Apartment Hunting in Brooklyn

by Jay on December 5, 2009

It finally happened.  I live in a three-unit brownstone, one apartment on each floor.  I have the main floor,  the basement and the back yard, and pay an absurdly cheap rent.  Now, after 20 years, my landlord has decided that she needs more permanency in her life (she is single and lives in a Manhattan rental), and that she wants to live in her own building, which she received in a divorce several years ago.  Of course she wants my garden apartment, so when my lease is up in February I will have to move.

I wasn’t too happy with this news, but the truth is, while living in a 19th century brownstone has its charms, I really wouldn’t mind having a dishwasher, a garbage disposal, a washing machine, and maybe even a doorman.  I also wouldn’t mind having a view.  I always thought these things were out of my reach, but after looking around at apartments today, I was really surprised — astonished, really, by how many nice apartments are on the market in New York, and how much prices have come down in the last year or two. I saw some two-bedroom apartments in luxury buildings that I could actually afford!

In New York, landlords generally expect a prospective tenant to have a yearly income of 40x the monthly rent for an apartment.  For example, if an apartment is $2000 per month, then a tenant would be expected to earn $80,000 per year, or 40x the monthly rent. Between M. and I, we earn about $125,000 per year, so can afford about $3,100 per month.  3 years ago, this wouldn’t have even gotten us into a studio apartment in a luxury building, but we saw two bedrooms today for $3,300.

I also found that some landlords are bending the usual 40x rule to be 35x or even 30x.  And the landlord of one luxury building we visited doesn’t even check income — if you have a credit score of above 750, you can take any apartment you want.  This is good for me because I have business income outside of my salary, which most landlords wouldn’t include in their 40x equation.

So all in all, this is a very good time to get an apartment in New York City, at least if you have good credit.  There is a ton of stuff out there, and prices are cheaper than they’ve been in years.

{ 3 comments… read them below or add one }

Paul December 6, 2009 at 12:18 am

It will be interesting to see what you end up with. You can have a really nice place. Do you have a limit on what you are willing to pay based on your debt reduction goals and your hopes to do something different?

Sensibility December 6, 2009 at 9:43 pm

You would be a fool to spend $3000+ on an apartment. You’re glossing over the fact that the 40x rule makes sense for both the landlord and the renter and focusing on the fact that you might be able to dodge the rule because of the “economy”. Save your money. You really don’t make that much for NYC.

Jay December 6, 2009 at 11:50 pm

Actually at $125,000 per year, $3000 would fall within the 40x rule for us. That said, $3k per month is about $1k more per month than I want to spend on rent. I am glad I stuck to my rule to sleep on it before signing anything!

Now I have to talk myself out the $465k 2-bedroom condominium that I saw today where the banker on site was more than happy to work out a mortgage with a 3.5% down payment, and had no problem with me spending 50% of my gross salary on housing. Seemed like a flashback to the days of subprime….FHA loans are going to be the next disaster. It sure was a beautiful apartment though…..

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