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Should I buy an NYC co-op from a stressed seller?
A thought exercise I gave to a mid-20s software engineer
1. Is your spending aligned with your values
2. It& #39;s hard to find a dream home AND great investment
3. Can you manage your liquidity
4. Don& #39;t feel like you need to jump in
A thought exercise I gave to a mid-20s software engineer
1. Is your spending aligned with your values
2. It& #39;s hard to find a dream home AND great investment
3. Can you manage your liquidity
4. Don& #39;t feel like you need to jump in
1. Your money values
Do you know what they are? This big purchase could (temporarily) close some doors like:
- Adventure
- Entrepreneurship
- Service-minded work
- College savings for future kids
- Other luxuries
While providing:
- Financial security
- Nesting
- Stability
Do you know what they are? This big purchase could (temporarily) close some doors like:
- Adventure
- Entrepreneurship
- Service-minded work
- College savings for future kids
- Other luxuries
While providing:
- Financial security
- Nesting
- Stability
2. Investment or dream home?
When you introduce a constraint, you limit your options. The BUY constraint means that you have less options for your perfect dream home.
PLUS, markets are (semi) efficient. A home that checks many great boxes, may not be the best VALUE.
When you introduce a constraint, you limit your options. The BUY constraint means that you have less options for your perfect dream home.
PLUS, markets are (semi) efficient. A home that checks many great boxes, may not be the best VALUE.
3. Can you manage your liquidity?
Every year you add to your purchase horizon, de-risks your exit (as you have more time to recover).
He& #39;s got a good job, but also gut-check if you think it& #39;s pandemic-proof.
What& #39;s a good horizon? 5-7 years
Every year you add to your purchase horizon, de-risks your exit (as you have more time to recover).
He& #39;s got a good job, but also gut-check if you think it& #39;s pandemic-proof.
What& #39;s a good horizon? 5-7 years
(A side note on commissions)
Remember that the 6% commission hits your entire investment amount (i.e. reverse leverage).
Say you buy $500k with 20% down ($100k) and sell the next day ($30k commission).
You lose 30k/100k of your investment or 1/3 of your money
Remember that the 6% commission hits your entire investment amount (i.e. reverse leverage).
Say you buy $500k with 20% down ($100k) and sell the next day ($30k commission).
You lose 30k/100k of your investment or 1/3 of your money
