![]() Ultimately, it’s not all about maximizing returns. ![]() Hence, this is another way of looking at it. It takes financial modeling, but you get what I mean. The historical returns of the S&P500 ranges from 7 percent to 11 percent per year, depending on the timeframe used.įrom this point of view, it only makes sense to buy if the appreciation from owning is higher than what the investor can earn from the financial markets. the S&P500, hedge funds, private equity funds etc. By renting, the renter’s equity that otherwise would be used for the down payment can be invested in the financial markets, e.g. This is because there is an opportunity cost of tying up equity in a property. Sometimes people prefer renting despite having the funds to buy. Read Wei Min’s article: Buying property in New York to rent outīuying vs Renting in Manhattan, New York- opportunity cost of other investments If the property appreciates 5 percent a year, the homeowner’s net worth grows by that amount. But what if the down payment is higher, say at 40 percent? The monthly cost to buy decreases.īuying benefits from appreciation, but renting does not. From a cashflow perspective, it’s more expensive to buy. With a 20 percent down payment and a mortgage rate of 5.5 percent, the monthly carrying costs, including common charges and property taxes, would be $15,500. But to buy the same two-bedroom condo, it costs $2.6 million. How much does it cost to rent and how much to buy assuming the down payment you have? For example, to rent a two-bedroom condo in a luxury building costs $10,000 per month. The basic rent vs buy analysis is to look at the cashflow of each. ![]() ![]() Read about Wei Min’s style in Best Manhattan property agents and Role of a buyer’s broker.īuying vs Renting in Manhattan, New York – the basic analysis Here are the key considerations on whether to buy or rent. In the context of buying for primary residence, some believe one should buy a property as soon as possible, while others do the cost benefit and prefer to rent (despite having enough funds to buy). Buying property in Manhattan, New York is a big decision even for sophisticated people with strong financials. ![]()
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