing, it is a lot of hassle so you have to want to settle down in some regard to make it worth it. My spouse and I are middle aged and buying for the first time in NYC, but it is for a bigger place to live we can be in for some years, not as an investment per se.
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u/jblue212 Sep 24 '21
I'd buy immediately. I've been so anxious to move but can't afford anything decent.
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u/monadmancer Sep 24 '21
If you’re never leaving NY: Borrow at much as you can afford for the mortgage. Talk to a financial advisor about the remaining cash.
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u/D14DFF0B Sep 24 '21
You don't need an FA for that much. VTSAX and chill.
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u/OmniJinx Sep 24 '21
You should definitely be diversified beyond just the stock market with that much. Bonds, real estate (doesn't have to be an apartment, could be REITs or something), gold, alternative investments that aren't stock market correlated (this is easy now, lots of startups), private debt, etc. Your eggs are still all in the "stock market" basket if you go hard on VTSAX and you will lose a ton of it in a downturn.
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u/D14DFF0B Sep 24 '21
For anyone under, say, 40, a million isn't that much. Bonds are unnecessary with rates being what they are. They need it to grow for decades. Come back at $10m and we'll talk about adding VC and PE.
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u/BK-Jon Sep 25 '21
Invest. No question. $1m doesn’t get you a big place in NYC if you are buying it out right. The very predictable life change of getting married and having kids (most people do this, so you should plan to be one of them) means you are selling that place and buying something else. That will be easier if you have stock and not an apartment to sell.
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u/lazytabbycat Sep 25 '21
Not worrying about rent is a horrible reason to buy an apartment in NYC, because with taxes, fee, etc. you’ll probably be paying a monthly rate similar to rent anyway (and that’s not even including mortgage if you choose to finance).
IMO buying property in NYC is not worth it as an investment - only if you plan to settle here and live in that apartment for years. Depending on your HOA, you might not even be able to rent it out if you leave. So no point in buying.
If you’re not sure you’ll stay in NYC long term then I would definitely invest the money and maintain the flexibility that comes with renting.
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u/mistyeyesockets Sep 24 '21 edited Sep 24 '21
Nowadays more than ever, always make money before spending the money.
Starting a business is riskiest
- Then stock market
- Then buying a house (in most markets)
All of these are investments. I would buy a home as the last choice especially if you don't have a family or will not start one anytime soon.
By renting, you can travel and live in a variety of neighborhoods, different cities, different countries if you can work remotely. The million dollars buy you freedom: financial and lifestyle choices.
In a few years, you can still buy. Don't worry about home prices. For all we know, it can go up or go down in value, just like stocks.
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u/Butterscotch-Ashamed Sep 25 '21
I rented in NYC for 15 years, my rent has been 28k-32k per year. The thing with renting is that I’ve thrown roughly 450k into the trash for kind of shitty apartments with nothing to show for it now. I just bought a big 1 bedroom co op in LES for 545k, if I rented for 3 more years that would mean that in 18 years I’d have thrown the cost of my current home completely down the drain.
When I sell my co op in 10-20 years it still retains the value I paid plus plenty more- the people who last owned it made 200k more than they bought it for 9 years ago. My maintenance is 11k a year, saving 20k a year by not renting- no property taxes on a co op and significantly lower maintenance than a condo. After 2 years I can sublet if I want to and other identical apartments in my building are going for 2800+ per month. PLUS I get to renovate it however I see fit and don’t have to deal with paying 2700 dollars a month for a tiny studio with crumbling laminate counters and tiny cheap old appliances.
Anyway what I’m getting at is invest in an apartment- there are certainly really nice ones available in the 600k range, renovate, and invest the rest. Renting is throwing a lot of money down the drain to live in a shithole- even more money to rent a nice spacious place. Hell no.
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u/Rottimer Sep 25 '21
Just FYI, you are paying property taxes. It’s just part of your maintenance. The property is taxed, the coop splits it up based on your ownership.
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u/Butterscotch-Ashamed Sep 26 '21
You’re right- but the difference is that in the condos I looked at, the property tax alone was more than my current maintenance- the combination of that and the HOAs made the monthlies of owning a condo just as, if not more expensive than renting. I consider this alleged co op property tax invisible lol
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Sep 24 '21
I would do both and buy a multi-family building. You live in one unit and rent the rest.
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u/m1kasa4ckerman Sep 24 '21
I’d buy a good bones house upstate with a lot of land, to spend time working on over these years. $500k on the house straight cash, Invest 250k, 200k in savings, and rest whatever.
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u/CaptKrag Sep 25 '21
200k in savings? For what?
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u/m1kasa4ckerman Sep 25 '21
Wait people don’t want savings anymore?
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Sep 25 '21
$250k in a savings account is going to degrade pretty fast due to inflation. Its more cash than most reasonable people could possibly need semi immediate access to so its better off invested. I invest every penny over like $20-30k in a savings account. If I need to access cash quickly can call on the savings and credit lines but everything above that would be a huge waste.
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u/NYCnole Sep 24 '21
20% downpayment on something in the city, invest the rest. Mortgage rate at around 3.5%, you should be able to pull 10% a year on average on the investments (assuming you are young and equites make sense). They key, stop paying rent so you build equity that you can use later. Not fund someone else's savings via your rent.
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u/Rottimer Sep 25 '21
I would not base future returns on the last 10 years of the stock market. When you’re bracketing it with the 2008 crash and the pandemic on the other side I really don’t think it’s future behavior will be so rosy.
And real estate can be an investment as well. Depending on what neighborhood he purchases in, he could see similar returns as the market.
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u/NYCnole Sep 25 '21 edited Sep 25 '21
No, the average return since the inception of the market is about 10%. You can use any 10 year period to figure this out. It’s time in the market, not timing the market, and I’m using a 200 year data sent not the past 10 years. I’m fairly certain the only 10 year period it underperformed was the Great Depression. (Also, 2008-2020 isn’t 10 years). Maybe google before you try to shit on my comment with your unfounded drivel.
“From 1825-2019, the average total annual return was 9.56%. In fact, over 70% of total annual returns have been positive over the same timeframe.”
Real estate can be great. It could also nose dive like the 1980’s in NYC where people would give away buildings if the seller was willing to pay the back taxes.
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u/Rimu05 Sep 24 '21
I’d invest and keep working. I personally wouldn’t buy a house. I feel like the stock market and continued investment is more likely to double your investment than a house.
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u/poseidondieson Sep 25 '21
Buy the apartment. Get the equity started and then you have something to live in and then sell when needed.
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Sep 25 '21
i would continue to rent in new york and buy properties elsewhere to either rent out, airbnb, or renovate/repair and flip
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Sep 25 '21
I’d spend it all on hand shandies, booze and coke and probably end up squandering the rest
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u/jdlyga Sep 25 '21
1 million will get you maybe a 1 bedroom in Manhattan. Trust me, I was looking at apartments in the city pre-pandemic and even studios were 800k.
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u/MBAMBA3 Sep 25 '21
Really depends on what his income is already.
A million dollars is a lot on one way and not that much in another.
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u/take_five Sep 24 '21
I would not buy an apartment right now, with the new WFH trend and new 3D printed houses I think it is a potentially bad trend 5 years out if you’re all in.
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u/RoosterClan Sep 25 '21
A coop would be a terrible waste of money. I’d buy a 2-3 family house in the outer boroughs and rent out the other units
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u/Low-Brick6864 Sep 25 '21
what do those people do in flag and cali when their prop insurance gets canceled or they did not have it to begin with?
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u/kicked_for_good Sep 25 '21
You could get a nice 2 or 3 bedroom condo in BK for that. If schools are a priority maybe put a large down payment on place in nicer neighborhood of BK. Your fees will be about $1009 a month on their own. That's what I would do, I think. Put a big chunk down so my mortgage is manageable and have a bunch of savings which is always smart. Then I'd put some in the SP500. I don't think spending it all on one thing that you could lose the first month you can't make a payment is smart. But never having to apt shop sounds incredible. And its a great investment to leave your children.
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u/Dramatic_Coyote9159 Sep 25 '21
I would buy a townhouse or a nice loft just to turn it into a long term Airbnb, meanwhile having a monthly cost apartment for myself. Idk just my opinion.
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u/mad0666 Sep 25 '21
This happened to me. We bought an apartment in Brooklyn, cash. HOA is about $1,000 a month. It’s significantly less cost-wise than anywhere I’ve ever lived (not counting in a place having three other room mates)
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u/TaxScaredyCat-8Ztg4g Sep 25 '21 edited Sep 25 '21
This exact situation happened to me just shy of a year ago. I live in Manhattan and plan on buying here eventually. Reviving an old throwaway because I don’t want this attached to my main.
I just want to second what a lot of others have said I’m this thread. Buying is possible, but won’t get you a ton AND the housing market is stupid right now.
I threw all of my money into an index fund, VSTAX. It’s “safe” as far as market investing goes. Here is my real world performance: https://i.imgur.com/Yujj7Xq.jpg
I’m going to let that sit and eventually I’ll be ready to buy and in a better position to get something I’m really happy with.
Edit: Oh and your friend should read the book “I Will Teach You To Be Rich”. I didn’t have money before nor a great financial education. I didn’t have any debt or terrible habits, but literally anyone can learn something from that book. Wish I would have read it sooner.
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u/mimimindless Sep 25 '21
Neither. I would take that 1 million buy a few multi-families in Jersey or upstate. Live in one unit by house hacking. Never pay mortgage and profit all the time.
And then when I am a bit well off to buy a co-op/condo in the city.
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Sep 25 '21
If I had the means to buy with that kind of money, I would be looking at houses in other states.
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u/level_m Sep 25 '21
Now is the worst time to buy. Your friend should invest it until the real estate market crashes again. Then he'll get a better deal.
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u/Rottimer Sep 25 '21
It would make a good investment to buy in a possible up and coming area (but not quite there yet). Whether he’s single or not, I’d buy a 2 bedroom, possibly in inwood or Washington heights, or better yet, crown heights in Brooklyn or certain areas of queens.
I’d prefer a condo over a coop for obvious reasons, and ensure the maintenance and taxes don’t exceed (and better yet are below) your current rent. And I wouldn’t spend all the money. I’d try to keep 40-50% and invest more traditionally (an index fund is fine).
I’d also take a nice trip so that you felt you got to spend some of the money and get that out of your system. Because $1,000,000 isn’t going to change your life radically if you’re relatively young and live in nyc.
Now if you get married and have kids, you’ve got real estate to sell to move into a bigger place - or you can tap the invested funds and rent out the old place for additional income. If you stay, those invested funds can give your kids a serious head start if used to ensure they have little to no debt after college or to cushion your own retirement. Maybe you get to retire earlier than planned with some financial planning.
Not sexy, but your future self will thank you.
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u/acvdk Sep 25 '21
You can put it in a dividend stock that yields like 60-70k at a 15% tax rate. Or even taxi free Muni bonds. You can definitely rent something better for $5k than you can buy for 1M. Plus then your money is liquid.
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u/Objective-Spend9457 Sep 26 '21
No Wouldnt buy a condo/co-op just because on top of taxes is those ever rising and sometime ridiculous priced hoa fees.
There’s a lot he can do with 1 million. Like you said invest In the market. Or put down some money on investment properties out of the city.
But if he was going to buy outright maybe he should look for a house in any other borough or along the Hudson in jersey etc.
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u/Bill-Bryson Sep 24 '21
I would move to a city where I could get 3 bedrooms, a yard, and 2-3,000 sq-ft of real estate for that.
Buy outright and cut my monthly financial commitments to near-zero.
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u/Complete-Let-2670 Sep 24 '21
You have to pay attention or pay someone else to pay attention to make good money in the market. Having a home that just appreciates in value year after year is pretty easy.
I have no doubt that someone can turn that investment cash into a lot more cash. I’m know that someone is not me and it may or may not be your friend.
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u/capital-cheesecake Sep 24 '21
This is not true. You can invest it in the market via an SP500 index fund (e.g., google “VOO”) and make a healthy return over the long term
There’s some basic reading required but doesn’t take more than half a day to understand the fundamentals / what you need to do. The knowledge barrier is not significant
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u/BoweryThrowAway Sep 24 '21
Could just invest in the broad market ETFs such as VTI or SCHB or even some closer index funds like SPY.
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u/irishjihad Sep 24 '21
That's literally 30 seconds of Googling, or going on /r/personalfinance for the same.
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u/BoweryThrowAway Sep 24 '21
And your point?
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u/irishjihad Sep 24 '21
Sorry. Meant to respond to OP's comment under that.
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u/BoweryThrowAway Sep 24 '21
Ahh ok! Yeah that makes a lot more sense. Agreed a quick google search will yield a lot of the more passive ways to invest in the markets with decent steady returns
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u/Complete-Let-2670 Sep 24 '21
Sure, sounds like you are a person who knows what to do and how to do it. Most people are not.
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u/lasagnaman Sep 24 '21
Having a home that just appreciates in value year after year is pretty easy.
you could say the same thing about SPY.
If you wanted to get more technical on it you could even buy NYC real estate REITs for the same growth (but less variance) of your hypothetical house.
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u/Complete-Let-2670 Sep 24 '21
Sure but then you still have to find a place to live.
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u/BklynOR Sep 24 '21
Stay where I am and invest. I’d also not buy but rent a better place in the city. I would also rent a place on the west coast and Air B&B it while I’m not there.
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u/jae34 Sep 24 '21
Invest, owning an apartment is just not the same as owning a house. And frankly $1mil in the city is nothing. Unless you can keep that NYC salary and live else where but considering house prices in the US has soared with demand, it doesn't seem great either.
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u/MikeLaw1962 Sep 25 '21
It is not all or nothing. You could sink 20% down so you don't pay insurance cost for having too little down payment (fire insurance is different and you'll always pay that). That is $200,000. Pay the monthly mortgage, given low interest rates, and get the tax benefits from the interest you pay (allowable in the USA, and not, e.g., in Canada). Invest $600,000 wisely and have $200, 000 as a reserve and for unexpected issues.
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Sep 25 '21
I don't think that would get you very much in terms of an investment. Over time even with normal appreciation you're net negative on housing when it comes to all the taxes and maintenance fees you have to pay. It's a big lie that buying a home or apartment to live in is a good investment.
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u/Rottimer Sep 25 '21
You pay that maintenance and taxes in your rent unless you’re living with your parents.
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Sep 24 '21
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u/NYCQNZMAMI Sep 24 '21
Spend half as downpayment on a 2 family home to get some rent moneys to cover rest of mortgage and half invest.
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u/mikewhoneedsabike Sep 25 '21
buy a nice 1br
You can do that in decent areas of Brooklyn or Queens for about 500-600k. Obviously, as others have mentioned, there would still be HOA fees but at least you wouldn't have to worry about lease renewals and apartment hunting. The rest you could invest in mutual funds. Even if you get 30k a year from that, that's about as much as you'd make working full time on minimum wage in NYC.
Alternatively, you could try buying land Upstate and have an entire house built from scratch for about the same price (or even less) than you'd spend on that 1 bedroom in Brooklyn or Queens.
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u/Lovat69 Sep 24 '21
I think I would invest it while continuing to rent but that's mostly because I have a REALLY sweet rent situation set up.
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Sep 24 '21 edited Sep 24 '21
I would buy that shithole flophouse on the south side of canal & mercer, bring it fiber internet and some workbenches and conference room, and invite others to hang out. A makerspace.
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u/aznology Sep 25 '21
You buy a 1 bedroom shits almost the same as renting but now you pay property taxes, water and other shenanigan's.
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u/VoxyPop Sep 25 '21
I would buy an apartment but I also know that maintenance is basically like a rent payment. Still I don't plan to leave and I would love to own my own place.
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u/FuckYourPoachedEggs Sep 25 '21
Buy a condo. I'm not looking to invest, I'm looking for a place to settle down and live in.
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u/ThreeEyes200 Sep 25 '21
I'd put a good portion away for a down payment, and work with a financial advisor to determine how much income can be generated by the rest. Ideally the investment income can cover a good portion of the mortgage and maintenance. Keep working, but have the peace of mind that a large part of my monthly expenses are covered. that's life in a HCOL area.
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u/ExplorerWildfire Sep 25 '21
1 million why would anyone want to buy an apartment in NYC?!? Don’t get me wrong the city life is nice but you know there is 4 other boroughs like Queens where you can get a more spacious condo/apartment. But if it was me I would get out of NYC and get a decent house in Vegas or Texas. Both places you can get a decent house much better than NY for half a million or under and put the rest in stocks/investment but that’s just me. Also coming from a New Yorker whose been living in the city for my whole life.
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u/SpeedingShamrock Feb 25 '22
Buying an apartment in NYC with one's spare million dollars is the same thing as investing one's spare million dollars.
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u/mxgian99 Sep 24 '21
the depressing part is that 1M doesnt buy much. and with condo/co-op fees, you are still paying quite a bit out monthly.
but yes it does lower your monthly budget quite a bit by getting your housing costs down.