Renting Vs Buying in NYC: What Makes Sense?

 

Renting Vs Buying in NYC: Key Distinctions

Before we begin diving into the pros and cons, let’s establish some key differences between renting and buying a unit or home in NYC.

A Quick Guide on Renting an Apartment

In essence, when renting an apartment you pay a monthly rate to inhabit the space for a predetermined lease term. This time period can vary, but twelve months is the most common leasing option.

Those interested in renting an apartment in New York City will typically begin by contacting a real estate salesperson representing a unit on the market. This salesperson will then allow the potential tenant to tour the apartment of their choice.

Let’s say, although often this isn’t the case, you’re instantly enamored with the space. (Nice going!) You’ll be interested in putting down a deposit and signing a lease. During your lease period, your rent will stay the same each month. After the lease term expires, apartments that aren’t rent-stabilized are subjected to potentially large rent increases.

In some ways, renting is a lot like “borrowing.” You do not own the unit, although you call it ‘home’, and it is not yours when your lease is terminated. The same way you might rent a tuxedo or borrow a library book—eventually, what you have must be returned.

Before moving in, the first month’s rent and security deposit are due upfront and most brokers collect a fee for helping you attain the apartment. After this is paid, other monthly costs should be determined. Depending on what amenities are offered with the rent, certain costs such as internet or electricity should be considered as you determine finances. There are many benefits to renting vs buying in NYC; of which we will soon discuss.

A Quick Guide on Buying an Apartment

Buyer demand surged over the last several years. Essentially, buying an apartment is purchasing a unit within a larger building for you and yours to inhabit permanently– or as long as you see fit. Besides owning the apartment, you are given full access to any communal spaces intended for residents within the building.

To buy an apartment, one typically assumes a mortgage. Mortgage payments are an investment, and can sometimes be less than rent might be per month. However, you will have to hand over a lot more cash up front than you would in a renting situation. However, it doesn’t stop there. Closing costs are another financial undertaking necessary for owning an apartment.

Similar to any apartment search, one typically begins with contacting a real estate salesperson, so that when you find a home you love you have an expert at the ready to help you land the place of your dreams.

Now, there are several different forms of home ownership in New York City. Condos or co-ops have different requirements. For these these homes, you purchase a unit within a community of similar spaces and then pay monthly for additional condo or co-op amenities. These are called maintenance fees in co-ops or common charges in condominiums. To learn more about condo common charges, check out our article on the topic.

The Pros and Cons of Renting Vs Buying in NYC

There are various benefits for renting vs buying in NYC. Depending on your own personal wants and financial needs, either could be a perfect fit. To help you determine which is best, here’s a quick guide on the beneficial (and not-so-wonderful) aspects of each option.

The Pros of Renting in NYC

Flexibility

Flexibility is potentially the most crucial aspect of renting in any city. The ability to up and move with greater ease, depending on the length of a lease, is ideal for those who travel often.

Even if you aren’t a frequent flier, many aren’t sure how well they’ll adjust to New York City living. Renting allows someone to up and leave when their lease is over if the subway rats and sleepless city are simply not appealing.

In addition, you don’t have to worry about putting your home on the market if you decide to leave. You are simply borrowing the space, and hold no stake in the game of whoever does so after you.

Financial Freedom

For many, renting is more financially doable than purchasing an apartment. Even for those who wish to own the lovely Tribeca two-bedroom they’ve spent a whole year in … many simply can’t. That’s okay!

Renting ensures you know exactly what you owe each month, and can plan your finances around it accordingly. In addition, what you’ll owe up front before move-in day will be significantly less than you would when purchasing a home.

No Worries About Maintenance

All maintenance and repairs are covered in your rent, ensuring you don’t have to sweat about that leaky sink or broken door hinge. When you own a home, any issue within it often becomes a burden you bear yourself.

The Cons of Renting in NYC

Rent is Subject to Change

Unless you’re one of the lucky few to reside in a rent-stabilized apartment, your rent may go up significantly when your lease is through.

Devastated to find out that your $1,500 a month studio is now approaching $3,000? You’re not alone. It can be difficult to grow comfortable within a space only to find yourself heartbroken that it no longer fits your budget.

Owning a home is an investment, but for many, one worth their while.

Impermanence

Similarly to the challenge above, many hate the ever-exhaustive act of moving in and moving out repeatedly.

Moving into a new place is both irritating and time consuming. For those who don’t own their new home–the process only looms again in the not-so-distant future.

It’s heartbreaking to fall in love with an apartment, only to return it when the lease is through. Buying a home does eliminate this feeling, allowing you to grow as attached as you please.

Eviction

Yes, eviction is something that’s typically avoidable. Pay your rent on time and don’t throw parties that shake the building at its core.

But what about when it’s not your fault? Landlords can evict residents for a variety of reasons. Though in New York City laws strongly favor tenants in these situations, it can happen.

While you will not be expected to pay rent for the remainder of that time, it simply serves as a reminder of the impermanence of rented-living.

Potentially Challenging Policies

Have a furry friend you simply can’t abandon? Your apartment search just got even more difficult.

Certain apartments have a “no pet” policy which, if broken, can lead to eviction. You are bound to all rules and regulations of your lease.

The Pros of Buying in NYC

Stability

We all crave stability, and owning a home is one of the most efficient ways to achieve it.

Sick of frequent packing? Sick of returning to the same, tricky market every time a lease is through? No one can blame you. Owning a home eliminates such challenges.

Good Investment Qualities

Owning a home is an investment, and often one with ample rewards. As the value of your property increases, a future sale of the property could reap financial gain.

Not only this, but some homeowners choose to rent their units out while on extended vacations or living in other owned properties. This is another source of decent income.

Tax Benefits

Mortgage payments are deductible, and paying off a loan builds equity in your name. While these may not be the first things associated with home ownership, they remain important benefits.

Lifestyle Freedom

When you own a home, many decisions are entirely in your hands. Want to decorate everything yourself? Change that ugly bathroom wallpaper or rip up that hideous carpet? All good!

The Cons of Buying in NYC

It’s a Serious Undertaking

Owning a home is no joke and, unlike rentals, many interior repairs are yours to shoulder. Household projects can be costly and time consuming, certainly something to consider when purchasing any apartment.

In addition, you must be willing to commit to the neighborhood of your choice. Selling a home is not easy, and there is no promised expiration date if you despise your living situation.

Financial Requirements

For some, financial requirements are the ultimate con to home owning. It is certainly not something that is doable within every financial situation. Down payments, mortgage payments, closing costs, and acquiring financing are all steep hurdles, and it’s understandable if home owning is simply not in your current cards.

The Worry of Property Value Decreasing

Like any investment, home ownership can be a let down. Some home values experience dips, and if the owner is forced to sell at that time, it can result in a significant financial loss.

How To Determine Whether to Rent or Buy

First, imagine your situation in five or ten years. Do you intend on living in the same city? The same neighborhood, too? If this picture doesn’t seem plausible, buying may not be best for you.

Secondly, assess your finances. If buying a home is simply not a smart investment with your current income, it would be wise to wait.

At the end of the day, armed with the pros and cons above, making a decision in either direction can be done through well-informed and careful consideration.

Either way, the real estate experts at NewDevRev are available to help you find your new home. Still need help deciding whether to rent or buy?