Author Topic: What to do with my inheritance...  (Read 9722 times)

FenderStrat

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What to do with my inheritance...
« on: August 06, 2014, 08:40:55 AM »
Greetings Mustachians!

I need a little advice. My parents passed away last year, and I'm trying to figure out the best place to put my inheritance. I don't own a home yet, and I have a rather dead-end-job that doesn't pay great. Should I use my inheritance to buy a home (I have enough to buy a modest place with cash)? Or should I use it to increase my income so I can save more (further education, pursue my own business, not sure yet)?

Thanks,
Scott

shotgunwilly

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Re: What to do with my inheritance...
« Reply #1 on: August 06, 2014, 09:03:47 AM »
It all depends on what you value and want.  If you want that house more than anything, then go for it.  If you want to put the money to work, you can stash it away and invest in index funds.

Personally, I would think about what my parents would have wanted me to use the money for, and imagine whether they would have been happy with my choice, then I would do that. 

FenderStrat

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Re: What to do with my inheritance...
« Reply #2 on: August 06, 2014, 09:22:27 AM »
Thanks! I think my parents would've wanted either for me. I'm leaning towards buying a home since I sold theirs, don't have one of my own, and already have a job. The job can be upgraded by other means.

Angie55

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Re: What to do with my inheritance...
« Reply #3 on: August 06, 2014, 09:26:06 AM »
I would be hesitant to buy a house only because you said you had a dead end job. Therefore, you will not be there forever.

If there is any possibility that you will venture to further your education or find a new job which may be in a new location I would wait a little longer. If you don't forsee yourself moving anywhere then by all means go for the house if that will relieve some stress from housing cost.s

AlanStache

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Re: What to do with my inheritance...
« Reply #4 on: August 06, 2014, 09:29:13 AM »
If your choices are 1) house, 2) education (?) 3) sp500 index fund.  so long as you follow thru you can only go so wrong.  Also does not have to be all or nothing.  Without details is hard to say much more, I think many here would play it conservative and lean towards a large down payment on the house option, maybe someplace you could rent out a room to get some income that way.  Unless you really want to go to school, but then a house could be a big help too....


edit: goes with out saying, only buy a house if you intent to live in it a good while.
« Last Edit: August 06, 2014, 09:33:37 AM by AlanStache »

neo von retorch

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Re: What to do with my inheritance...
« Reply #5 on: August 06, 2014, 09:30:24 AM »
I came across this flowchart earlier today... http://www.businessinsider.com/buy-or-rent-a-home-flowchart-2014-7

Personally I don't recommend home buying for many people. (It is right for some.) There can be a lot of expenses most don't factor in, a time cost in maintaining your home, and you often live in a bigger space than you would have if you rented... so you end up spending more money on stuff, and holding on to more stuff than you can hide away in all that extra space.

My personal experience is that after over 7 years of home ownership, renting out bedrooms almost the entire time, I'm still not financially better off than I would have been renting. But then I also replaced a roof and an HVAC unit. Not everyone will deal with that, but maintenance and repairs are a big, variable part of home ownership. I also would really, really like to live much closer to my current job (in my field, changing jobs every 2.5 years is common) but selling my home is not a trivial undertaking. It would take a lot of effort and time (and some money, and certainly some stress) to make that happen.

Most of all, buying a home is a very big decision that is not at all easy to undo. You could rent now, put money in investments, and change your mind in 1 month, 6 months, 1 year. But once that house is purchased, and you've sunk all those closing costs in, you can't easily change your situation. It also costs a lot to sell a home, too!

FenderStrat

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Re: What to do with my inheritance...
« Reply #6 on: August 06, 2014, 10:10:19 AM »
Not sure if this changes any variables in regards to buying. I live in Queens in NYC. If you're not familiar with what is happening here in real estate, the extremely wealthy and foreign investors are buying up manhattan and pricing out average wealthy people who would normally live in Manhattan. They are now buying up Brooklyn and Queens, pricing out those who aren't wealthy. I feel like buying in up and coming areas would shield me from rent increases while being itself a real investment. Also, in NYC most homes are co-ops or condos where you are paying maintenance fees. So as long as the building's financials are solid, home maintenance is less of an issue. Those maintenance fees are also why I want to buy cash instead of mortgaging. I can't afford the fees AND mortgage.

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Re: What to do with my inheritance...
« Reply #7 on: August 06, 2014, 10:21:48 AM »
based on what you've written, sounds to me like you should buy, relieving yourself of a rent payment as long as you own the property

you can bank the cashflow saved from [Theoretical Rent - (Property Taxes - Insurance - Maintenance)] forever and if you ever need cash can take out a HELOC, which is a great backstop (no more emergency fund) as well as potentially cheap source of funds if you wanted to invest

surfhb

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Re: What to do with my inheritance...
« Reply #8 on: August 06, 2014, 10:27:41 AM »
Much more info is needed.   What's your age, education, debt, income, savings?

FenderStrat

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Re: What to do with my inheritance...
« Reply #9 on: August 06, 2014, 10:43:32 AM »
Sure. I'm 41. I have a bachelor's degree in communications with a minor in visual arts. Currently working as a print production artist for a book advertising agency. I make about $45K/year, which is the median salary in NYC (last I checked). I have absolutely no debt. My own personal savings aren't incredible. I have $24.4K in an IRA which I'm not touching. I have about $9.5K in my checking account. I'd be willing to invest most of the checking acct. funds.

Here's where my inheritance is:
$95K sitting waiting in a "high apy" (highest I could find) savings account.
$142.5K in an Inherited IRA. There's no inheritance tax on this money, but I'd have to pay income tax on whatever I pull out. I worked out the numbers with a financial planner friend of mine. We think I can pay cash up to around $200K for a home and still have plenty left to pay the income tax for the Inherited IRA. He thinks I should buy.

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Re: What to do with my inheritance...
« Reply #10 on: August 06, 2014, 10:49:55 AM »
I think the fact that most of it is in an IRA changes some of the details.

What are your Reitrement plans? If you're looking to retire soon, then you may want to keep the tax advantaged account alone. It would be far better to take a mortgage than to break into the IRA. Or at the very least take the mortgage to stagger paying back the mortgage. Because you'll come out much farther ahead even with a mortgage at 5%, if you can avoid hitting the 25% tax bracket.

surfhb

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Re: What to do with my inheritance...
« Reply #11 on: August 06, 2014, 10:50:32 AM »
Yeah.  I'd probably pay for the home if you're sure that's where you'd like to live.    From here on out, read this forum and start putting money away. 

Read the Bogglehead wiki for a good investment plan and open a ROTH IRA today.   

I'm sure your parents are very proud of you.   Use their legacy for good :)

The poster above gave good advice too but I'm against debt if it's possible.   One things for sure though.....you'll have a paid off home and every extra cent can go to retirement from here on out.   You can be FIRE in 10 years easy
« Last Edit: August 06, 2014, 10:53:54 AM by surfhb »

FenderStrat

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Re: What to do with my inheritance...
« Reply #12 on: August 06, 2014, 11:34:34 AM »
Oh yeah, I'm also against taking on debt. And I was against taking on that income tax burden to buy a home at first. But my financial planner friend made the point that I'd be paying extra income tax from here on out as I pull out a little each year from the inherited ira, might as well pay it all at once, get it over with, and own real estate with no mortgage. There are good arguments against it too. I could take on a mortgage and use the annual withdrawals from the Inherited IRA to pay that off. It's funny. I was less stressed about finances when I had very limited financial options. I'm mostly just making damn sure my parents' legacy doesn't turn into some financial nightmare.

Frankies Girl

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Re: What to do with my inheritance...
« Reply #13 on: August 06, 2014, 11:55:17 AM »
Sure. I'm 41. I have a bachelor's degree in communications with a minor in visual arts. Currently working as a print production artist for a book advertising agency. I make about $45K/year, which is the median salary in NYC (last I checked). I have absolutely no debt. My own personal savings aren't incredible. I have $24.4K in an IRA which I'm not touching. I have about $9.5K in my checking account. I'd be willing to invest most of the checking acct. funds.

Here's where my inheritance is:
$95K sitting waiting in a "high apy" (highest I could find) savings account.
$142.5K in an Inherited IRA. There's no inheritance tax on this money, but I'd have to pay income tax on whatever I pull out. I worked out the numbers with a financial planner friend of mine. We think I can pay cash up to around $200K for a home and still have plenty left to pay the income tax for the Inherited IRA. He thinks I should buy.


Tapping an (inherited or otherwise) IRA comes with two caveats: you'll be hit with the early withdrawal penalty of around 10%, and you'll also be hit with income taxes as the amount removed (your taxes will reflect you "made" amost 200K in one year! Ouch!) that will count towards your income... so that will slam you into a tax bracket MUCH higher than you are now if you clear out that account to purchase a house with it. I would strongly advise against doing this. You won't get a "first time homebuyer" break on anything removed since this is an inherited IRA (not one you opened and funded yourself).

http://www.investopedia.com/ask/answers/03/062303.asp

You also are 41 and have almost no savings/investments on your own. Just over $30K - That's not good, even if you're not planning an early retirement. I understand the draw to purchase a house, but I don't think that it is a good idea to rob that IRA and pay out large amounts of penalties and tax on it. At the most, I'd run the numbers on putting a down payment of around 100K (the cash in the high yield + a bit of your own cash) will get you a decent mortgage rate that is comparable to your current rent. Otherwise, I wouldn't do it.

You're going to be taking a required minimum distribution from the inherited IRA once a year minimum (please tell me that someone has already set that up for you cause you'll be forced to take the entire account out in a 5 year period if not), and you can roll that money to a Roth IRA (after having taxes taken out) and start building up a tappable retirement vehicle. Don't tie up the IRA money in a house purchase that may or may not be a decent investment - especially when it will cost you so much right up front.

Your friend/planner whatever isn't quite thinking clearly if he said this is a financially sound move. Deliberately taking all that money now will rob you of thousands of dollars (tens of thousands really) it is the opposite of "tax efficient" advice.

Your distribution is based on your age, and for that amount, that's something in the range of $3K a year. Ask the company holding the IRA to deduct taxes at your current rate (15%?) and boom, done. It will be like a nice raise each year, and you can probably still even stay in the same tax bracket if you bump up your 401K contributions to drop your taxable income. Versus taking out 140K now, losing 10% off the top ($14,000!!! NOOOOO!) and then paying taxes on 140K + your regular taxable income ($45K)... dude, that's thousands of dollars just wasted because you think a house is a good idea.

So basically, buy a house if you can use the ready cash and get a decent place and affordable mortgage. Use that inherited IRA correctly - take the RMDs (you could even up the amount taken to fully fund a Roth IRA, but do the math to figure out how to keep yourself in a low tax bracket!), roll them into a Roth IRA each year, and pay tax on the distributions up front so it's not a headache come tax time. And you might just get to have your cake and eat it too...

And it goes without saying that you'd need to do some research on how to invest if you haven't already. JL Collins has a great stock series, and it's easy to move IRAs and such accounts around to someplace like Vanguard and invest in index funds... lots of posts about that stuff on here.

http://jlcollinsnh.com/stock-series/

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Try playing with the numbers in this to see what you'd be facing as far as taxes owed and tax rates. It could be pretty scary.



And finally, I'm very sorry for your loss. Both parents in a short time has got to be hard to deal with.


Edited to strike thru the inaccurate info pointed out by Beltim.
« Last Edit: August 06, 2014, 12:18:38 PM by Frankies Girl »

beltim

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Re: What to do with my inheritance...
« Reply #14 on: August 06, 2014, 12:06:16 PM »
FG - Although I agree with most of your post, you're mistaken about one thing: inherited IRAs are not, in fact, subject to a 10% early withdrawal penalty:
http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_ira/withdrawal_rules
http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230896

Frankies Girl

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Re: What to do with my inheritance...
« Reply #15 on: August 06, 2014, 12:16:09 PM »
FG - Although I agree with most of your post, you're mistaken about one thing: inherited IRAs are not, in fact, subject to a 10% early withdrawal penalty:
http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_ira/withdrawal_rules
http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230896

Whoops. Apologies! Missed the inherited IRA is free of the penalty part.

(although I do know my sister paid a 10% penalty for one of our inherited IRAs, but that might have been because she broke a CD early and I got it mixed up with that)

FenderStrat

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Re: What to do with my inheritance...
« Reply #16 on: August 06, 2014, 12:20:12 PM »
Some states have inheritance tax. Is that what you were thinking of? My parents were in Louisiana which doesn't.

FIPurpose

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Re: What to do with my inheritance...
« Reply #17 on: August 06, 2014, 12:21:03 PM »
Oh yeah, I'm also against taking on debt. And I was against taking on that income tax burden to buy a home at first. But my financial planner friend made the point that I'd be paying extra income tax from here on out as I pull out a little each year from the inherited ira, might as well pay it all at once, get it over with, and own real estate with no mortgage. There are good arguments against it too. I could take on a mortgage and use the annual withdrawals from the Inherited IRA to pay that off. It's funny. I was less stressed about finances when I had very limited financial options. I'm mostly just making damn sure my parents' legacy doesn't turn into some financial nightmare.

I'm sorry, but no it is not 'might as well pay it all at once'. That is not how taxes work. I'm assuming you're single, if not you can remove it slightly faster, but here is what taking out the money in the IRA will cost you.

I think the poster above is confused. I do not believe you will be penalized with 10% for taking the lump sum.

Taking the RMD's:
With 45k salary: around the 12% tax bracket at about $3500 a year. (Will last pretty much the rest of your life.)
or $420 per year. Assuming no growth that is $17,100 of tax paid over its lifetime.

Taking lump sum:

That will push into a tax rate of about 30% or about $42,750 of taxes on the amount. $25,650 difference. In just taxes.

If you're married the difference is more between the 2 options

As the poster above mentioned, you will not have credits you would have before. And that is just an unwarrented additional cost to wanting a home.

Basically you'll be paying a $25,000 tax just for the priviledge to own a home free and clear.

If you really want to own your home using the IRA money, just take a small sum each year that maximizes tax benefits, but really the best thing to do is to not touch it and hang onto the RMD.

EDIT:

Other poster caught the 10% mistake while I was typing my reply :P

beltim

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Re: What to do with my inheritance...
« Reply #18 on: August 06, 2014, 12:27:50 PM »
Oh yeah, I'm also against taking on debt. And I was against taking on that income tax burden to buy a home at first. But my financial planner friend made the point that I'd be paying extra income tax from here on out as I pull out a little each year from the inherited ira, might as well pay it all at once, get it over with, and own real estate with no mortgage. There are good arguments against it too. I could take on a mortgage and use the annual withdrawals from the Inherited IRA to pay that off. It's funny. I was less stressed about finances when I had very limited financial options. I'm mostly just making damn sure my parents' legacy doesn't turn into some financial nightmare.

I'm sorry, but no it is not 'might as well pay it all at once'. That is not how taxes work. I'm assuming you're single, if not you can remove it slightly faster, but here is what taking out the money in the IRA will cost you.

I think the poster above is confused. I do not believe you will be penalized with 10% for taking the lump sum.

Taking the RMD's:
With 45k salary: around the 12% tax bracket at about $3500 a year. (Will last pretty much the rest of your life.)
or $420 per year. Assuming no growth that is $17,100 of tax paid over its lifetime.

Taking lump sum:

That will push into a tax rate of about 30% or about $42,750 of taxes on the amount. $25,650 difference. In just taxes.

If you're married the difference is more between the 2 options

As the poster above mentioned, you will not have credits you would have before. And that is just an unwarrented additional cost to wanting a home.

Basically you'll be paying a $25,000 tax just for the priviledge to own a home free and clear.

If you really want to own your home using the IRA money, just take a small sum each year that maximizes tax benefits, but really the best thing to do is to not touch it and hang onto the RMD.

EDIT:

Other poster caught the 10% mistake while I was typing my reply :P

You're right about the tax, but you're neglecting to cost of interest on the mortgage.  On a 200k mortgage @ 4% interest, that's about 8k a year until you start paying down significant amounts of principal.  The extra taxes would only be enough to pay about 3 years of interest!  That mean you're better off paying the income taxes.

FIPurpose

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Re: What to do with my inheritance...
« Reply #19 on: August 06, 2014, 12:38:02 PM »
That would be assuming that your IRA is not invested; ignoring home mortgage tax deduction; and assuming that he would take on a 200k mortgage. Let's assume he takes 90k in cash and needs a 110k mortgage. With mortgage deduction, effective rate of 3.5%. with a 30 year loan, you can definitely beat 3.5% even the worst 30 year period in stock market history beats that. He could probably take 'safer' investments and still do better, and will come out ahead in investments and taxes saving more than half a year's salary.

surfhb

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Re: What to do with my inheritance...
« Reply #20 on: August 06, 2014, 12:50:05 PM »
Both forks in the road are smart regardless.   

I still say keep things simple....take the hit since it was a gift of love from his parents and work on the FIRE plans.   

The market is speculative.....his home is not

beltim

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Re: What to do with my inheritance...
« Reply #21 on: August 06, 2014, 12:56:16 PM »
That would be assuming that your IRA is not invested; ignoring home mortgage tax deduction; and assuming that he would take on a 200k mortgage. Let's assume he takes 90k in cash and needs a 110k mortgage. With mortgage deduction, effective rate of 3.5%. with a 30 year loan, you can definitely beat 3.5% even the worst 30 year period in stock market history beats that. He could probably take 'safer' investments and still do better, and will come out ahead in investments and taxes saving more than half a year's salary.

I think the reduction from the average 4.3% to 4.0% is plenty generous considering the mortgage interest on a 110K mortgage @ 4.3% is less than a standard deduction.  Even with a 110K mortgage @ 4%, you're still better off paying the taxes now to safe the mortgage interest.

Yes, taking a larger mortgage and investing it is likely to be profitable (that's what I would do!), but the OP specifically said he didn't want to take on debt.

Franklin

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Re: What to do with my inheritance...
« Reply #22 on: August 06, 2014, 01:33:43 PM »
I would buy the house and honor your parents by preserving their stache.   

FenderStrat

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Re: What to do with my inheritance...
« Reply #23 on: August 06, 2014, 04:01:38 PM »
Thanks everyone!

mozar

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Re: What to do with my inheritance...
« Reply #24 on: August 06, 2014, 07:38:07 PM »
+1 Frankies Girl, I had the same exact question on the forum and nobody answered it :-(

I would be wary of anyone telling you it's a good time to buy. Remember how that turned out in 2006? And your so called financial adviser has given you bad tax advice already.

Also want to point out, since I now know everything about inherited IRA's is that it is a MRD (not a RMD).

NCGal

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Re: What to do with my inheritance...
« Reply #25 on: August 06, 2014, 08:53:01 PM »
If you buy a condo or coop in NY you need to get some hard facts on the building`s finances the HOA fees and a history of HOA increases and assessments. Also the bylaws and how easy or difficult it is for the Board of Directors to make changes, and if it`s a condo, what your property taxes will be. We left Long Island in 2006. We had a 650 sf box of a condo with one bathroom, outdoor parking, no terrace or patio and our taxes were 5K. Between HOA and assessments our monthly charges were around $450. Condo boards often add assessments with an objective in mind i.e.replace the roof, and yet when the objective is met they often keep the assessment levied on all homeowners and find a pet project to use it for.  It`s difficult to tell which neighborhoods will rise so please make sure you love the apartment and the neighborhood, can afford all your monthly fees for a sustained period of time, and do due dilligence on the building`s finances. One last thing if you have any thoughts on subletting to a renter in the future. Some coops don`t allow it, some do. But it always needs Board approval which isn`t always obtainable. All the rules should br available in the building`s rules and regs and covenants. You can get them from the management company.

NCGal

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Re: What to do with my inheritance...
« Reply #26 on: August 06, 2014, 09:27:15 PM »
PS I`m so sorry for your loss.

boarder42

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Re: What to do with my inheritance...
« Reply #27 on: August 06, 2014, 10:00:23 PM »
is it just me or the simple fact that you say you cant afford a mortgage and the maintenance fees yet you want to buy raises tons of red flags about your finances. my 2c its a bad idea for you to buy

FenderStrat

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Re: What to do with my inheritance...
« Reply #28 on: August 06, 2014, 10:28:09 PM »
Yes, been through all this with friends who have bought real estate here, and with my real estate attorney. Surprisingly, the two coops I've looked at had sublet friendly boards.

If you buy a condo or coop in NY you need to get some hard facts on the building`s finances the HOA fees and a history of HOA increases and assessments. Also the bylaws and how easy or difficult it is for the Board of Directors to make changes, and if it`s a condo, what your property taxes will be. We left Long Island in 2006. We had a 650 sf box of a condo with one bathroom, outdoor parking, no terrace or patio and our taxes were 5K. Between HOA and assessments our monthly charges were around $450. Condo boards often add assessments with an objective in mind i.e.replace the roof, and yet when the objective is met they often keep the assessment levied on all homeowners and find a pet project to use it for.  It`s difficult to tell which neighborhoods will rise so please make sure you love the apartment and the neighborhood, can afford all your monthly fees for a sustained period of time, and do due dilligence on the building`s finances. One last thing if you have any thoughts on subletting to a renter in the future. Some coops don`t allow it, some do. But it always needs Board approval which isn`t always obtainable. All the rules should br available in the building`s rules and regs and covenants. You can get them from the management company.

FenderStrat

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Re: What to do with my inheritance...
« Reply #29 on: August 06, 2014, 10:32:56 PM »
is it just me or the simple fact that you say you cant afford a mortgage and the maintenance fees yet you want to buy raises tons of red flags about your finances. my 2c its a bad idea for you to buy

... which is why I wanted to buy a place in cash, no mortgage.

NCGal

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Re: What to do with my inheritance...
« Reply #30 on: August 07, 2014, 06:16:54 AM »
I also know of co-op Boards that have blocked the sale of a unit if the seller prices too low. They don`t want to bring down the value of everyone`s home. Allowing sublets then would be desirable. It`s a hard decision when rents are high. My nephew is paying over $2500 month for a small one br in Brooklyn Heights. I lived in a cheap govt subsidized rental studio near Grammercy Park for years.  Have you looked into getting on any of those waiting lists? Especially since your income is low and you might qualify? A friend of mine got into a beautiful new subsidized building in Chelsea. The waits can be long but hers was only about 2 years. It`s worth the price of s stamp when the lists open up.

FenderStrat

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Re: What to do with my inheritance...
« Reply #31 on: August 07, 2014, 06:36:32 AM »
I also know of co-op Boards that have blocked the sale of a unit if the seller prices too low. They don`t want to bring down the value of everyone`s home. Allowing sublets then would be desirable. It`s a hard decision when rents are high. My nephew is paying over $2500 month for a small one br in Brooklyn Heights. I lived in a cheap govt subsidized rental studio near Grammercy Park for years.  Have you looked into getting on any of those waiting lists? Especially since your income is low and you might qualify? A friend of mine got into a beautiful new subsidized building in Chelsea. The waits can be long but hers was only about 2 years. It`s worth the price of s stamp when the lists open up.

Yes, I've been looking into that. Do you have any experience with HDFC coops? I looked at one recently that I qualified for, but I didn't like that years down the road I wouldn't be able to sell it at full value.

boarder42

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Re: What to do with my inheritance...
« Reply #32 on: August 07, 2014, 07:17:51 AM »
is it just me or the simple fact that you say you cant afford a mortgage and the maintenance fees yet you want to buy raises tons of red flags about your finances. my 2c its a bad idea for you to buy

... which is why I wanted to buy a place in cash, no mortgage.

I think you're greatly missing my point.  But youre barely making it in NYC at 40 and can't afford a mortgage. Just BC you got this windfall doesn't fix a much larger problem I see and buying an apartment doesn't really fix this.

NCGal

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Re: What to do with my inheritance...
« Reply #33 on: August 07, 2014, 08:20:33 AM »
Regarding the HDFC coops - yes I know a few people who purchased in a complex near 22nd and 1st. But frankly, none of them sold yet. You don't sell at full value but you don't buy at full value either. They don't see it as an investment; they see it as a way to drastically cut expenses and be in the heart of the city.

I don't know you but I would worry for you buying in the NYC area. Sh-t happens. My brother has been in the financial industry over 30 yrs, has an upper eastside 3 BR condo owned outright and a 2nd beach condo on LI. Well, he just got a CO 2 weeks ago to return to his totally gutted and renovated condo, devastated by Sandy. And he still doesn't know if he'll be made whole. FEMA took a step back because the Board intentionally let their flood insurance policy lapse for under a week while waiting to change to a less expensive policy. Big mistake. My brother got back on the Board to help negotiate a multi-million dollar bank loan to rebuild half of the first floor units. In his solid financial position he can't wait for prices to rise again and sell - to get back his investment.

We were very fortunate to make a large profit on our condo. But it was timing, along with a 3-year plan, to reduce expenses and get out of NY. I'm new here but the one thing I've seen reinforced here and in all the reading I do -- reducing expenses and getting out of debt are the first steps for financial freedom. The unit we sold was later devastated by Sandy - we would have been literally and figuratively under water.  You need a very large cushion to own real estate in NY and manage a mortgage. There is no room for error. We were flying by the seat of our pants.

FenderStrat

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Re: What to do with my inheritance...
« Reply #34 on: August 07, 2014, 09:30:21 AM »
Thanks for all your input guys and gals! Everyone I know is frothing at the mouth to buy real estate, quit throwing money at a landlord, set roots down in a neighborhood they like, while gaining equity and property value. I keep hearing BUY, BUY, BUY! It's good to hear opposing opinions about this. Although it's possible for me to buy, it doesn't seem to be practical given my circumstances. And I don't think my friends are trying to direct me down the wrong path. I think it's just tunnel vision. So my focus will be on investing now.