I am a 66 year old high school teacher in Tucson, Ariz. I have a University of Arizona downtown property valued at $610,000. I have about $105,000 left on my mortgage. I have two roommates who pay rent, which helps pay the mortgage.
In four years I would like to retire and be closer to my daughter in Brooklyn. I want to be a snowbird and keep my own house in Tucson and maybe buy a condo or condo to spend the spring, summer and fall in Brooklyn. I want to keep my house in Arizona, so I can be with my son and daughter in the winter.
Should I sell in Tucson in four years when I retire and use the money to buy a house in Brooklyn? Or should I keep the house in Tucson and rent an apartment in New York?
I’m a little concerned about the lack of water in Arizona over the next 30 years, and the winters are getting warmer. I love Tucson. It’s a progressive place in a red state. Also, things can change for the worse.
Big city dreams
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Dear Big City Dreams,
I love that you are moving to New York to retire. From personal experience, I’ve seen many college students or early career types move to the city, eager to make a mark. But you want to be close to your daughter and also avoid the crazy heat in Arizona!
To answer your question, whether to buy or rent: It really depends on how long you plan to be a snowbird and stay in Brooklyn. If you plan to stay for a long time (or forever), it may make more sense to keep a Tucson home. And Shop in Brooklyn if you can.
But if you’re not entirely sure about going to the Empire State for an extended period of time, you can rent and get a feel for the city before taking the money home.
“Renting in New York City right now is a horror show. “
But a big red, flashing warning sign for you: Renting in New York City right now is a horror show.
Francis Katzen, a real estate agent with Douglas Elliman, told me that it was “Darwinism at its best” because of the fierce competition to buy and rent in the city. In Katzen’s view, the rental market is on a “sugar high.”
According to data from Douglas Elliman, the median rent for a studio apartment in Brooklyn was $2,824 in 2015. Starting in June. A one-bedroom will set you back $3,240 a month. “Because the supply is so limited,” Katzen says landlords can raise rents even higher, with demand increasing as the office-to-office picture improves.
Not only will you be paying rent with teeth, but you will be stuck with the mortgage on your Tucson home.
If you have the financial means to do so, consider keeping a Tucson home – and renting it out – and investing in Brooklyn as well.
Of course, buying property in the city is a very expensive proposition. Inventory is low. In the second quarter of this year in Brooklyn, the median sales price of an apartment (whether condominium or condominium and regardless of size) rose 8.2 percent to a new high of $985,000, according to another report from Douglas. Elliman
At an average of around 5.54% for a 30-year fixed-rate mortgage, that makes your borrowing costs even higher.
But considering how high rents are, if you plan to stay in Brooklyn for a while, putting the money into a second home might be a good move.
You mentioned you have roommates – so you know a lot about running rent. If you’re thinking of heading back to the desert this summer, you can always rent out your New York place on Airbnb ABNB.
Or a short-term rental contract in the winter, to get some income from the property.
And if you decide to keep the Tucson home, you’ll probably get about $1,800 a month in rent that could go toward your new mortgage (for what it’s worth, some investors still bank on people moving to the Sun Belt). If it doesn’t work, you have the flexibility to pull the plug on Brooklyn.
Additionally, if you plan to share your home with your daughter, she may be able to help you with the bills, making the option of buying a home more attractive. She can also save a little money on rent, if you decide to charge below market rate!
Living in the city will be a unique experience for you as you will certainly have no shortage of entertainment options during your retirement. And living next to your daughter makes it even more special.
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