Condo/Apartment/Coop in Jersey City vs Brooklyn/Queens

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Condo/Apartment/Coop in Jersey City vs Brooklyn/Queens

Joshua Fu
Flushing, NY · Member since 2018 · 3 posts · 0 votes

Hi everyone,

I am an Army veteran, also a first-time buyer moving to NY area in a month. My new job is in lower Manhattan area. 

I will rent an apartment first but I am going to buy one eventually. My considerations are: 

1. Easy to rent out. My stay in NY will be at least 2 years, so I'm not going to rent it out right away. But if I leave, my goal is to have the rental cover everything (mortgage, HOA, tax)

2. Close to subway station/path. This is my priority when choosing a rental apartment if I work in Manhatten, so I guess this type of apartment will be easier to rent out. 

3. My budget is around 300-350K. My credit score is pretty good plus I can use VA loan.

4. I am single, no pets, open to a studio, 1bed/2beds size. 

As a first-time buyer and just transited out from the military to NYC, I really do not know much about the real property market where I'm going to. Based on the factors above, I hope you guys can give me some advice and recommendations! Thank you!

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  • Mona Richardson
    New Orleans, LA · Member since 2015 · 1 post · 0 votes
    8y

    It would be easier for you to rent out a 2 bedroom.  Before purchasing you need to compare the property taxes in both cities.  Best of luck and thank you for your service.

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    8y

    @Joshua Fu

    You can try areas near Journal square for property around your budget(or even less). I think Rego park in queens has homes around your budget or less.

    However, I find it that home prices below $150,000 cash flow very well. When you buy homes above $150,000 - you may not cash-flow but you may potentially make money on appreciation(speculation).

    One thing to be wary about when buying a co-op is if they will let you sublease the property. 
    Some Co-ops allow you to sublease; some allow you to sublease after you own it for 2 years. 
    If the co-op allows you to sublease- they may have a fee associated with your right to sublease.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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  • Morris Cohen
    Lender · Brooklyn, NY · Member since 2016 · 110 posts · 48 votes
    8y

    This may be a tall order. How much can you put down? The issue you will have is that most properties in that price range are co-ops and the VA doesn't lend on co-ops. They also typically require a minimum of 20% down. I'm not sure how large of a down payment you have, but finding an HDFC co-op that has a lenient sublet policy may not be a bad idea. Financing is usually tough on HDFC co-ops since there are income restrictions (which restricts who you can resell the property to), appreciation is usually not so great and the co-op tends to take a large percentage of any profit you make on the resale (some buildings take 50% of the profit as a flip tax). If I get some more specifics, I can probably advise you a little better, but your best bet may be to go deep into Queens or Brooklyn (near a subway, but making a pretty long commute), south Bronx or Staten Island (which doesn't have a navigable subway to the city (but relatively close if you can take the staten island ferry, which is free). Feel free to PM me if you want to discuss further.

    @Basit Siddiqi is correct as well. Moving into Jersey City may not be a bad idea at that price point, but VA loans may still be an issue if the building is not VA approved.

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  • Joshua Fu
    OP
    Flushing, NY · Member since 2018 · 3 posts · 0 votes
    8y

    Thank you very much for all your helpful advice! 

    I can put around 100-150K for down payment if necessary, but I want to keep the first investment as low as possible, like you guys mentioned, keeping a healthy cash flow. 

    As to the choice between condo and Coop, after I learned more about the nature of Coop in NY, I don't think Coop will fit my investment goal, even though I will live in this property for at least 1-2 years.  

    Condos (or apartments?) in Queens or Brooklyn are pricey for me (400K above on Zillow) especially where close to subway stations. Now it looks like Journal Square area has condos that fit my budget and investment and traffic needs. But some remind me the high property tax in NJ, does it matter that much? 

    Thanks!

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  • Thomas Fisher
    Real Estate Professional · New York City, NY · Member since 2016 · 20 posts · 2 votes
    8y

    @Joshua Fu The challenge with apartments in NYC is that co-ops are way cheaper than condos, but a condo is really the only form of apartment that is good for long term investment purposes. Co-ops are really meant for you to be the owner occupant, so most buildings have restrictions on your ability to rent out the apartment once you move out.

    I would definitely encourage you to familiarize yourself with the difference between condos and co-ops. It seems like you have plenty of time since you are going to rent for a while anyway. This is a good read on the topic: https://www.hauseit.com/co-op-vs-condo-nyc/

    ALSO - renting for a year or two may be a good idea. During this time the market should enter its final phase of appreciation and rates will rise. If you time it right, things may pop in a few years and leave home prices lower and rates back at zero.

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  • Marc Weisi
    Rental Property Investor · Jersey City, NJ · Member since 2017 · 104 posts · 53 votes
    8y

    @Joshua Fu  To your question about high property taxes, yes NJ has among the highest property taxes in the country. However, I would suggest that you run your numbers with the 2018 tax numbers (there was a reval in Jersey City that was completed in the past few months that has affected what owners will be paying in '18) and see if you can cash-flow at these prices. I think it's a pretty safe bet to say that NYC will still be a city in demand over the foreseeable investment horizon and as a result so will the surrounding areas. That being said, you don't want to stake your financial future on pure speculation. Heed a property's cash-flow numbers, of which taxes are just one component (albeit an important one at that).

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  • Joshua Fu
    OP
    Flushing, NY · Member since 2018 · 3 posts · 0 votes
    8y

    Thank you so much for you guys' helpful input! 

    I am thinking of buying a condo that is around 500-700 sq ft, price range 100K-150K,  and needs some renovation. What's the estimated cost of renovation for a condo like this? And where you guys find the contractor to do the work? 

    Thanks!

    Josh

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  • Ryan Goldfarb
    Flipper/Rehabber · Jersey City, NJ · Member since 2012 · 204 posts · 109 votes
    8y

    @Joshua Fu -- 

    If your job is in Lower Manhattan, Jersey City should make for a pretty easy commute. Outside of Downtown JC (near Grove St., Exchange Place, Newport PATH stops), condos in that price range exist. You'll definitely want to familiarize yourself with the areas where those numbers are attainable, as they can vary quite a bit.

    Another option I'd recommend is exploring a small multifamily around here. You may be above your original budget, but the larger mortgage should be offset by rental income, which will make your net payment a bit more palatable. IMO, these are more desirable as a long-term investment because you're not beholden to an HOA, and if you buy right, I think you'll realize better cash flow.

    I live and invest here and would happy to answer any other questions if I can be of assistance. Best of luck!

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