Sunday, April 10, 2011

The house chronicles, part I

I've been saying for months that I would write about the nitty-gritty of buying an NYC condo -- something I knew nothing about before we started. So here goes ...

Depending on when you start the clock, it took either eight years or eight hours for me to find the apartment we decided to sink our life savings into buying.

My spouse and I have been together for just over a decade, and I've had house itch for most of it. I like permanence, I like decorating, and I wanted to own. But we were caught in the Catch-22 of New York City real estate: Because it's expensive, down payments are stratospheric. During the boom years, when anyone with a pulse could get a minimal-money-down mortgage, the prices were out of our reach. When prices crashed, underwriting tightened. Saving 20% -- a six-figure sum -- seemed hopelessly impossible. (We are also crap at saving. We shouldn't be. But we are.)

When I went home to Maryland for Christmas at the end of 2009, a friend filled me in on the apartment he'd just bought in Baltimore with the help of an FHA loan. That meant a down payment of just 3.5%.

New York's housing market is unlike any other, so I assumed that option wouldn't be available here, but when I started Googling, it turned out it was. You can't get an FHA loan for co-ops (which account for a vast chunk of NYC real estate), but over the last decade the condo stock has increased a lot. And not only were those eligible for FHA loans, developers were actively pre-qualifying their buildings for them.

Because I'd had house itch, I'd idly window-shopped for apartments for years. I'd gone to a dozen or so open houses in my neighborhood, constantly scoured Brownstoner and Streeteasy, and even kept a list in my Palm of all the features I wanted in an apartment. After so many years together, David and I had a pretty good idea of what we needed and what we wanted.

My non-negotiable list: "Two bedrooms, a decent kitchen, a dishwasher, a washer/dryer somewhere in proximity, and no more than a 45-minute commute to midtown."

My 'this would be my magical unicorn apartment' list: "Two-bedroom two-bathroom duplex with a terrace or backyard, eat-in-kitchen, washer/dryer, short commute, good light and maybe a fireplace." (Remember, that was my 'ha ha yeah right' fantasy list.)

So when I decided to go shopping for an apartment we could get an FHA loan on, I had a reasonably solid idea of what I was after. Sunday is New York City's open-house day. On the first Sunday in January, I made a list of about a dozen places to check out, grabbed my camera, and set out into the freezing weather.

(I was on my own because David hates apartment-hunting. "Just tell me when you find something good" was his approach.)

The first places, all in and around the Park Slope/Prospect Heights border we were then living on, were not good. Park Slope is a neighborhood of brownstones, and all the condos on my list in the area were low-rise places in small developments. Great in theory, but it quickly became clear that almost everything in the area had the same drawback: Constrained layouts. Because the buildings were mostly brownstone-sized, the apartments tended to be long, railroad-style corridors.

That meant cramming things into odd places in odd ways. One apartment didn't have room for a full-sized stove -- it looked more like a built-in toaster. Another had a large finished basement where the bedrooms were, but a main floor that was maybe 50 square feet. The nadir of the afternoon was a "duplex" with no stairs -- it had a hardware-store ladder connecting the tiny storage-area-like top floor. When I asked the broker about the stairs, she said nope, the developer had no plans to add any. "The buyer is free to do that!" she answered cheerfully.

Discouraged, I stopped in next door at Chocolate Room for a hot chocolate and a reconsideration of my list. I'd tromped through all my candidates in Park Slope and Prospect Heights, the neighborhoods we'd hoped to stay in. I had about two hours left before the day's open houses ended.

There was one other neighborhood on my open-house list: Downtown Brooklyn, an area I'd only been a handful of times. It's just 10 minutes by subway from Park Slope, but of an entirely different character. Park Slope is trees and brownstones; Downtown Brooklyn is a commercial area only recently rezoned for residential development. That development has been of the mega-building variety: The area has about a dozen condo projects, most in buildings with hundreds of units.

But because there's so many condos, there's lots of open houses, and I had two buildings on my list of places to check out. One called The Belltel had an open house that ran till 3pm, so I started there.

... and liked it way more than I expected to. After looking at so many apartments jammed into Park Slope brownstones and brownstone-sized lots, it was a sea change to walk into a giant building with comparatively sprawling layouts. Belltel takes up most of a city block, and its apartments were wide and deep. Every single one had a washer/dryer -- an unimaginable luxury to me, after 10 years of trekking to laundromats. The building's Art Deco lobby was a giant step up from the utilitarian tenement entryways I was used to.

But what dazzled me the most was the space. I saw four or five apartments, most in the 1,000 to 1,200 square foot range, and all with at least two (and in some cases, three) bedrooms. The asking prices were slightly above our range, but only slightly, and I was pretty confident they weren't expecting to get the asking price. The apartments had hardwood floors, open kitchens with granite countertops, walk-in closets and even, in a few units, built-in wine fridges. I'm a wine fiend who has often fantasized about turning a closet into a wine cellar, so that perk definitely caught my eye. But I didn't let myself even consider it: I tried to keep my sights trained on the less-expensive, more-realistic units.

Before I sell this as NYC's Last Great Real Estate Steal, I'll note that Belltel has one giant red flag: Windows, or Lack Thereof.

The (landmarked) building is a converted New York Telephone headquarters. Built around 1930, it's big and deep and was never designed to be carved up into residential apartments. The layouts vary widely, and a few (pricey) floors near the top have more conventional apartment designs, but most of the lower floors are filled with clever architectural kludges. Many of the "two bedroom" and "three bedroom" layouts are technically studios (or, if you want to sound fancier about it, lofts), because the apartments have just one wall of windows, in the living room.

That's a love-it-or-hate-it thing. I definitely understand when apartment-shoppers check out the building and head right back out, muttering "are you kidding me!?" But it didn't really faze me. In our decade of NYC apartment surfing, Dave and I had mostly lived in basements and railroads; our current apartment didn't have a bedroom, so we slept in a breakfast nook three feed from the fridge. "Natural light" was a hypothetical concept to me.

Just to be sure I wasn't jumping at the first life preserver, I left the Belltel open house and tromped about three blocks north, through the intensifying snowstorm, over to another FHA-financing-available new condo, the Oro. This one has a worse location (farther from the subways, across traffic-clogged Flatbush Avenue), but amazing views. They cleverly put the sales office on the 21st floor, with fabulous views over the Manhattan Bridge. I was somewhat smitten.

But after half an hour of seeing what the more-affordable, lower-floor apartments were like, I'd sobered up. Walls of giant windows look amazing, but -- we have books. Vast numbers. We didn't need fabulous amazing unaffordable views, we needed walls for bookshelves.

Conventional house-hunting wisdom probably says you shouldn't pick a place the first day you look. But I've always been terrible at small decisions (I can spend an hour agonizing over a menu) and quick at big ones. I picked my career when I was in middle school and got engaged to David four months after I met him; so far, those impulse choices are working out just fine. Belltel felt like a place I could see us living in.

So, half frozen, I hopped the subway back home to Park Slope, took David out for dinner, and announced that I'd found an apartment we should buy.

Monday, January 31, 2011

Your greatest investment, and your greatest albatross

Last year David and I pulled off a financial trick I thought we never would: Buying an apartment in New York City. There's a ton I learned along the way, and I've been meaning to write up the full story, as reference for those who are also taking the plunge and trying to decipher the cryptic process.

But there's a certain irony in finally starting to tell the story now. One of my closest friends called this afternoon to talk over a big financial decision: She's going to strategically default on her mortgage.

She and her partner bought their place right before prices peaked, at a time when they felt their only option was to buy a compromise "starter house" they didn't love or be priced out of home ownership forever. But right after they bought, prices started plunging -- and my friend lost her job.

With just one income and a significantly underwater house, they easily meet the guidelines for a loan modification, and my friend has applied for one, twice. But because they're still eking out the monthly payments and haven't gone late, the bank isn't interested in discussing a mod.

And my friend has had enough. Keeping up on the house payments means they have no money left for any kind of savings, including retirement savings; now, facing five-figure bills for needed maintenance and local housing market forecasts that suggest their house won't get back to the break-even point for another decade, she's decided to write off the sunk costs, let the bank come take its collateral, and move on.

Meanwhile, my best friend is also dealing with an albatross house -- one her soon-to-be-ex-husband fought to keep when they split, but couldn’t actually afford and promptly started missing payments on. Two years later, the foreclosure drama keeps dragging out.

I'm still thrilled beyond belief about my apartment, and this week I'll start posting the blow-by-blow tale of our 87-day warp-speed journey from making an offer to taking possession of the keys to our new home.

But my friends' stories are a sobering daily reminder of just how damn fraught the whole thing is.

Sunday, November 28, 2010

Hello world!

I went on inadvertent hiatus though the summer, while I intermittantly food blogged and readjusted to the tech beat's 27/7 news cycle. Today, to cap my four-day weekend (ok, technically, nine-day weekend. The spouse and I decamped to Las Vegas for T-Day, where I also food blogged-- there's a reason's auto-budget feature tags "Restaurants" as my biggest monthly expense, easily dusting Shopping, Clothing and Entertainment. "Groceries" is a close second), I tackled the giant stack of "paperwork needing doing" that had accumulated on my desk. Most of which was financial.

Over the course of two hours, I ...

-Filled out forms that will hopefully qualify the spouse for an extended life insurance policy. Typically, we've each carried just what our employers spring for, which is generally one or two times our annual salary.

But now, we have a mortgage. Which is scary large. His open enrollment ended a month before mine, and I didn't speak up in time about having him up his insurance. But I had the option of adding coverage on him to mine. To cover us each for an amount about equal to about 70% of what we owe on the mortgage cost me about $11 a month. I decided to spring for it; now let's see if he passes the underwriting. He had surgery for a deviated septum three years ago, and has a monthly drug prescription -- which means I had to check "yes" on an annoying number of "do you have any physical condition that indicates you are mortal and could eventually die!?!?1?" boxes on the insurance form.

-Mailed a defunct Metrocard off to the MTA in hopes of a replacement. Just days after one of my writers had his constant-refilled card journey to the Transmit Museum in the Sky, mine demagnetized. I have no idea what caused it, and in almost a decade of buying Metrocards, this is the first time it's happened.

I checked with a gate agent who confirmed, yep, demagnetized. "Call the customer service number on the back of the card," she instructed. Problem: This all happened as I was headed out of town for the week.

I finally got a chance to call, and was instructed to mail the card in. Now, online accounts suggest that if you paid for the card with a credit card (I did), the customer service line can refund you the remaining days. Bzzzt. I called twice, and was instructed both times to mail it in. I finally did today; we'll see how that goes.

-Mailed in a prescription. I'm still really pissed off about the monopolistic PBM practices that are killing neighborhood drugstores. But it would currently cost me $1,080 a year to fill our recurring monthly 'script locally, because my drug plan slaps a huge co-pay on things not filled through their mail-order. Doing Medco mail-order costs $260 a year. We cratered.

-Downgraded my Netflix plan. I mostly use the streaming these days, so with my current 3-DVD plan set to soon jump to $20 a month, I took the opportunity to swap to the 1-DVD, $9.99/month plan.

-And finally, I poured a stiff drink and eyeballed my Verizon bill. Remember way back in May, when I blogged about opting for Verizon's $89.99/month Triple Play and having no confidence whatsoever that the bill would be correct? The bill wasn't correct. Our first bill was $203.96. The next was $115.98. And the next was $148.59. Then $128.36.

Every single month, the day after the bill arrived, I called Verizon customer service. Every single month, the agent went "wow, that's weird!," applied some seemingly random credit amount to get my bill back into sane territory, and assured me the problem was fixed. And every month, when the next bill arrived, it was for some random amount. Waterloo came in September, when a bill for $346.18 arrived.

Eventually, after many phone calls, we zeroed in on the problem: Verizon had never turned off my old address in its system. I was being charged for two different plans at two different addresses, even though they were showing as one, and interacting in totally random ways.

This month, my bill finally seems to have just the right set of charges and taxes. My $89.99 plan actually costs $126.10 with taxes and surcharges, which is around what I expected.

I just ran the numbers, and when you average out the grand total of what I've paid vs the number of months I've been in the new place, it comes out to a $12.56/month overcharge so far. But I'm too defeated to fight with Verizon for a refund. I'm just crossing my fingers my $126 bill is here to stay.

So that's the State of My Financial Life. And I'm back to blogging just in time for the holidays, when all attempts at budgeting will inevitably be blown to smithereens!

Sunday, July 11, 2010

Where I'm writing this summer (not here)

Posting has gotten light again, thanks to time-consuming other projects. I switched positions at work at the start of June (swapping off the smallbiz beat and onto tech coverage), which has been eating my brain, and I have two other writing gigs at the moment.

-On personal finance, you can find me weekly-ish at Make Love Not Debt. Recently I've chimed in why pet insurance is a rip-off, how money mixes dangerously with marriage, and why my cat no longer has teeth.

-I'm also foodblogging at the Red Hook CSA website. I've been tempted for years to join a CSA, but always lazed out because I a) wasn't sure I'd cook enough to justify it, and b) suspected I'd miss the pickup window frequently. But this year, my friend Amy lives blocks away from her neighborhood's CSA pickup spot, and offered to grab my share any week I couldn't make it.

So for $332.50, I got a 22-ish week share that gives me an assortment of veggies and a half-dozen eggs each week. That's about $15 a week. Is it paying off? At some point I'll crunch the numbers and figure it out, but for now, I'm swamped trying to keep up with the zombie hyssop and mountains of kale. The kale has already conquered the veggie drawer and sent out reconnaissance units to scout the cheese drawer for its territorial-expansion possibilities.

Which is a longwinded way of saying my PF brain will kick back in at some point, but in the meantime, hit those two sites if you miss my ramblings. My Twitter feed features occasional links to my postings around the Interwebs.

Wednesday, June 02, 2010

AT&T jams one up the iPad's jacksie

We have what amounts to a religious war in our household: David is a Mac lover, I'm not.

There's irony in this, because I was a diehard Mac fan throughout my formative years. My Dad brought home an Apple IIG in 1989 or so, and for the next decade, I regarded those who didn't use Macs as vaguely inferior life forms.

Then, right around the time Apple seemed to be sputtering off into its grave, I succumbed to the ubiquity of Windows. (This did not stop me from plastering a "snail inside" decal on every Pentium PC I owned. I retained the sly snootiness of an Apple user.) Between office PCs, college computer lab PCs, my campus-job Windows laptop, and my own broke-student inability to afford a new Mac, I drifted off into Microsoftland.

And stayed there. When my job change two years ago brought with it a Mac desktop, I was the only magazine staffer to regard it as an actual work impediment. I fled whenever possibly to my alternate office 20 blocks north, in no small part because my desk there had a Windows machine and was the only place I could actually get work done. I couldn't help it; my brain now worked in c:\Windows\Desktop directories.

Meanwhile, David went full-bore in the other direction. For the first few years we were together, he used my backtop work laptop as his home PC. When I changed jobs, I bribed him to give it up by using my pay raise to buy him his first personal laptop. He chose a MacBook, and within less than 24 hours he was far more attached it to than me. "If I'd know it was this good, I would have skipped eating for a week and spent the money on this years ago!" was, I believe, a direct quote from him. I rolled my eyes.

But for many years now, he's been a Mac addict, with the iPod/iBook/iPhone combo, while I cling to my Windows desktop, archaic Samsung cell phone and Palm PDA. (Stop laughing. I cherish and coddle it. And am in deep, deep denial about it being the end-of-the-Palm-road when it dies.)

One reason I've resisted the siren call of Apple is that I don't like the company's closed tech ecosystem. The Apple experience works really well if you use its approved apps, on its approved hardware, to do approved create-and-consume things, on the network of its approved bandwidth provider. Wander off, and you get shooed back onto the path.

So I was pretty intrigued today to see AT&T make a subtle move with big ramifications: No more unlimited data plans for new iPhone or iPad buyers. Welcome to the world of metered billing.

Which, yes, will probably knock a few dollars of the bill of the average Apple gadget user, if they opt into a pricing tier reflecting the fairly casual data consumption most users have. Now. In 2010.

In a year? Or two? I don't see apps and devices using less bandwidth going forward. And once you're into the land of metered billing, you're not going back. Comcast, Time Warner, Verizon, and all the cable/broadband/etc providers that have been itching to ditch unlimited bandwidth in favor of metered data have got to be doing the dance of joy right now. AT&T fired the first shot over the bow; now the way is cleared for them to launch their own fusillades.

I don't think it'll happen immediately, and I think the upward pricing pressure will be gradual -- after all, no telecom wants to spook Congress into doing anything rash or regulatory -- but I think we're edging toward a future where bandwidth costs are charged by consumption, like electricity or water.

Meanwhile, back on the home front, David has recently discovered the streaming, addictive joys an subscription for his iPhone. Guess who plans to cling to his grandfathered, unlimited data plan for as long as physically possible?

Sunday, May 30, 2010

The next lending crisis

The New York Times had a good column this week spotlighting the dangers of student loans through one family's story: an undergrad NYU education that left $100,000 of loan debt in its wake.

Almost everyone I know has student-loan bills, which vary in severity from "enh, it's not that bad" to "holy god, that's more than rent." But there's one clear similarity in all our stories: No one knew what they were getting into.

It's the undergrad debts that make me wince the most. You take those loans on when you're 17 or 18, and I don't care how academically smart you are, I've yet to meet any college-bound 18-year-old able to make sound judgment calls about loans, debt, estimated paychecks and so on. How can you? At 18, you haven't had the experience of trying to line up all your bills and make them fit within the bounds of one fixed monthly income number -- and until you actually do that, month after month, it's all hazily theoretical.

You can sign on a dotted line saying "yes, I understand that if I take on this loan I'll owe $200 a month to repay it," but is $200 a lot or a little? To me at 18, who considered $20 a windfall, it would have sounded staggeringly huge -- but me at 18 (circa 1996) hadn't ever had a job paying more than $6 an hour. I had no framework at all for making adult financial decisions.

I guess this is where parents enter the equation, but at 18, you're supposed to start making your own decisions -- and what 18-year-old is going to listen to the parent who says "this expensive school you got into and want to go to? Sorry, you can't." You spend all of high school hearing that college will be exciting, life-shaping, career-door-opening and so on. The last thing you want to think about at that point is what's cheapest.

I basically got lucky. My parents scrapped together the cash and took on the debt themselves to pay for most of my trip through the pricey college I wanted to attend. I helpfully repaid them by dropping out right before my senior year. (Thanks, Dad, for not driving up to NYC and strangling me when I told you that ...) The consolation prize is that I dropped out because the college basically did what it was supposed to: Help me get a good, full-time, decent-paying job in the career field I wanted to pursue. I left to take the job.

My three years at Barnard resulted in loan debt of $11,000, which required monthly payments of around $90. That was manageable.

But five years later, after a few halfhearted stabs at night classes, I finally decided to go back and finish off my degree. And once again, I didn't want to make practical-and-affordable choices -- I wanted to do what I wanted. Which, this time, meant going to the school best set up to deal with working students. That turned out to be New School University -- which cost about five times more than I would have spent finishing my degree at Hunter or another state school.

Result: Three years after graduating from New School (much to my Dad's delight -- I finally got the BA!), I'm currently sitting on a student-loan balance of $21,664.59. I now pay $250 a month for my loans, and have been paying that for almost five years. I have ten more to go. If I'd done the less-expensive thing, I would instead have my loans fully paid off about two years from now.

Was it worth it? In my case, maybe -- I can afford the $250, and my previous efforts to finish the BA hadn't actually worked. If New School was what it took to get me through, it was probably a sensible thing.

But really, all it boils down to is that I got lucky. I don't even remember signing the loan papers for my first set of loans, for Barnard. I definitely didn't do it with any "this will cost me X dollars each month" idea of what I was obligating myself to. The second time, when I took on the New School loans -- this time, as a working adult, and even a personal-finance blogger -- I again didn't do any precise monthly cost forecasting. I just eyeballed the total sum and said "well, it looks manageable."

Which is why I get nervous every time friends of mine talks about going back to grad school. There are, for sure, financially responsible ways to do it. You can use savings, go somewhere very inexpensive, or pursue a degree that has a very clear payoff in your chosen career field.

But you can also spend a small fortune on a degree that's hard to monetize -- or, worse, trains you for a field with salary prospects that don't align. To pick on my own alma mater and career field: A journalism or creative-writing master's degree at Columbia will cost you about $40,000. A typical entry-level journalist or any-level fiction writer would be lucky to make $40,000 a year -- and managing a $350/month loan payment on a take-home salary just north of $2,000/month starts to get pretty restrictive.

I don't see any obvious solutions, but it's scary to see a whole generation of 20- and 30-somethings (and on into their 40-somethings) chained to massive debts right out of the starting gate.

Sunday, May 23, 2010

Serial bank dating

I always intended to come back to the story of how my attempts to abandon Chase are going, but kept getting distracted. So I wrote it up over at Make Love Not Debt: Taking a Break from Monogamy.

Meanwhile, as we prepare to pay our Very First Mortgage Payment, the kitty decided now would be a great time for a dental emergency. He's lost a tooth -- and unlike when five-year-kids do this and it's an exciting milestone, with five-year-old cats you end up feeling like a horrible, neglectful parent who didn't realise that your cat's teeth are dissolving. So poor Kea is getting hauled off to the vet tomorrow to have what's left of his teeth cleaned, and likely removed.

Because what we really needed right now was a random $500 bill. Sigh. At least he's cute.