Conventional wisdom, even after the big housing crunch of the mid 2000s, is that buying property is a better financial move than renting. Though this is true for most people in markets like the Upper West Side, homeownership is not without risks. Some of these risks are significant, and buyers of Upper West Side apartments should consider them before committing to that down payment.
Pushing the Envelope
Your mortgage broker will help you look at your finances to determine if you can afford the mortgage payment – which is sometimes higher than what you pay in rent. However, they often fail to take into account other increased costs that come with buying an apartment. Your utility bills are likely to increase, and you might take on other services – like renovations – which you never invested in when living in somebody else’s place.
Best Fix: Assume the worst when calculating expenses for your new place. If things cost less, your budget will have some extra wiggle room.
The Appliance Trap
You’ll have a tough time getting financing for a building with major structural or service flaws, but in-unit appliances are another matter. A washer/dryer that needs constant service, or a fridge that dies during your first year of ownership, or an overly zealous co-op board can be a major financial burden – especially during those lean early years when your income is still adjusting to home ownership.
Best Fix: Have a qualified technician check appliances as part of your inspection process. Negotiate for replacements if anything looks like trouble.
Photo Credit to Flickr User: Herbie in the Hills
Neighborhood Surprise
The Upper West Side has many pockets. We love all of them. And it’s a fantastic neighborhood to invest in. But make sure you are familiar with the exact block and surrounding area where you are going to be living. More than one person has moved into a great apartment, only to find the neighborhood too noisy, too quiet, or simply not a great fit. The thing about this risk is that it’s hard to find out about until you’ve actually spent significant time in the area.
Best Fix: Contact us! This is our territory. But you should also find out for yourself. Rent a room in the neighborhood for a week (feel free to contact us for recommendations). If your schedule or bank account don’t allow you to do this, take time to walk around the neighborhood at different times of the day or night. Check important statistics online and compare them to where you live now. Visit local businesses to get a feel for what the locals are interested in.
Opportunity Costs
This one is more subtle, but one of the more painful risks for those who experience it. It comes into play even if the apartment and neighborhood remain just as attractive as they were when you went home hunting, and is all about what you can’t do because of where you live. Opportunity costs could take the form of affording fewer luxuries with a higher monthly payment, or simply from living further away from the office. And while investing in an Upper West Side apartment is a great long-term investment, please realize that it’s usually not fast – and funds will tend to be tied up for some time. So if you are more of a high-risk, quick-return investor, you might want to check out some other investment options.
Best Fix: Look hard at the logistics of living in your potential Upper West Side condo or co-op. Run a realistic budget, check commute times. Have everybody involved in the decision make a list of ten reasons not to live in that home. If you can beat each objection, you can live there!
Photo Credit to Flick User: Ed Yourdon
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