Author Topic: What to do with our unoccupied apartment in New York City?  (Read 4607 times)

bop

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What to do with our unoccupied apartment in New York City?
« on: July 12, 2013, 03:37:32 PM »
  My wife and I own a 2-bedroom co-op apartment in Manhattan (New York City).  It's currently worth about 1.6 million dollars.  (We benefited from the increase in New York real estate prices over the last 20 years.)  Because we were making extra mortgage payments over time, our remaining balance is relatively low, less than 100K.  The maintenance fee on our apartment is about $1780 per month, which covers things like property taxes, mortgage payments on the overall building, and the doormen salary.  A portion of the fee is tax deductible; I don't remember the exact percent, but let's say 60%.

  On a lark (being recent empty nesters), we just moved to a Caribbean island.  My wife is teaching at the medical school here.  We're renting a furnished 2-bedroom apartment on the island.  Because our new place is furnished, we left most of our stuff in New York.  My wife's contract with the med school is year to year.  We're not sure how long we'll stay.  (We love the island, but we also miss our family and friends in the US.)  I'm telecommuting.  When we moved, I reduced my hours to half time, and in a few months I will probably retire.  I'm 50 and my wife is 47.

  During breaks in the med school (about 9 weeks per year), we're currently planning to head back to our apartment in New York, to visit friends and family and enjoy the city. 
 
  At some point, we have to decide what to do with our Manhattan apartment.  Some options are
  • Do nothing (until we figure out our long-term plan).
  • Sell the apartment.
  • Rent the apartment out.  We could probably rent it out for about $7500 per month.  Because our building is a co-op, any rental agreement would need to be approved by the co-op board (which doesn't like having too many apartments rented out at a time), and the co-op takes a cut (maybe like 10%). 
  If we sell or rent out, we'd have to figure out where to stay when we visit the US.  We'd also have figure out what to do with our stuff.

  Any advice on what to do with our apartment?

totoro

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Re: What to do with our unoccupied apartment in New York City?
« Reply #1 on: July 12, 2013, 03:46:27 PM »
Do you plan to return to New York long-term?  If you sell can rent from the investment income from the 1.5 million or so for less than it costs to own?  Are prices going up or down in New York?

At the very least you should rent this out furnished if you can.  Right now it is a monthly loss. 

aj_yooper

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Re: What to do with our unoccupied apartment in New York City?
« Reply #2 on: July 12, 2013, 04:16:57 PM »
This is a nice problem to have! 

I think you should stew on the coop decision until you figure out what you want to do longer term.  From an expense point of view, you mentioned  about $13,000 of your $22k monthlies are deductible so you are paying a pretty low NYC rent to use your coop for 2 months.  From an income POV, it is hard to give up $60k net income long term.  So, I wouldn't take too long with the decision. 

KingCoin

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Re: What to do with our unoccupied apartment in New York City?
« Reply #3 on: July 12, 2013, 04:59:48 PM »
This apartment is costing you somewhere between $60-120k/yr in terms of fees and forgone income depending on your assumptions. Way too much to justify using it as a pied-a-terre/summer retreat. Heck, you can stay at the Carlyle for 9 weeks for a small fraction of that.

So if you're convinced you're not going to be back in NY in the nearish term (or you won't need a 2-bedroom if you do), you need to rent or sell it.

Renting yields you about 3.9% + appreciation (assuming 5% vacancy, and 3% of rent for occasional renovation). This is pretty dismal as an investment considering that you can easily get 6%+ plus appreciation elsewhere. Manhattan real estate is the most desirable in the world, and the market is punchy now, but long term, it has to obey economic laws.

I'd sell it along with the furniture inside. Ask yourself, if you didn't own this apartment and "stuff", would you consider buying it? If the answer is an obvious no, then it's probably time to cut this money gushing cord.

bop

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Re: What to do with our unoccupied apartment in New York City?
« Reply #4 on: July 13, 2013, 09:55:00 AM »
Thanks all three of you for your advice.  My wife and I will talk about it.  We're still not sure of our long-term plan.  We may sell our 2-bedroom apartment in Manhattan and get a smaller place in the NYC area. 

lhamo

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Re: What to do with our unoccupied apartment in New York City?
« Reply #5 on: July 13, 2013, 11:06:17 AM »
I would sell and pocket your gains.  Storage for your furniture will cost you less than keeping your current place.  I wouldn't buy again until you are planning to move back.  You can sublet a nice place for the times you are back visiting family/friends. 

You can get a really nice co-op a 20 minute subway ride from Manhattan for MUCH less than 1.6 mill.  We loved living in Jackson Heights.  We lived in the Greystones, which is a very nice, pre-war complex on 80th street.  The Towers is another nice complex, but further from the subway and with higher maintenance charges.

If you'd like to stay in Manhattan I'd look at Hudson Heights or INwood. 

ny.er

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Re: What to do with our unoccupied apartment in New York City?
« Reply #6 on: July 13, 2013, 12:42:24 PM »
If you sell and invest the income, would your money make more in the stock market than in NYC city real estate? I doubt it. If you like the place, and think you may one day move back to the city, I'd rent it out for the income, and sublet when you return for visits. Good luck!

sol

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Re: What to do with our unoccupied apartment in New York City?
« Reply #7 on: July 13, 2013, 01:21:46 PM »
I'd rent it out unless you're sure you never want to live in it again.

With $7500/month in rental income, you can afford some fancy hotels back in the States when you visit.

bop

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Re: What to do with our unoccupied apartment in New York City?
« Reply #8 on: August 10, 2014, 09:53:46 AM »
It's been more than a year, but I thought I would update this thread.  We just sold our Manhattan apartment for nearly 1.9 million dollars (more than I was expecting).  We're currently renting a 2-bedroom apartment in the Boston area (in Davis Square, Somerville to be precise).

My wife negotiated with her Caribbean med school to spend 58% of her time in the Caribbean and 42% in Boston.  (She will be paid 75%.) 

Oh, and I retired 7 months ago.  Life is good. :-)

     

aj_yooper

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Re: What to do with our unoccupied apartment in New York City?
« Reply #9 on: August 10, 2014, 01:38:05 PM »
Congratulations on your retirement and major cash bump!  Keep us posted on the ER.

escolegrove

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Re: What to do with our unoccupied apartment in New York City?
« Reply #10 on: August 10, 2014, 10:39:39 PM »
Congratulations on your Early Retirement. Hope we are only 15 years behind you.

bop

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Re: What to do with our unoccupied apartment in New York City?
« Reply #11 on: August 11, 2014, 05:48:48 PM »
Thanks, aj_yooper and escolegrove!  I'll try to post on ER life when I have something interesting to say.