Author Topic: Reverse Geo-Arbitrage  (Read 1039 times)

Montecarlo

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Reverse Geo-Arbitrage
« on: January 25, 2019, 10:07:10 AM »
I've always wanted to live in Brooklyn or Manhattan.  I was thinking about it and how it would tie in with my FI plan.  So my FI#, excluding the equity in my house and tax advantaged accounts, is 400K.  I feel at 400K + no mortgage/rent + what I have in tax advantaged, I'm good.


Going to NYC, I would want to rent out my house.  Probably ask my friends a mile away to manage it and pay them a fair amount.  Let's be super conservative and say in the first year I have to replace the roof and I'm break even short term on rental cash flow.

A quick look on Zillow says I can get a nice house for around 600K.  I'm not sure how much I'd have to add for living expenses, higher taxes, etc, but I'm swagging at 30K/year.  30*25 + 600 = 1.35 million extra for the move to Brooklyn.  That is another 7 years of working!  I don't think that's worth it.

Then I realized I'm being a wussy complainypants.  If MMM wanted to move to Brooklyn (seems far fetched, but IF) and he didn't want to work 7 years to do it, he would find a way!

I'm going to dig in and see what I can figure out, but curious on what the community thinks (other than "don't move to Brooklyn!")

leavesofgrass

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Re: Reverse Geo-Arbitrage
« Reply #1 on: January 25, 2019, 10:29:01 AM »
If you've always wanted to move to Brooklyn/Manhattan, do it!

I lived in Brooklyn Heights for 2 years. It was great. I'm not familiar with the current housing market, but getting a nice house in Brooklyn/Manhattan for $600K sounds like wishful thinking. You can probably get something further out in Brooklyn, but I would think that means giving up the ideal Brooklyn/Manhattan experience.

Why not rent for a year or two first to see how you like it and what area you'd be happy living?

Montecarlo

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Re: Reverse Geo-Arbitrage
« Reply #2 on: January 25, 2019, 10:48:52 AM »
I forgot to mention - biggest constraint is two dogs

Montecarlo

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Re: Reverse Geo-Arbitrage
« Reply #3 on: January 25, 2019, 10:52:26 AM »
If you've always wanted to move to Brooklyn/Manhattan, do it!

I lived in Brooklyn Heights for 2 years. It was great. I'm not familiar with the current housing market, but getting a nice house in Brooklyn/Manhattan for $600K sounds like wishful thinking. You can probably get something further out in Brooklyn, but I would think that means giving up the ideal Brooklyn/Manhattan experience.

Why not rent for a year or two first to see how you like it and what area you'd be happy living?


https://www.zillow.com/homes/for_sale/Brooklyn-New-York-NY/fsba_lt/house_type/30654635_zpid/37607_rid/500000-700000_price/1986-2780_mp/pricea_sort/40.767541,-73.781777,40.542765,-74.093171_rect/11_zm/0_mmm/

Seems like a lot of these!  Yes, I think renting makes sense at first, and maybe forever.

leavesofgrass

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Re: Reverse Geo-Arbitrage
« Reply #4 on: January 25, 2019, 11:23:46 AM »

https://www.zillow.com/homes/for_sale/Brooklyn-New-York-NY/fsba_lt/house_type/30654635_zpid/37607_rid/500000-700000_price/1986-2780_mp/pricea_sort/40.767541,-73.781777,40.542765,-74.093171_rect/11_zm/0_mmm/

Seems like a lot of these!  Yes, I think renting makes sense at first, and maybe forever.

That's further out than I'd want to be and not very close to the subway (looks like closest one is over 1.5 miles away). Personally, I'd prioritize location/great neighborhood.

But if that's not your priority, I can understand.

I still wouldn't buy a place until after you've lived in the area for a while.

MonkeyJenga

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Re: Reverse Geo-Arbitrage
« Reply #5 on: January 25, 2019, 01:20:37 PM »
Neighborhoods vary greatly within NYC, and I would strongly echo the advice to rent before you buy. Especially if something's been on the market that long. It would make me suspicious.

Montecarlo

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Re: Reverse Geo-Arbitrage
« Reply #6 on: January 27, 2019, 04:05:39 PM »
So the Brooklyn heights area we're probably talking about 1.2M to buy.  Rents are high too.  Seems like best bet would be to rent a room from someone willing to have two dogs, but that's a very tenuous situation to be in...

Any ideas?

leavesofgrass

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Re: Reverse Geo-Arbitrage
« Reply #7 on: January 28, 2019, 02:03:53 PM »
Try short term rentals that allow dogs. You seem like you don't have much experience with NYC, and if that's the case, take your time to make sure it's a good fit for you. Rent in different neighborhoods. Do you need a car? Do you need a nearby dog park? Are you going to be working? So many factors to consider. No need to buy a place or enter a 1 year lease right away. Slow down.

I don't know where you'd be moving from, but NYC long-term isn't for everyone. I always had dreams of living there, and while I'm very glad I did it, it's not the place for me.

If you need a car but can't afford to live in a desirable area with easy subway access to the city, I wonder what's the point of moving there? The further out you are from the city and a subway station, the less likely you are to actually go into the city.

Montecarlo

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Re: Reverse Geo-Arbitrage
« Reply #8 on: January 28, 2019, 03:53:57 PM »
No need for a car!  Just need affordable shelter for me and the dogs in a relatively safe neighborhood.  Dog parks and working optional.