Is Buying a Home in New York a Good Investment?

Is buying a home in New York a good investment? Before answering this question, it’s important to define the term “investment.”

Because everyone needs a place to live, we are not going to compare the return on investment of buying a home to investing in stocks, bonds or other alternatives. And because someone might need to live in New York because of job or family connections, we are not going to compare buying in New York to buying elsewhere (though according to Zillow, New York state home values have increased 2.8% in 2018 over 2017, and they predict an increase of 5% in 2019). Instead we are going to tackle the question: Is buying a home in New York a better investment than renting?

Renting vs. Buying

Consider that if you are renting, you are already paying a mortgage. Not to mention taxes and insurance. It’s just that instead of it being your mortgage, it belongs to your landlord, who is likely also charging extra money to profit from the rental. When you move, you will have nothing to show for the time and money you’ve spent in your landlord’s residence. If the property goes up in value, you will receive no financial benefit.

Renters are basically at the mercy of a landlord. If he or she chooses to raise the rent at the end of your lease, you could face an increase that you’ll be unable to pay. (This can occur even if the property you rent is subject to rent control or stabilization regulations.) The result: displacement. You’ll have to pack up your life and move elsewhere. Landlords also set the rules.  When you rent, you may not be able to have a pet, make structural changes, update appliances or even change a paint color. The actual rules vary per landlord, but one thing is always true: you’re not free to do whatever you might want to do in the home.

Also consider that after you have saved up a down payment and purchased a home, your monthly costs might actually be lower than your rent—especially since your landlord was likely charging you more than his or her actual ownership costs. A great mortgage banker in New York, like Ark Mortgage, can help you determine how much you may be able to save if you become a homeowner instead of a renter. Furthermore, money you spend to improve your home may boost its resale value. Depending on how long you hold onto your home and how the market fluctuates, you could realize a profit when you decide to sell.

If you expect to move frequently – perhaps due to job transfers – don’t necessarily rule out the idea of purchasing a home. While the costs of moving and financing may likely outweigh any initial profit you might realize from a quick resale, you can always rent out the property. Then you’ll become the landlord and potentially profit from the rent and from an increase in property’s value when you ultimately sell.

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