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January 18, 2008
Parking and Points
Okay, here's the deal. Buying a new condo in PH. Don't own a car, but have the option to buy some deeded parking. Tempted, insofar as re-sell, but not sure to go through with it since I'll never use it (anti-car), but maybe I can rent it out. The space is outdoor, protected, and costs 20k. And another thing: Trying to decide to decide on how to configure the mortgage...is it dumb to buy points to lower the % rate. Thinking of doing it, but have no experience with this (just herd of it actually). So some advice would be much appreciated.
Comments
Do the math on the space - How much can you rent it for? How long will it take to recover the 20K + interest you will spend?
Parking in Manahattan is around $350-500/ month. Doubt you will get that in BK so if you get $200/ month it will take 100 months or 8 years to recover your investment.
General Rule on Buying Points - Only makes sense if you dont think you will move or refinance for at least 10 years.
Same basic math - Amount of time you plan to stay times the savings on the mortgage. If it is less than cost of the points, dont do it.
Posted by: guest at January 18, 2008 8:06 AM
Can you get between 5%-8% yearly income for the investment?
It might be better than the bank.
There might be a tax deduction for you as well. (not sure).
Maybe you can get more than 8%, who knows?
Posted by: Ysabelle at January 18, 2008 9:22 AM
I don't know all that much about condo operating agreements (as opposed to co-ops), but make sure that you're permitted to rent your parking space. You might want to ask your lawyer. Just sayin'.
Posted by: guest at January 18, 2008 9:58 AM
Tske the parking space. IF you borrow the $20K at 6.0% you'll be paying $100 per month in interest. You should easily be able to rent the space for more than that. Over time, the rent on the space will increase while your cost will remain fixed. Also, it will make your condo that much more marketable when you decide to sell.
Posted by: Boerum Hill at January 18, 2008 10:10 AM
Condos are notorious for raising common charges.
If there is any work to be done on the building you pay an assessment.
I wonder if this applies to a condo garage space.
.
State farm sells a condo insurance policy at a good rate.
Remember if you take a higher deductable your premiums drop.
Ask them if you can add a rider covering assessments on the property.
Will the insurance cover the parking space as well?
If you really want to save money tie in your condo insurance policy with your car insurance which qualifies you for an umbrella policy.
The umbrella is great it covers all sorts of stuff like being sued.
Posted by: Ysabelle at January 18, 2008 10:37 AM
YES take the parking space. Even if you couldn't rent it, it increases your condo's value. And if they say you can't rent it to strangers, I bet they'll let you rent it to a fellow owner in the building. But ask first.
Posted by: guest at January 18, 2008 10:37 AM
Where is the spot?
Posted by: guest at January 18, 2008 10:37 AM
I'd take the parking spot if it is only $20,000. It really does add to value, and 10:37 am is likely right that you could rent it to another condo owner.
Re: paying points. We paid points when we bought in 2001. We thought we got a great deal with a mortgage at 6.75% and planned to stay 30 years, so seemed a no brainer. We figured that in 5 or so years we would have saved more than what we paid in points.
We re-financed just over a year later, paid no points, and got our mortgage down to 6%. I always regretted paying those points, but who knew mortgages would go down so much?
You could look at points as an insurance policy, I guess. You guarantee yourself a reasonable monthly payment each month by paying them. If mortgage rates go up and you never refinance or sell, it's a great idea. Also, those points should be tax-deductible so if that helps you the year you buy, also a reason to do this. (but check with accountant). So if you think mortgages are at a historic low and you won't be refinancing or selling anytime soon, it's worth considering. It didn't work out to be the best decision for us, but it wasn't a bad one, and with same limited information about the future, we'd probably do it again.
Posted by: guest at January 18, 2008 11:20 AM
If PH is prospect heights, can you expect to be able to rent the space to one of the many people who'll move into AY? Parking spaces there may become valuable. Or are they building enough parking for all those people?
Posted by: guest at January 18, 2008 12:18 PM
Yes, you should be able to rent the space for $250 at least (if you are allowed to rent it), so if that covers your expenses, then do it. Also, point about it being bette for resale is important - especially with AY and a more crowded neighborhood coming.
There are some online calculators where you can figure whether the points are an advantage. If you aren't sure how long you will be there (or keep that mortgage before refinancing), but it looks good, then my advice is to do points only in moderation - like 1 maybe, not 3.
Posted by: guest at January 18, 2008 12:46 PM
For what it's worth, the two parking garages in PH that i'm aware of -- on St. Marks and Underhill -- charge $225 and $250, respectively, including taxes. So figure you'll likely get less than that considering your spot is outdoors and unattended.
Posted by: guest at January 18, 2008 1:28 PM
I'd get the parking space. As for the points, as someone noted, mortgage calculators can tell you when you'll come out ahead. I think it's with five years or so. We bought 1.125 points off our mortgage in june, so we could keep it 6.125. Don't think rates will go so much lower than that in the next few years to make refinancing an option.
Posted by: guest at January 18, 2008 1:40 PM
Of course you should buy the parking space (assuming you can rent it out). Let's run the math -- assume you borrow $20K at 6.0% in a 30-year fixed mortgage -- the monthly cost of $120 (excluding any tax benefits) should be easy to recoup by renting the space out. Contrast that, of course, with your condo, which undoubtedly costs one or more multiples of what you could recoup by renting it out. The parking is good value; the condo is something else.
Posted by: guest at January 18, 2008 3:46 PM
Definitely buy the parking spot. It will greatly enhance your condo's resale value, especially as the neighborhood continues to develop and parking's at a premium. That said, hope you're negotiating as much as possible with the seller/developer. Looks like the r.e. market is finally softening around town. We may not see a dramatic drop in prices (or we may...), but keep in mind there are lots of condos on the market at the moment and more on the way (just look around from boerum hill to bed stuy).
Posted by: guest at January 18, 2008 5:53 PM
Yes to spot. No to points.
Posted by: guest at January 18, 2008 6:34 PM
I think the parking spot is a good investment. If you can finance the aprking spot it makes sense. Points on a mortagge depends on the situation if you have a good banker he should give you the financial breakdown and the break even costs etc.... Good luck...
brianscottcohen.com
Posted by: brianscottcohen at January 18, 2008 8:36 PM
Whether you choose to rent the spot or not purchase it. Just having the space will increase the resale value in a neighborhood where parking is hard to find. Find out if you can "park" a small storage container/shed, one not bigger than a SUV in the space. I am assuming it is indoors. You can then store your skis, camping gear, bike and other rarely used but necessary items. Many condo/coop owners still end up renting space in storage units for such items. You would have on site storage and probably start a trend.
Posted by: guest at January 18, 2008 9:48 PM
you're "anti car" yet you would buy a spot that profits from and essentially promotes their use. I find that strange.
Posted by: herkimer at January 18, 2008 11:53 PM
re brianscottcohen: are all bankers men? maybe at wells fargo.
re points: the best points calculators are here: http://www.mtgprofessor.com/calculatorsOriginalMenu.htm
re the spot: if there are no restrictions on renting it out, do it. we did. rented for a coupla years, then got the car. now people in our building are begging us to sell our spot to them. keep in the mind that the rent is taxable (if you declare it).
good luck...
Posted by: guest at January 19, 2008 3:13 PM
"you're "anti car" yet you would buy a spot that profits from and essentially promotes their use. I find that strange."
huh? he didn't say he was anti-money.
Posted by: guest at January 19, 2008 8:09 PM
get the space it will add value to your condo
Posted by: guest at January 20, 2008 7:58 PM
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