Alt: Skyscrapers in NYC.
Whether to rent or purchase is constantly debated in New York City. It’s challenging to know what to do with your hard-earned money here: apartments are ridiculously costly to buy, and renting isn’t that affordable either. However, the solution to the recurrent buying vs. renting in NYC real estate quandary may appear slightly different in 2022 than in previous years.
Although the economic environment is changing, several factors are likely to influence the sales market: a continuous shortage of flats and townhomes for sale, growing inflation, and rising interest rates. The NYC rental market has rebounded spectacularly despite COVID, with rents now higher than they used to be before the pandemic. We bring you a guide on everything you should know before deciding whether to sign a lease or a sale contract.
Buying vs. Renting in NYC: A guide
Increasing capital over time, engaging in property investing, receiving affordable leverage through a mortgage, saving money on rent, increasing value through remodeling, and having a sense of security when it comes to your property – are all key benefits of purchasing.
The perks of renting in NYC include having plenty of choices and overall flexibility, the prospect of cheaper monthly housing costs, and the chance to invest funds instead of using them as a deposit for a home.
So, should you rent or buy in New York City? Is it truly the case that renting in NYC is less expensive than buying? Let’s find out.
Buying is an excellent method of accumulating equity
Buying property allows you to borrow funds – you need to find financing. It suggests you’re buying something using someone else’s money. This is significant because leverage might result in a higher return on investment. For example, if you put down 20% to buy a home for $1,000,000 and sell it for a net of $1,200,000 5 years later, your yearly rate of return is around 14.87%. On the other hand, if you paid $1,000,000 in cash for the property, your annual rate of return would be around 3.7%.
As you can see, leverage in real estate is quite effective. In a real estate market as liquid as NYC, with a consistent appreciation rate, your home will almost certainly be worth more money when you’re prepared to sell than when you bought it.
Hold your horses; it’s not that simple
As tempting as it may seem to go straight for that sale contract, it can be ill-advised in certain cases. No one can deny that owning real estate in today’s day and age is, first and foremost, a huge responsibility. Even the most prosperous NYC circles can’t avoid the risks owning a property carries with it. Let alone the regular folk who just want a nice home to call their own. Therefore, it’s essential to consider all the downsides.
The Buying vs. Renting in NYC dilemma is not just about the matter of price
First of all, buying your place requires a lot of time and money. Careful planning and some haggling will also likely be in order. The effort you need to find, buy, and remodel property can easily be put to better use. Furthermore, owning real estate can be quite problematic in several ways. There is always a maintenance problem to contend with. Not to mention that, before buying, you need to have a clear plan in mind on what to do with your property. NYC owners will tell you that you need to see your sale contract as a business opportunity.
Wherever you stand, remember that knowledge is power
Of course, renting out your place right after you’ve bought it may not seem like the best idea. However, it’s definitely something that you should consider, as it has the potential to be quite lucrative in the long run. Of course, renting a place to someone can have its fair share of challenges. Your first step would be getting familiar with your tenants right, either way. Regardless of whether you’re renting your property or are a tenant yourself, you may find it helpful to know the extent of the tenant-landlord relationship, just in case.
Know your other option
Renting does seem like a safer option at first glance. It’s definitely one that carries less responsibility. One can’t be too sure of anything these days, and real estate tides can be somewhat unpredictable. You need knowledge and experience to make the right decision regarding buying a property. Therefore, if you’re not in a situation where you can give this issue some thought, renting is a safer option.
Don’t put yourself in a tight spot, unless that’s precisely what you need
What makes renting so great is the matter of convenience. When moving out of a rental apartment, all you genuinely need is a good storage unit. Once you have that, you’re covered and ready to go wherever life takes you. And there is no place out there that offers better storage units than the Bronx. Once you find the storage facility that suits you, this can be an excellent place for all your belongings – everything you don’t have the time to deal with. Smart storage solutions are a great illustration of what you want from a rented space, be it for storing or living purposes:
- Secure and reliable
- Not too binding
- Just enough space for you to house everything you need
It’s up to you – we’re just along for the ride
The ever-puzzling dilemma of buying vs. renting in NYC avoided getting resolved for years. The question may seem complicated, but only you can find the solution that will satisfy yourself and your family. It all depends on where you are in life and what you want to do with your property. Don’t buy real estate for the sole purpose of having your name on the door. Make a point of having a good strategy in mind. Once you figure out what you expect from your new place, you’ll know whether you should buy or rent it.