Closing time?

Is buying an apartment in NYC within reach of the average New Yorker? We took a few city dwellers and asked Eric Tyson, personal finance adviser, syndicated financial columnist and author of Personal Finance for Dummies and Home Buying for Dummies, to check their digits and see if they’re in a position to own a little piece of the city.

Awymarie Riollano, project designer, and husband José Bayona, newspaper editor

Total income: $120,000
Savings: $5,000

Riollano and her husband own a one-bedroom co-op in Forest Hills, Queens. “We love it because it’s residential, has tree-lined streets, and it’s close to public transportation,” she says. However, with a child on the way, the couple is looking to move into a two-bedroom condo in an elevator building, in a good school district.

“I wish they’d come to me a year ago,” says Tyson. “The biggest concern with real estate is patience: Wait to buy the place you really want to live in. Sure, they have an apartment they can sell, but real estate hasn’t done that well in the last year, and transaction costs can eat up 15 percent of the income from a sale. That could demolish their potential down payment! But their monthly spending is way below what they earn; that’s good. I suggest they take their time and figure it out—do they want more kids in the next few years? Buyers in this city should have an idea of what they will be doing for the next five to ten years, as difficult as that is. They also need to get rid of their credit card debt (about $10,000)—I’m assuming their student loans ($90,000) are low-interest, but if they’re not, then paying off college debt is important.

“Now, having a child can help on their taxes a bit,” he adds. “They can adjust some withholdings, but it’s not, in this situation, going to help that much.”

It would cost a lot less to wait. “Since the kid won’t go to school for four to five years, and they seem somewhat okay with where they are, I’d say don’t compound the mistake at this moment. And also, it’s important to figure out how the child will impact their income. That’s something they need to ask themselves.”

It would cost a lot less to wait. “Since the kid won’t go to school for four to five years, and they seem somewhat okay with where they are, I’d say don’t compound the mistake at this moment. And also, it’s important to figure out how the child will impact their income. That’s something they need to ask themselves.”

Shea Sullivan, art director

Total income, depending on bonuses and freelance work: $70,000–$90,000
Savings: $50,000

Sullivan is in a good spot for a first-time buyer: She has decent savings; $9,000 in her 401k; negligible debt; and she reckons she can maybe “wring about $5,000 to $10,000 from my parents now that I have a real job.” Currently single, Sullivan rents a room in a four-bedroom loft in Chelsea. “I love the neighborhood and my roommates, but I live like an overgrown college student,” she laments. She wants to move to a large alcove studio or one-bedroom in lower Manhattan or the west side of Harlem, which she hopes will “appreciate in value.”

“I don’t see any red flags—like debt—in her financial history,” says Tyson. “But she hasn’t had a credit check yet—getting a credit history is a priority, but if she’s been fine for the last ten years or so, it shouldn’t be a big deal. And she lives within her means, which is great.” However, Tyson warns against making assumptions about location. “She’s looking in Harlem because it’s affordable and up-and-coming,” he says. “But she should see what she could get for her money in other neighborhoods. People leap to conclusions without checking out places they may like more. You’re buying in an area for the long-term—you want to be comfortable.”

“I like to see people put down 20 percent—so she could buy something for a quarter million, no problem,” adds Tyson. That may not get her Manhattan, but it could work in the Bronx or Queens. “If she saves for a few more years, she could do even better, especially if the market stays relatively cool.”

However, that retirement money is off-limits. “People should leave the 401k alone,” he says. “Some plans allow you to borrow the money, but ultimately it’s a loan you have to pay back. You have to pay current income taxes on the money because it’s a withdrawal, plus penalties for early withdrawal. She doesn’t really need to do that.”

Look around for a good deal in the area you want—and don’t touch that 401k.

Gala Nora, runs GalaVideos, a wedding and event videography studio

Total income: $40,000–$60,000
Savings: None

Nora’s flexible income is the result of spending several months every year outside of the country. Interestingly, she has some experience buying and selling real estate in Europe, but not in the U.S., where she currently resides in a rent-controlled apartment in the East Village with her seven-year-old, Isabel. Nora is reluctant to move, but with a growing child, she’s finding her place “small.” At the very least, it’s time for a two-bedroom.

“This situation is interesting; she spends so much time out of the country,” says Tyson. “And that rent-stabilized apartment—sure, it feels smaller because her daughter is growing up, but I’d caution her not to make major changes right now. She’s not a high-income earner, and she spends a lot in relation to the amount she brings in. That’s my biggest overall tip: Don’t put the cart before the horse. You can find any mortgage person who will look at your income and savings and say, ‘Here’s what I can do,’ but that’s not taking lifestyle into account.”

“Now,” he continues, “there are some loan programs that would qualify her for some decent mortgage terms. And like anyone else, she should talk to a lot of mortgage people. This isn’t a matter of going to one financial person—you need to find someone you’re comfortable with who’s going to work with you.”

She could buy—but not in NYC. “It’s too much of a stretch right now,” says Tyson. “If she buys in the city, she’s probably going to be unhappy, because she’ll get very little for her money—and she’ll be walking away from a nice, rent-controlled space. Actually, if she wants to own real estate, buying overseas is a real option for her because she spends so much time there.”

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