Let's start with the basics. What is the cheapest apartment in Manhattan, right now? It's a studio on 1st avenue in east Harlem, and it's currently going for $925 dollars a month. Now let's think about this. How did the landlord get to this price?
Firstly, you all should be aware that I AM NOT AN APPRAISER. It is not my job to give an expert opinion on the value of an apartment; however, I can guess as to how this apartment got to this price. There are several factors to consider when determining how much you might pay for an apartment in a single area:
1. Location
2. Apartment Size
3. Views
4. Customer Service (doorman or not)
5. Access (elevator or walk up)
6. Apartment Quality
These items are listed in order of most important to least important. Surprising isn't it? You might figure that the quality of the apartment itself might be the most or 2nd most important thing under normal circumstances. But this is not a normal city. This is New York.
Now, anyone who has heard, read, or learned anything about real estate will know the first three rules of real estate investment: Location, location, location. Tedious, yes; however, this is a fact of life. Costs are going to change depending on what area you want, especially in this city. Lets say you take that same exact studio, lift it up, and smack it straight down in the center of Central Park South. How much do you think the cost went up? 200? 400? 800 dollars? I'd say something more like $1500, and I'm being conservative. That would bring the price of this studio to around $2500, just by changing locations.
Now let's say that this studio also has a view of the park in it's new location, and it's on the 10th floor now in a building with a doorman and an elevator. The price just went to $3250.
The cheapest apartment on Central Park South right now is going for 2400 dollars. The price was just cut down from $2600. It's been on the market for almost 3 months. The average amount of time a rental is on the market is about 2 weeks. Why is this apartment not renting? Well firstly, I'm betting, is that it has no view. It states that it has a southern exposure. And if it's on Central Park South, with the Park on the North side, then it's easy to assume there is no view. Second, it's in a co-op which usually has other costs associated with the apartment having to do with common areas; therefore, you will be paying more than the listed price of 2400 dollars a month. Third, the other downside of living in a co-op is the board approval which is notoriously difficult to get approval for. Finally, if you had 2400 dollars, why would you want to live in a pre-war building with no view in a small studio, when you could get an apartment on the Upper East Side, in a modern building, in a large studio with brand new appliances and a great view for the same price?
I have said it before and I will say it again, Manhattan, if you are renting on a budget, is a borough of compromise. Don't be stubborn about what neighborhood you want to live in. Listen to your broker, they have seen things that are much better that might not be on the Upper West Side but they are great apartments.
At the end of November, my lease is up. I will be searching for apartments on a budget. I am an agent so I have all the listings in Manhattan available at my fingertips. What will I do when I conduct a search? I will select every neighborhood in New York. I will give my price range, and I will go to each of these neighborhoods and see what's available. My new apartment might be a combination of great location and good apartment, or good location and great apartment, or terrible location and exquisite apartment.
The overall point that I am trying to make, is that when many of my potential clients come to Manhattan from out of town, and they are upset that New York prices are so high, they try and ignore this fact and ask for things that simply do not exist. If your broker tells you that you cannot live in an area for a certain price, do not be offended. They're not trying to squeeze more money out of you (if they're a good broker), they are trying to help! Ask what neighborhoods they would suggest! Let them conduct a search and see what they can find! Agents are professionals in their field and will know the market better than you do!
This is why it is so important to find an agent that you like working with, and that you trust. Agents have the inside lines to great apartments, and you are going to want their help.
"What is the best neighborhood for the cheapest price?" My money is on the Upper East Side, they have some great apartments for low prices. But that's just my advice! Ask your agent what they think!
More to come...
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