Real Estate Market Comparison – Germany USA

What are the differences between buying a piece of real estate in Germany and the USA? What are the things you should be looking at? Below a full run-down of what you have to know about how real estate differs between the two massive markets!

Country Overviews – What do you Need to Know?

Both countries are known worldwide for their strong economy, and progressive markets. That means these countries are stable and can be relied upon for having a future from an economic as well as societal perspective. Germany especially is becoming more and more wealthy, with an average salary increasing, reaching almost $5.000 a month.

• Increases in average salary

Does Germany have a Strong Economy? Is the U.S. Economy Growing?

Yes, in Germany the GDP is growing by 2.5%, while in the U.S. by 2.3%. Both economies are strong and growing. If you want to find out about the strength of a country’s economy, the first thing to do is probably to look at the GDP per capita, meaning how much money is in the economy per person in the country. In Germany the GDP per capita is $50.800, while the U.S. is very similarly at $59.800. That means both of these economies are strong, even when taking into account the amount of people living in the country.

• Germany GDP/c: $50.800 (+2.5%)
• USA GDP/c: $59.800 (2.3%)

Population: Growing Markets?

Increases in population demonstrate a healthy country, and therefore are a good information to support the decision of whether to invest in a country. The U.S. has demonstrated a clear tendency in increasing population.

• Pop. US: 328,2 mil.
• Pop. Germany: 83,02 mil.

In Germany, population growth has not been as strong or constant. This is of course related to the number of inhabitants, with Germany being a smaller country, deviations are more likely and look larger than they are. Despite this, Germany has, in the past years also shown increases in population, with the year 2015 and 2016 showing stronger growth than the USA had since 2010!

Should I Move to Germany? To the US?

One of the most popular emigration destinations for Germans is to the USA. This is evident in the numbers. Every year, 270.000 people move abroad, with 3.6% (9.780) of these choosing the USA. The favourite non-German emigration destination. This is likely due to the strong German heritage in the USA, and economic opportunities. Similarly, every year over 1 thousand Americans receive their German citizenship. This number is changing rapidly, increasing by over 33% last year. There are also 10.000 Americans studying at German universities thanks to the lower tuition fees, as well as high standard of living.

• 3.6% of German Emigrants move to USA
• Number of Americans moving to Germany increasing rapidly
• High number of American students in Germany

Corporation, Entity, Business – Real Estate Companies Germany and USA Comparison

There are of course many different ways to invest in real estate in different countries. Depending on whether you’re a big timer looking to upgrade, or a small partnership not sure of the direction you’re going to take. We take you through the respective real estate entities, investment forms and things you need to know if you want to build a big business in another country.

Germany Real Estate Investment – Types of Corporations, Business Forms, Structure

Germany has many forms of real estate investment businesses. The main types are the Immobilien GmbH and Familienstiftung. An Immobilien GmbH is a real estate company. Meaning a company that pursues the purpose of leasing, development, financing, realization or marketing. A Familienstiftung, strictly speaking, is a form of charity. It allows to save capital on real estate investments. Our simple english-language articles are excellent explanations of what you need to know about these forms of investment.

• Immobilien GmbH – Explained
• Familienstiftung – Explained

These are just a few of the ways that you can save money on your real estate investment in Germany.

German Real Estate – Explanation, Overview

USA Real Estate Investment – Types of Corporations, Business Forms, Structure

The USA has the much more famous forms of investment. Most everyone will have heard the term LLC or corporation. American company forms allow for much more liability protection, and much more freedom in execution. The typical forms are LLC, Limited Partnership, General Partnership, S Corporation, C Corporation, Multiple Entities, and REIT. Partnerships are generally less liability protection, while corporations will allow much more protection. LLCs are undoubtedly the most popular, and in most cases safest choice. Lastly, REITs are for big time invstors or retirees.

• LLC
• Limited Partnership
• General Partnership
• S Corporation
• C Corporation
• Multiple Entities
• REIT

Prices – Where is it Most Expensive?

Comparing the prices of real estate is of course a bit difficult considering that the USA has a much wider spread gepgraphically as well as societally, where there are many properties valued very low in rural, or destitute areas as well as very low-income city districts. In Germany this spread is much smaller, with fewer very low-income regions. Below are the direct comparisons between the two countries.

• Germany and U.S. prices higher than other countries

Price-to-Rent Ratio – Should you Buy?

The price to rent ratio tells you whether it is comparatively cheaper to buy or to rent in a specific region. These ratios are often used to ascertain whether a housing market is ‘healthy’, i.e. whether the market is in a bubble, or well-valued. A very high price to rent ratio (if it is above 20), means that renting a house is better, as it is very expensive to buy a house, compared to just paying rent. On the other hand, a price to rent ratio below 15 means that rent is pretty high, and if possible you should buy because you’ll have it paid off comparatively quickly.

• Price-to-rent ratio >20 = Rent!
• Price-to-rent ratio < 15 = Buy!

Is Buying Real Estate a Good Investment?

These numbers indicate that Germany is a rife market. It is a good time to buy real estate in Germany according to this ratio. A price-to-rent ratio as high as can be taken with caution though, as in 2008 before the financial crisis, the very high price-to-rent ratios were indicative of a housing bubble. Nonetheless, you will find that Germany has vast opportunities for buying real estate, and buying in Germany is a sound investment. This is also heavily down to German rent prices being very high.

You should buy in Germany!

Is it Worth Buying a House in Germany? In USA?

It is a financially sound decision to buy a house in Germany on average, with a price-to-rent ratio over 28. In the USA, the ratio is below 13, meaning that you are better off renting than buying.The price-to-rent ratio in these countries is quite different. In Germany, the price-to-rent ratio is much higher than in the USA. You will find an extremely high price-to-rent ratio in the US cities of Naples, Florida (60,0), Santa Barbara, California (41,9), and Queens, New York (41,8). In Germany, the highest ratios are in Munich (41,7), Freiburg (35,2), as well as Hamburg (32,5) and Cologne (31,7).

• Highest USA: Naples, Florida (60,0), Santa Barbara, California (41,9), and Queens, New York (41,8)
• Highest Germany: Munich (41,7), Freiburg (35,2), as well as Hamburg (32,5) and Cologne (31,7).

USA vs Germany Comparion – Where to Rent, Where to Buy

It is a financially sound decision to buy a house in Germany on average, with the ratio being over 28. In the USA, the ratio is below 13, meaning that you are better off renting than buying. In city centres, price-to-rent ratios tend to be higher than outside the city as is also evident in these numbers.

• Ratio Germany (City): 30,8
• Ratio USA (City): 12,6

In more rural areas, the price-to-rent ratio is lower than within the city, meaning that it is typically better to buy here.

• Ratio Germany (non-City): 28,3
• Ratio USA (non-City): 9,4

Mortgage – How much is a Real Estate Loan?

Of course in different countries the mortgages are also differently high, and more or less difficult to get. This can also be compared across the two markets using the loan affordability index. This index takes into account many different components such as mortgage interest and gives you an accurate impression of the costs and difficulties of obtaining a mortgage. It is calculated by taking into account the mortgage as percentage of income.

Index = (100 / Mortgage as Percentage of Income)

Here, a higher score is better. You see that a loan is generally less financially debilitating in USA than in Germany.

• Index Germany: 1,83
• Index USA: 3,43

House Price Comparison – Where is it More Expensive to Buy a House?

When looking to buy, no matter what type of real estate, house prices give a fairly accurate representation of what the prices look like in a given location. The house prices in Germany as well as the US are showing increase. Meaning an investment here will pay dividends when selling. Importantly, the increase in housing prices is outpacing inflation along with other investments such as gold and many stocks.

House prices in both countries are higher than elsewhere thanks to being desirable places to live, and having a high standard of living. Although it is evident that in Germany the prices for a single-family home are slightly higher than in the U.S.

• Germany: $305.000 (€238.500)
• USA: $261.600 (€215.200)

Germany House Price Index

Germany’s house price index is steadily increasing, as the chart below demonstrates. The fact that this is a constant as opposed to explosive development speaks to the stability of the market, and strength of the general sector. Germany has shown increases in its housing prices by more than 1% in every quarter since 2015, and has not seen a decrease since 2013.

USA Housing Price Index

This index shows the month-over-month development of the American Housing Price Index. While this looks much more erratic, this is down to the nature of the graph (i.e. that it takes the change in index compared to the previous month). It also shows a strong market development.

Real Estate Market Analysis – Most Important Facts

Now that we know these are two strong markets, we take a look at what makes these unique, and how to handle each one.

US-Market – The Biggest Real Estate Market in the Western World?

Annually, almost six million residences are sold in the U.S., this is also in accordance with nearly a million homes being built each year. In the U.S., as in Germany, newly constructed homes are typically more expensive than their older counterparts.

• Many new residences being built

German Market – Investing in Europe’s Strongest Economy

The German market has been criticized for not supplying enough new homes, i.e. new constructions as residences. The amount of new constructions took a downturn shortly after 2010 thanks to new regulations and tax laws making it less financially viable and more difficult to build new houses. Although the number of new construction permits increased by 3,8% to 361.000 This doesn’t necessarily speak for the market in general. Last year, the volume of transactions again increased by 7%, which takes it to a massive $22,5 bil., the second-highest increase since beginning of records.

• Fewer new constructions
• New constructions are increasing

German Real Estate Explained

International Alliance with Economic Exchange

Germany and the USA are economically intertwined, with heavy import and export between the countries showing a strong relationship. Germany is the world’s third largest exporter, and a significant market for its exports is the USA.

• Strong relationship between the countries

Common Success – Economic Relationship of US and Germany

The U.S.-German Treaty of Friendship, Commerce and Navigation is a treaty between the two countries which allows for easier and better economic exchange. It grants U.S. investors national treatment as well as allowing for movement of capital without issue between the two countries. Additionally, sweetening the deal for American investors, taxation of U.S. companies within Germany is regulated such that double taxation is avoided.

Sectors of Economic Exchange

The most important financial sectors on which the U.S. exports to Germany are in Aircraft, vehicles, machinery, medical instruments, and electrical machinery.

1. Aircraft – $8.9 billion
2. Vehicles – $7.2 billion
3. Machinery – $6.9 billion
4. Optical and Medical Instruments – $6.7 billion
5. Electrical Machinery – $5.5 billion

Meanwhile, Germany’s exports to the U.S. are similarly technology-related. With vehicles and machinery also being in the top 5.

1. Machinery – $27.2 billion
2. Vehicles – $25.4 billion
3. Pharmaceuticals – $15.3 billion
4. Optical and Medical Instruments – $10.6 billion
5. Electrical Machinery – $8.8 billion

Political Relations

The political relationship between Germany and the USA has been strong since Germany’s reunification, thanks to mutually dependent support for economic and political relationships. On the state website of the U.S., Germany is very favourably positioned:

Germany is one of the United States’ closest and strongest allies in Europe. U.S. relations with Germany are based on our close and vital relationship as friends, trading partners, and allies sharing common institutions.

Summary – Positioned for Return on Investment

Looking at these two economies it is evident that both offer a strong position for investment. Exchange of goods, and international investments are frequent and supported. With many German realtors looking across the pond to the American market and vice versa. The two real estate markets should thrive in the coming years, with a strong flow of capital from one to the other. German real estate investors in America will find great success, as will American real estate investors in Germany.

This city article is part of our full size guide: Buying a House

L.A. Real Estate – How to Buy

Los Angeles is a legendary city with incomparable opportunities. If you want to move here, it is probably a good idea to invest in real estate. There are of course many types of real estate, from apartments to condos and townhouses. Or houses, which is the possibility we dive into here. Much like buying an apartment, buying a house is a complicated process in general, complicated even more by municipal, county, and state laws. Rather look into something smaller? Buying apartment in L.A.

Most Expensive House in L.A. – Bel-Air Luxury Mega Mansion

The most expensive house on the market in the whole of the U.S. last year was the ‘billionaire’. This house also has the highest tax bill in L.A. It is a massive multi-million dollar house which is situated in Bel Air, and comes equipped with a Helicopter on the roof (you can even see it on google street view!).

The Billionaire is among the most expensive real estate in the whole of USA, and it also pays the highest taxes for any property in L.A. with a massive $1.4 mil. in taxes annually. It can be found at 924 Bel Air Road in L.A. It is worth $188 mil. and includes perks like the helicopter, the most expensive sinks you’ll likely see, along with a Louis Vuitton bowling alley, and a private art gallery.

• Style: Contemporary
• Location: 924 Bel Air Road Los Angeles, California
• Worth: $188 Mil.

Economy – Thriving for Startups and Creatives

The economy of Los Angeles is, as expected, of course heavily made up of the creative sector. It’s no coincidence that Hollywood is the largest movie making center in the world. Los Angeles was originally heavily agriculture and manufacturing, but nowadays, thanks to its fame and size, it has drawn other sectors. The most important economic sectors in Los Angeles are finances/business, technology manufacturing and innovation, fashion, and of couse movies. The economy of Los Angeles is actually so massive, that if it were a country, it would rank above most other countries in terms of GDP. It is marked by resilience to market changes and fluctuations.

• Creative, Tech, Finance
• GDP: $960.25 bil.

If you’re looking to invest in real estate, it’s probably good to think about forming an LLC, an S corporation, or a limited partnership!

Is it Worth Buying a House in Los Angeles? – Real Estate Market

Los Angeles has a massive housing market, for houses, as well as for apartments. In general, home prices are increasing throughout the city. That means buying a house will translate to a higher selling price, and therefore profit. Still what you get for $500.000 in L.A. now is probably less than what you get for $500.000 in Modoc County, not too far away, but Modoc County isn’t likely to become too popular anytime soon, so you’ll be selling it for the same price, while in L.A. you can expect at least a %10 percent increase in value over the next two years.

• Home Prices Increasing

Home Price Trends L.A. – Housing Market Development

Home price trends for the area are reported using the Case-Shiller Index, a statistic published by Standard & Poor’s forming part of an index of residential real estate market values. This index allows one to view the development of housing prices in the city.

Sales Volume for Los Angeles

The number of sales in Los Angeles is decreasing. That may be a worrying sign from outside looking in, but it’s not because people aren’t buying, rather it’s because there are few properties on the market. This also explains the rising costs, with limited supply, and high demand, prices are rising. At the moment, the average house in L.A. is selling within a super short 26 days.

Real Estate Market Explained

The real estate market in L.A. is neither sellers not buyers market. The past year saw an increase of 30% in single-family homes, as compared to last year.

• Increase in Sales

How much it Costs to Buy a House in L.A. – Median Sales Price

In Los Angeles County, which includes the less-in-demand outer regions, single-family homes are also gaining in prices. Below the list of median sales price, as well as the year-to-year change.

• Single-Family Homes: $660.000 | +12%
• Condos/Townhouses: $490.000 | +9%

The counties making up Los Angeles city, a.k.a. Greater Los Angeles, the prices are similar for single-family homes. Orange county sticks out for its high prices, and high increase in median sales price. San Bernardino takes the cake though, with a massive increase in 20% increase in median sales price.

• Orange County: $930.000 | +13%
• Riverside County: $490.000 | +15%
• Ventura County: $750.000 | +12%
• San Bernardino County: $370.000 | +20%

Is it Hard to Buy a House in L.A.? – Problems

As mentioned, the Los Angeles market is extremely competitive. That presents two probelms. For one, it may be difficult to find the home with the exact specifications you’re looking for. Even then, when you do find it, you’ll have to outbid other buyers which are likely just as keen on the property. That’s shown in the fact that only about 25% of Los Angeles residents can afford a house in the county.

Mortgage Rates – High with Interest

Mortgage in L.A. is a topic unto its own. These high prices also mean another thing of course, that a downpayment is not only a financial burden, but often also a burden too heavy to stem. The average downpayment in L.A. last year was over $100.000 for people buying a single-family residence. That means many people who need to buy a house, will either struggle to save up, or make large sacrifices to pay such a downpayment, or, potentially worse, make a smaller downpayment. This smaller downpayment leads to high mortgage interest rates, and of course principal mortgage insurance. With a home price of e.g. $700.000, the classic 20% downpayment is a hefty $140.000!

Taxes! Where to Pay and How

In L.A. your taxes are a complicated story. You may have heard an eclat about longtime homeowners paying significantly less in taxes than those with newly purchased homes. At any rate, there will be taxes when buying a house, as well as repeating property taxes.

More on L.A. taxes in our article on California Property Taxes.

How Much Money do you Need to Buy a House in L.A.?

There are of course a million ways to save money everywhere on your home. From saving on your taxes when buying a home to government programs, you need to make sure to take a look at the possible programs for you in your income-, cultural-, and geographical region.

We have a full-size guide on how to use tax breaks and deductions to your advantage:

Real Estate Tax Deductions

Saving in the City of Angels

For people who are not able to pay a full downpayment, there are many support programs. Real estate purchases are generally encouraged with incentives and support programs. The best are for first-time homebuyers, meaning that if it is the first time that you buy a full residence, you will pay less taxes, and have other monetary incentives. More on that in our main article on buying a house.

• Less taxes for first-time homeowners

In addition to these incentives and deductions, there are also programs such as veterans’ loans, or less costly mortgage programs for low- and middle-income buyers from Home Possible Mortgages. In Los Angeles specifically you can make use of ‘California’s First Mortgage Program’ and ‘First Home Mortgage Program’ given you are eligible. These provide finanical assistance and make the process much less financially risky.

Saving with Home Improvements

The planet is dying, and everyone has to do their part. That’s why many houses in L.A. nowadays are sold with eco-friendly upgrades already done. These inlcude renewable energy sources such as solar power, or other variants such as more insulated roofing or smart thermostats. Having these can cut down on your recurring costs.

• Eco-friendly = Wallet-friendly

What you Need to Know About Buying a House in L.A.

Buying a home in Los Angeles is costly, unless you know where to look. The commute is long, unless you find the right spots. All the ins and outs of such a massive city must be taken into account. These are the things that will make your experience of buying a home in L.A. more manageable.

It’s the Season – Spring

If you want to buy a house in Los Angeles, the time to do it is in the late winter to early spring. From January to March, the prices of homes are lower than the rest of the year, which means you can pay less for the same house that you would normally.

• Buy in Spring!

Location is Super Important

Which neighbourhoods in L.A. to buy in? The old realtors adage, location location location. In L.A. this holds true more than in other places probably. What you should know about where to buy is that some neighbourhoods are expensive and dangerous, others only expensive, and the best of all, affordable and safe. In L.A. you will probably want to stay away from south central, where crime rates are much higher than elsewhere. Additionally, you’ll be apying a location premium anywhere near the downtown core and the beach.

Get a Realtor!

In L.A., more so than in other cities, a realtor is your best friend. Or at least should be. The market is quite complicated owing to the high demand, ever-changing characteristics, and massive market. A real estate agent with experience in the area can guide you through these choppy waters and get you out safely on the other side.

Don’t Forget Additional Costs

This is a problem homebuyers face everywhere, but more so in L.A. Additional costs are always an unexpected burden on top of the already large price of the house. There’s a lot to delve into, so I defer you to our guide detailing all additional costs you can expect when buying a house

• Real Estate Purchase – Additional Costs

Renovating your Home – Beware of this

A major problem in Los Angeles is that of unlicensed professionals making unlicensed alterations to houses. These are usually cheaper, but when you’re buying a house, beware of these as they can come back to bite you. Another problem is, due to the weather and climate, sun damage, and depending on the location the salty air. These make for costly maintenance in the long run, and it’s a good idea, if you have to renovate, to spend a bit more and not have to spend again. Other common problems include ‘sinking’, as well as roof and plumbing issues.

• Common Problems: Roofing, Sun Damage, unlicensed work

Get Pre-Approved!

With such a competitive market a mortgage can be hard to find. Especially considering this mortgage principal is going to be larger than is usual. Therefore, pre-approval is vital. Not only does it give you security, and allows for you to plan better around what you can expect to buy, it also makes you more attractive to sellers. A mortgage pre-approval will make the whole process, from beginning to close worth it.

Process Explained – How to Buy a House in Los Angeles

The process in Los Angeles is the same as for buying a house in the whole of USA. In short you save up, find the people that will help you through the journey, find your future home, and close on the deal. More specifically:

1. Save up for the Downpayment
2. Find a Mortgage Broker
3. Get Mortgage Preapproval
4. Get your Team Together: Attorney, Real Estate Agent, etc.
5. Start looking at Listings
6. Go to Viewings
7. Submit an Offer
8. Close

How Long it Takes to Buy a House in L.A.

From start to end, the process is going to take a few weeks at least. The time can range anywhere from three weeks to three years, but on average you can expect about 6 months from start to finish. Some people search for years and fail to find anything. In the end, how long you spend finding a new house depends on how well-prepared you are. If you are financially responsible, have a lot of money saved, the process can be shortened, as your pre-approval will be easier to obtain, and you are able to financially outbid and provide security to sellers. In any case you should not rush it, as that leads to mistakes and misjudgements that can cost you in the long run

• 3 Weeks to 6 Years

Best Real Estate Agents in Los Angeles for Buying a House – Ranked

In a city as big as L.A. there’s going to be a whole lot of real estate agencies. If you want to buy a house in L.A. you will want the best real estate advisors and brokers available. Below a list of the top 8 real estate agents and groups in L.A. according to our research

1. Suarez Team
2. Park Regency Realty
3. Stephanie Younger
4. Pinnacle Estate Properties
5. Jon Grauman
6. Billy Wynn
7. David Yun/Eighty8
8. Rafael Gevorkian

Los Angeles City Explained

Los Angeles is made up of many neighborhoods and communities. These are difficult to count per se, because depending on your definition one thing may or may not count as a separate city, as a community, as a district, etc. What also complicates matters is the fact that Los Angeles county and the Los Angeles metropolitan area are two different regions. The Greater Los Angeles metropolitan Area is the largest metropolitan region in the Country, and is home to 18,7 mil. people.

• Pop. 18,7 mil.

Los Angeles’ Counties – More than L.A. County

The Los Angeles metropolitan area is mostly in Los Angeles county, although made up in total of five counties. The five counties which make up L.A. are Ventura County, San Bernardino County, Riverside County, Los Angeles County, and Orange County.

• Ventura County
• San Bernardino County
• Riverside County
• Los Angeles County
• Orange County

How Many Neighborhoods in Los Angeles? Map

There are over 200 neighborhoods in the Los Angeles metropolitan area. Again, this is difficult to pin down to an exact number, as definitions vary. Don’t forget Catalina Island, which is also part of Los Angeles County, and often counted as part of the city. Below a real estate map of Los Angeles, detailing the neighbourhoods.

What is the Downtown of Los Angeles?

When talking about a downtown, you expect a central business district. That means a place within the city with heavy economic activity, often in the form of a financial district, shopping, or similar. The city of Los Angeles has multiple of such districts. The obvious one, and largest, is downtown Los Angeles, with others including Downtown Long Beach, Downtown Pasadena, Downtown Glendale, and Downtown Burbank.

• Many Downtowns

L.A. Property Taxes – Explained by County

Los Angeles, thanks to its many counties, has very different property tax rates depending on the area. Property taxes are influenced by municipal and county administrations, therefore you can expect to have a headache trying to figure out your own property taxes in your location. Still though, one can compare, broadly, the property taxes by comparing the county-wide rates. Note that Riverside, with 0.97% has the highest property tax rate in Los Angeles, as well as ranking second highest in California property taxes. So, what are the property tax rates for Los Angeles counties?

• Los Angeles County – 0.75%
• Ventura County – 0.74%
• San Bernardino County – 0.83%
• Riverside County – 0.97%
• Orange County – 0.68%

Neighborhoods in LA – Venice to Glendale

What neighborhood should you move to? There’s something for everyone in this megacity, and you’re bound to find what you’re looking for. With so many neighborhoods, each offering up their own unique flair and identity, you won’t be hardpressed to find a location that you’re happy with. The neighborhoods to know for buying real estate are as follows

Mid-City – Residential Heaven

The place close to everything. You’re likely to find everything you need nearby, as well as avoid a long commute. With sales prices varying from less than $500.000 to over $2 mil. the price class leaves you deciding what you want to go for.

Inglewood – Hottest on Market

It seems L.A. real estate is all about Inglewood. It’s no surprise it’s the hottest tip in the city, because it’s close to the downtown, with currently very affordable prices and great amenities. Not to forget it’s so close to LAX, that you’re never going to have to rush for a flight again. Keep a lookout in the rising districts of Hollywood Park, Fairview Heights, Westchester/Veterans, and La Tijera. Lastly, it’s almost certainly a good investment, with the current construction of the stadium for the LA Chargers and Rams being a major draw in the future.

Ladera Heights – Up Next?

Situated right next to Inglewood, this neighbourhood will be the dark horse of L.A. real estate. While Inglewood is taking the headlines, you can be sure that Ladera Heights is also making big steps in becoming one of the hottest desitnations for real estate in California’s super-city.

Silver Lake/Echo Park – The Hippest

If you’re a young creative, I won’t have to tell you about silver lake, and its adjacent brother Echo Park. It’s the place for the hip young and cool in Los Angeles. Buying a home here will leave you not only certain of a high selling price, thanks to gentirfication and near-certain rising popularity, it’ll also have you happy with the amenities. Everything from shopping, to the coolest bars and resetaurants can be found in this piece of the city.

This is part of our larger guide on buying apartments. Back to Buying an Apartment USA.

The City of Angels – Buying an Apartment L.A.

Los Angeles, where dreams come true. The home of celebrities, hollywood, a sprawling cityscape, beach and surf, and everything else you can imagine. From Malibu to Bel Air, Silver Lake and Venice Beach. It’s worth the traffic and chaos of the metropolis, to experiennce the unique atmosphere of this city. So you want to live in Los Angeles, but don’t know where to start? It’s certainly not easy wrapping your head around where and how to live. Do you choose Mid City or and a retail paradise, or Silver Lake, and hang out with the young students? We give you the full run-down below. Some people buy a house in L.A., but no doubt, buying an apartment is a good decision.

Los Angeles Economy – Overview

Los Angeles has a massive economy, third largest in the world behind Tokyo and New York. Its strength is of course the creative sector. Hollywood is the world’s largest film production area, and countless stars and starlets have their villas and mansions in the city. This does not paint the full picture though. It is also home to a booming high-tech industry with a surge of startups heading to the seaside city. There is also a strong aerospace and transportation industry, as well as, perhaps unexpectedly, the nation’s largest international trade industry.

• GDP: 941,06 bil.
• Creative, high-tech & aerospace industries

If you’re looking to invest in real estate, it’s probably good to think about forming an LLC, an S corporation, or a limited partnership!

Los Angeles Drone – How Beautiful it can Be

Los Angeles has a ton to offer in visual pleasure. Sundown by the ocean, beaches, and skyscrapers. Take a look at Los Angeles drone footage:

Full L.A. Guide – Hot Neighbourhoods + More

Buy or Rent? Calculation Explained

Whether to buy or rent, you’re going to be paying a high price in L.A. Whether to buy or rent depends on the classic ‘break-even point’. How long you would have to pay rent in order to break even the amount which you would need to pay off a house. E.g. in Los Angeles, a median-priced home is around $630.000, and you may be paying rent around $2.000. That means, once you’ve lived in your residence for 6 years, you would have paid as much rent, to have been able to buy it. In short, whether to buy or rent depends on this: Assuming you live in a residence for at least five years, your rent needs to be lower than $2.600 in order to make renting more viable.

Also, in Los Angeles, it may be even better to buy than in other places, considering manageable property taxes in L.A. That means owning real estate is not a high recurring investment.

• Buy if your rent > $2.600

Is it a Good Time to Buy an Apartment in Los Angeles?

Maybe. At the moment, high vacancy rates mean low rent prices. That means it may be more beneficial to rent at the moment. Considering the growing market though, it may be clever to invest at the moment, where high vacancy rates may have more landlords selling their property at higher rates than usual, driving down prices. That means, when the market inevitably recovers, you’re likely to make profit quickly.

What state has the highest property tax rate? Ranking

• Property Tax Rates by State – List

Los Angeles Real Estate Market – Explanation

The Los Angeles real estate market, like so many of U.S.’ super cities, is doing well. For example, the year-over-year amount of sales of single-family homes increased by 23,2%. The median home price is at a strong $630.000, showing just how exclusive properties are here. Los Angeles is neither a sellers nor a buyers market. There are just as many real estate listings as there are sales. Combining this with the high increase shows the strong turnover, and ripe investment opportunities. Prices are also increasing, taking single-family residences, by over 16%.

Real Estate Price Development

Home prices in the metropolitan area of Los Angeles increase by about 13% annually, with the number of sales also increasing over the past year. The median price of an apartment is now $667.000. On top of this, rental prices have been steady in the past years, when looking at average rent.

• 2017: 2.281 $/m²
• 2018: 2.385 $/m²
• 2019: 2.516 $/m²
• 2020: 2.524 $/m²

What you have to know About L.A. Areas

Los Angeles is a massive city, spanning multiple counties. It’s near impossible to decide where to live. Generally, there are those that want to live in the famous residential areas of Bel-Air or Beverly Hills, there are also people who want the tumult of downtown LA, or younger people, and those looking for a more comfortable atmosphere will head to e.g. Silver Lake or Mid City. In general, for Los Angeles, it’s a good choice to rent, as opposed to buy. With purchases prices being comparatively high.

• Lowest rent: Jefferson Park $1.355
• Highest rent: North of Montana $4.690

How to Buy an Apartment

It’s of course a long and arduous process to buy an apartment, and takes a lot of time as well as financial investment. From beginning to end, there are irreplacable steps which, if you miss them, could be costly. If you’re not sure what real estate you should invest in, start here:

• Type of Real Estate – Which to Buy

Checklist – Things to do Before Buying

How to prepare for buying an apartment. Before buying real estate, you need to do these 5 things:

• Get knowledgeable about your finances
• Get together documents about your finances
• Speak to your possible mortgage broker
• Decide on the type of financing
• Find an attorney, real estate agent, and home inspector

When buying any property, you will need to pay a downpayment on your mortgage. In L.A., with comparatively high real estate prices, your downpayment should be at least 20% in order to avoid the likely very high mortgage interest rates.

Buying Apartment – Process from Negotiation to Close

To buy the apartment finally, you will want to start negotiating.

Make an Offer – How to Negotiate Sales Price

So you decide that this is your dream apartment. What now? Well now it’s time to make an offer. That means approaching the seller with an offer. There are two sides on which to negotiate, and you must pick one or the other. Either you try to reduce the size of the sale price. I.e. buying a property for $800.000 as opposed to $850.000. The other option is to negotiate the closing costs, e.g. agreeing on the sales price, but asking the seller to pay some of the additional costs, including real estate purchase taxes. These tactics of course mean either having more money in your bank account at that moment, or reducing the amount of montly costs in the future. You can typically expect to negotiate 5%-10% of the sale asking price.

Next Steps – Building Inspections

Your lender will most certainly require you to have an inspection of the apartment building, as well as the unit itself. This usually shows slight flaws, such as necessary maintenance in the future, or e.g. structural flaws.

Reducing Sales Price on Real Estate

Now you can renegotiate. You have found flaws in the building, and now have a strong negotiation stance. Let the seller know your concerns, and they will likely be more lenient in their negotiation.

There’s also a ton you can save on the many slight additional costs which come up when buying real estate, we give you the full guide

• All Additional Costs when Buying a Home

Final Important Step! Walk-through

Don’t forget the walk-through! This is one of the most frequent beginner mistakes. After moving out, things may change, the previous owner may have broken something, or a cabinet may have been covering up a flaw. Not doing a final walk-through can be your number one regret later on. It doesn’t take that long, and will most certainly be worth it, at least for the peace of mind.

What’s Different in Los Angeles?

There’s of course some caveats to buying an apartment in L.A. as opposed to elsewhere in the U.S. That means a few things to keep in the back of your mind when considering your purchase of an apartment. Of course, the normal process takes place, you buy a unit using a downpayment as part of your mortgage, pay closing costs, then taxes, and then move in.

Popular Types of Properties in L.A.

In L.A., there are a few different types of popular properties. The most popular being, as in most other suburban areas, single-family homes, duplexes, and condos. These are popular because they allow for a fairly private space, without the hassle of neighbours which are door-to-door with you. Note, duplexes (or even triplexes) are typically hard to own for the resident, as investors tend to buy these and rent them. Other types of property are townhomes, small lot homes (advantage: no homeowners’ association!), coops, much like the apartment market in New York, TICs (Tenancy in Common), and of course the infamous vacant lots, where you just buy a piece of empty land.

• Single-Family Home
• Duplex
• Condo
• Townhome
• Small-lot Home
• TICs
• Vacant Lots

Before – Buying Apartment Preparation & Planning

In L.A., it’s just as important, if not more important to get pre-approved. That means having your loan provider provde certification that you will be able to finance the mortgage on your home.

• Get Mortgage Pre-Approval!

Negotiation – Paying too Much on your House

In L.A., strong changes in price as a result of negotiation are rare. The vast majority of properties are sold at or around listing price. Meaning there is little to no negotiation, and when, this negotiation takes place in small degrees.

Taxes – Extra Real Estate Costs

Of course there’s different taxes in Los Angeles than elsewhere in the country. It’s important to be in the know about the unique taxes, from property taxes to transfer taxes in California if you’re looking to own property in Los Angeles.

Pretty much everyone pays too much in taxes. It’s especially easy to save on real estate taxes. Learn how:

• Saving on Real Estate Taxes – Easy How-to

Insurance – Expensive Additional Cost

Not to forget is that you will have to pay homeowners insurance. Los Angeles has a broad span in homeowners’ insurance amounts. In some parts you can pay as little as $837, with L.A.’s average amount being $1.116.

• $1.116/year homeowner’s insurance

Tips to Save Money – Lower your Homeowners Insurance!

These are the number one tips to reduce the amount you’ll have to spend on homeowners insurance.

• Install a safety system for your home that includes fire, smoke and carbon monoxide alarms
• Convert your older house to comply with earthquake regulations
• Replace your roof with fireproof materials
• Inquire with your insurance agent if you qualify for discount programs
• Repair and replace wiring and plumbing to bring it into line with current building codes

Where to Live in L.A. – Best Neighborhoods

You’ve probably heard of Compton, Inglewood, Hollywood, and the like. You also probably have some preconception about how dangerous or safe it is here, whether you’d like to live here or not. We give you a full-researched list of the worst neighborhoods to live in Los Angeles.

Homes for the Ultra-Rich

Of course, some of the super-rich of the USA have ultra-luxury houses in L.A. Among them, superstars from all over, and pretty much every film star has at least one residence in Los Angeles. Below we have one of these ultra high-end properties, worth $50 mil. Of course, you’ll find it in the legendary Bel-Air neighborhood.

Worst Neighbourhoods in Los Angeles – Danger, Crime, Low Standard of Living

You’ve probably heard of Compton, Inglewood, Hollywood, and the like. You also probably have some preconception about how dangerous or safe it is here, whether you’d like to live here or not. We give you a full-researched list of the worst neighborhoods to live in Los Angeles. Best to keep in mind, L.A. is more dangerous roughly everywhere east of Broadway.

• Skid Row
• Fashion District
• South Central L.A.
• Compton
• Central City
• Jefferson Park

The Places to be in Los Angeles

There are a few neighborhoods you can’t miss. These are the classics like Hollywood or Bel Air. The top neighborhoods in Los Angeles to invest are the famous ones of course, but there’s a few ones to keep in mind if you’re looking to be in the place to be. Hip neighborhoods are plenty in L.A., like Culver City or Silver Lake. Some that you may have missed include Echo Park, Frogtown, and Tujunga.

Classics: Hollywood, Beverly Hills/Bel-Air, Downtown

Hip: Fairfax, El Segundo, Chinatown, Culver City

Outside Call: Echo Park, Frogtown, Tujunga

You want more info. Where to buy an apartment in Los Angeles? We tell you everything you need to know

• Best Neighborhoods to Buy – Los Angeles

Best School Districts Los Angeles

Thinking about moving to L.A.? These are the best school districts, taking into account quality of education, safety, and more.

• Hermosa Beach City Elementary
• Newhall
• South Pasadena Unified
• Palos Verdes Unified
• San Marino Unified
• Walnut Valley Unified
• LA Canada Unified
• Temple City Unified
• Manhattan Beach Unified
• Arcadia Unified

Should I Rent a Co-op Apartment?

Co-ops are probably more famous and more popular in New York than anywhere else. Still you’ll find them from time to time in Los Angeles.Co-ops are slightly more challenging to get, with a complicated and time-consuming process, but the time investment is worth the reward, with typically lower property taxes, the possibility to build equity, and more.

What is a Co-op Apartment? Real Estate Corporation

A co-op apartment is an apartment which is administrated by a housing cooperative. If you buy a co-op apartment, you are not actually buying the property, i.e. the four walls which you intend to live in. Rather, you are buying a share in a legal entity. The shares you buy entitle you to use a specific part of the building. Therefore, you are not the owner of real property, but rather a membership which allows you to use the apartment you live in. This also means of course that you do not take out a mortgage, but rather share loans, i.e. a loan to pay for the shares.

• You buy shares, not property

Why you Should choose a Co-op – Explanation

Because you are not the owner of the property itself, you do not have to pay property taxes. Rather the cooperative pays the property taxes for the whole building, and these are divided among the members, i.e. residents. The main advantage of a co-op is that it is cheaper. The property taxes which each resident pays are lower, and any additional fees are also lower, because the co-op is not intended to make profit. Lastly, residents in co-ops, despite not actually owning the property, are entitled to many tax deductions which real estate owners are entitled to.

• Cheaper

How to buy a Co-op Apartment in Los Angeles – Step-by-Step

There are a few steps to go through before buying into the cooperative. Before approaching a co-op, or identifying an apartment which you are interested in, you have to gather an attorney, a mortgage broker, and an engineer. Although this is not necessary, it greatly increases your chances of getting the apartment you want. This is because, once you’ve identified the apartment you want, you apply. Your application is decided upon by the board. This board obviously wants the best possible residents, therefore it’s important to present yourself as a serious buyer. All co-ops have a certain list of requirements, which include the amount of downpayment you need to pay, and how much financial reserves you have. Following this, you contact the seller, begin the title search and mortgage application, and close the purchase.

Buying an Apartment Los Angeles – Checklist

If you want to buy an apartment in L.A., these are the most important things to do and keep in mind.

1. Decide! Rent or buy?
2. Prepare! Visit the city, research the market
3. Lawyer Up! Find your attorney
4. Choose affordable! Sponsor units, coops, or up-and-coming neighborhoods

Step 1 to Financial Freedom – Buy Real Estate

Owning real estate. That’s the way to go. But you may not have the $100.000 sitting in your bank account to pay for such a hefty downpayment on your mortgage. The better choice here is to invest in an apartment. Below we take you through the full process, from where to start, to where it ends and moving into your brand new own apartment. These apartments may be lofts, penthouses, single-bedrooms, or shared flats. The same process goes for all these types of residences in the USA.

Advantages of Buying vs. Renting

You may not be sure about whether you want to buy or rent an apartment. Real estate gurus everywhere will either swear that you have to rent, or that you have to buy. In the end it’s not such a simple decision, and what the best choice in your case is, depends on many factors, such as your income, financial reserves, the location of the property, etc. The number one factor is likely how long you intend to live in the property.

Calculate your Finances

When making this decision, the most important calculation is comparing rent to mortgage payments. Let’s say you find your dream property, and you want to live here for the next 10 years. If you can rent this property for e.g. $1.000 a month, or you can buy it and pay $1.000 a month in mortgage for 10 years you can do the math yourself. You will live there either way, but when you buy it and pay mortgage you are building equity, and once you move out, you can sell it for profit. Ownership as opposed to renting also comes with a number of tax deductions which lower the amount of money you actually invest.

When you Should Rent

Of course you shouldn’t forget the fact that a purchase always includes a downpayment. If you are strapped for cash, and cannot afford this downpayment, or it would force you to take out another loan. Then you are better off renting, and avoiding high interest. This side also has tax perks, such as not having to pay property taxes.

Top Reasons to Buy an Apartment

There’s many reasons to buy an apartment. These are the top reasons which should motivate you.

• Attractive returns on Investment
• Danger of Depreciation
• Perfect Preparation for Retirement
• Flexibility
• Safe Investment
• Safety rom Inflation
• Tax deductibles

Preparing Property Purchase – Before Buying

There are a few things to take care of before you even start looking for properties. Of course, feel free to scope out the market before doing these things, but remember that it will be quite difficult to make a serious offer for an apartmentwithout these following things.

Of course, you have to decide what you actually want to invest in, let us help you with that:

• What Real Estate Should I Invest in?

Check your Credit Score – Financing an Apartment

This is the number one thing to do. Before doing going on the hunt for any real estate you should know whether you are even in financial shape to buy. Credit scores are compiled by three so-called credit bureaus: Transunion, Equifax, and Experian. They provide you a report, which can be turned into a score. This score will also play a role in deciding what type of mortgage you can get.

Contacts – Attorneys, Mortgage Broker, etc.

Before buying you need to have a few professionals by your side. It’s probably good to have an attorney set up beforehand, and in many places, e.g. when you buy an apartment in New York, it is even mandatory. Additionally, you may opt for a mortgage broker (especially when buying into a co-op, see below), and a real estate agent.

Mortgage Preapproval – Insurance for Loan

Before you go on the hunt for an apartment, you can (and should) obtain preapproval for a mortgage. This consists of a letter which certifies that you are in fact capable of obtaining the mortgage. In a sense it is the bank telling the agent and seller, that they will lend you the necessary funds to buy a property worth x dollars. This is a vital part of the process, as most real estate agents and brokers will refuse to do showings or take up contact without such a preapproval.

Let us guide you through the confusing world of mortgage:

• Mortgage Explained Easily
• Mortgage Interest – Where it is most Expensive

Buying without Mortgage Preapproval – Paying Apartment in Cash

It is possible to buy without a mortgage preapproval, given that you are paying everything upfront. This is of course not a common case, but given that you will not get a mortgage for the property you are going to buy, you can approach brokers and sellers without a mortgage preapproval. In this case though, you must present proof of funds to view properties.

Now What? More Apartment Search Tips

Now that you’ve taken care of these things you can start to look around. It is best to first get an orientation of the market and how you want to buy. This is best done by taking frequent looks at real estate listing sites and going to open houses. Also, despite internet being pretty much everywhere by now, it’s never a bad idea to go in person to smaller real estate agencies in neighbourhoods which you are interested in. Some more old-fashioned shops may not be putting their listings online.

Readying Purchase – Costs Preparation

When you are preparing to buy your apartment, there are a few things to straighten out beforehand. Planning is as always key, and should include all additional costs. Note that of course these things differ in different areas. Buying an apartment in Chicago is very different from when you buy an apartment in L.A.

Taxes & Property Tax Rates

Of course, when thinking about finances you will have to consider the taxes. There are three different kinds. Three taxes you pay when buying property, which includes property tax. This property tax you also have to pay repeatedly when owning said property.

Want to learn more about property tax? We’ve got you covered

• Property Taxes U.S. – Explained

Important Extra Details

There’s a ton of details you may forget about when buying a property, which bother you a lot later on. Think service charges, which you will pay to the owners of the building. Also important here, who takes care of these services, and is this company performing the services good? Also pay attention to any restrictions, like e.g. whether pets are allowed, and noise restrictions. There may also be difficult-to-detect issues in the neighbourhood, like a large shopping center opening very nearby which increases traffic, or a night club nearby which means noise at night. Or perhaps building issues are prevalent in the area because the ground is unstable. Many of these things will be highlighted by your solicitor, so make sure to listen well. The location is key, meaning New York will have different details to look out for than L.A. or Miami.

Buying Apartment – Process from Negotiation to Close

To buy the apartment finally, you will want to start negotiating.

Make an Offer – How to Negotiate Sales Price

So you decide that this is your dream apartment. What now? Well now it’s time to make an offer. That means approaching the seller with an offer. There are two sides on which to negotiate, and you must pick one or the other. Either you try to reduce the size of the sale price. I.e. buying a property for $800.000 as opposed to $850.000. The other option is to negotiate the closing costs, e.g. agreeing on the sales price, but asking the seller to pay some of the additional costs, including real estate purchase taxes. These tactics of course mean either having more money in your bank account at that moment, or reducing the amount of montly costs in the future. You can typically expect to negotiate 5%-10% of the sale asking price.

Next Steps – Building Inspections

Your lender will most certainly require you to have an inspection of the apartment building, as well as the unit itself. This usually shows slight flaws, such as necessary maintenance in the future, or e.g. structural flaws.

Reducing Sales Price on Real Estate

Now you can renegotiate. You have found flaws in the building, and now have a strong negotiation stance. Let the seller know your concerns, and they will likely be more lenient in their negotiation.

There’s also a ton you can save on the many slight additional costs which come up when buying real estate, we give you the full guide

• All Additional Costs when Buying a Home

Final Important Step! Walk-through

Don’t forget the walk-through! This is one of the most frequent beginner mistakes. After moving out, things may change, the previous owner may have broken something, or a cabinet may have been covering up a flaw. Not doing a final walk-through can be your number one regret later on. It doesn’t take that long, and will most certainly be worth it, at least for the peace of mind.

Co-op Apartment – Buying Shares not Property

Co-ops are slightly more challenging to get, with a complicated and time-consuming process, but the time investment is worth the reward, with typically lower property taxes, the possibility to build equity, and more.

What is a Co-op Apartment? Meaning, Definition, Explanation

A co-op apartment is an apartment which is administrated by a housing cooperative. If you buy a co-op apartment, you are not actually buying the property, i.e. the four walls which you intend to live in. Rather, you are buying a share in a legal entity. The shares you buy entitle you to use a specific part of the building. Therefore, you are not the owner of real property, but rather a membership which allows you to use the apartment you live in. This also means of course that you do not take out a mortgage, but rather share loans, i.e. a loan to pay for the shares.

Why you Should choose a Co-op – Advantages

Because you are not the owner of the property itself, you do not have to pay property taxes. Rather the cooperative pays the property taxes for the whole building, and these are divided among the members, i.e. residents. The main advantage of a co-op is that it is cheaper. The property taxes which each resident pays are lower, and any additional fees are also lower, because the co-op is not intended to make profit. Lastly, residents in co-ops, despite not actually owning the property, are entitled to many tax deductions which real estate owners are entitled to.

How to buy a Co-op Apartment – Step-by-Step Explanation

There are a few steps to go through before buying into the cooperative. Before approaching a co-op, or identifying an apartment which you are interested in, you have to gather an attorney, a mortgage broker, and an engineer. Although this is not necessary, it greatly increases your chances of getting the apartment you want. This is because, once you’ve identified the apartment you want, you apply. Your application is decided upon by the board. This board obviously wants the best possible residents, therefore it’s important to present yourself as a serious buyer. All co-ops have a certain list of requirements, which include the amount of downpayment you need to pay, and how much financial reserves you have. Following this, you contact the seller, begin the title search and mortgage application, and close the purchase.

Special – Buy Apartment New York

New York, the city of dreams. You too can live your dream of owning real estate, and that in one of the top cities worldwide in everything from fashion to finance to art and food. Buying an apartment in New York certainly isn’t the easiest of tasks, but one that is likely to leave you happy you took the risk. But! New York has a complicated real estate system as everyone knows. Buying an apartment here means many different things than it does in other parts of the U.S.A.

We take care of all questions you could have in our full guide on buying an apartment in New York

Buy Apartment New York

Special – Buy Apartment Los Angeles

Los Angeles, where dreams come true. The home of celebrities, hollywood, a sprawling cityscape, beach and surf, and everything else you can imagine. From Malibu to Bel Air, Silver Lake and Venice Beach. It’s worth the traffic and chaos of the metropolis, to experiennce the unique atmosphere of this city. So you want to live in Los Angeles, but don’t know where to start? It’s certainly not easy wrapping your head around where and how to live. Do you choose Mid City or and a retail paradise, or Silver Lake, and hang out with the young students? We give you the full run-down below. The Los Angeles real estate market, like so many of U.S.’ super cities, is doing well. Los Angeles is neither a sellers nor a buyers market. Prices are also increasing, taking single-family residences, by over 16%.

We take care of all questions you could have in our full guide on buying an apartment in Los Angeles

Buy Apartment Los Angeles

Checklist – Overview of Process: Buying Apartment

These are the most important things you need to do before and as you buy your apartment. Don’t neglect these steps, as they are each important in their own right.

Preparation Steps for Buying an Apartment

The most important things to be certain of before buying an apartment are:

1. Check Credit Score
2. Gather Professionals
3. Mortgage Preapproval
4. Remember the Details!

Remember When Buying the Apartment! Important Final Steps

During your purchase, or slightly before or slightly after, there are important things to do. These include:

1. Make an Offer
2. Negotiate Smart!
3. Inspect
4. Renegotiate
5. Walk-Through (Important!)

This is part of our larger guide on buying apartments. Back to Buying an Apartment USA.

Living the Dream in NY – Buying an Apartment

New York, the city of dreams. You too can live your dream of owning real estate, many people dream of buying an apartment or buying a house in New York, one of the top cities worldwide in everything from fashion to finance to art and food. Buying an apartment in New York certainly isn’t the easiest of tasks, but one that is likely to leave you happy you took the risk.

The Money’s Flowing? New York Economy Overview

In regards to economic developments, New York is seeing a surge. So in a city where money is everyhwere anyways, it’s flowing even more now. Currently it is the city with the second highest economy in the world, ahead of Los Angeles. In recent years, multiple top companies from digital sectors have moved headquarters or opened offices in the city. This means increased investments in multiple sectors, along with higher demand for rentals in the inner city, housing workers. The general real estate market has weakened over recent times, meaning the classic investments of earlier years like TriBeCa or Soho where high square meter prices dominate, are currently clever investments for buying as the market is likely to recover, and these parts are likely to gain back value.

• Economy likely to grow

The Beauty of the City – New York Drone

New York City is known worldwide for its massive skyscrapers and epitome of big-city atmosphere. Take a view at the Metropolis from above:

Buy or Rent? Calculation Explained

When deciding whether to buy or rent, of course the low property taxes suggest you should buy. But as always, it depends where you want to live, and how long. If you’re looking at the downtown core, like Manhattan, it’s near-impossible to buy, and rent is comparatively cheap. So here, you would be good to rent, and invest your money elsewhere.

Neighborhoods like Bushwick, or even Chelsea, give you better buying options. Buying in Bushwick carries the same financial load as renting for three and a half years. That means buying here is much better than renting. You’re likely to leave a few years later with a strong return on your investment, along with financial equity.

• Depends on which neighborhood

Why it’s Good to Buy in New York City

In New York, it’s especially advantageous to buy, because New York property taxes are quite low. Thanks to fairly high income taxes, the state does not require to set high property taxes, which allow homeowners to save money. These taxes are at 0.86% in New York City, much lower than in the vast majority of U.S. States.

Low property tax rate in New York City means owning is worth it!

What state has the highest property tax rate? Ranking

• Property Tax Rates by State – List

New York’s Real Estate Market – Explanation

So what do you have to know about buying real estate in New York?

Properties are becoming increasingly large. Accordingly, there is an increase in purchases of properties valued at more than $1 mil. In New York, real estate is all about location though. On average throughout all of New York City, one-bedroom apartments can be had for $2.810/month, or two-bedroom apartments at $3.576/month. In e.g. East Brooklyn, the average rent is at $1.250/month, demonstrating the large chasm in where you pay and how much you pay. This is quite different from when you buy an apartment in Los Angeles, where no matter what part of the city you go to, you’re going to be paying hefty sums.

• Apartment Median price: $916.000
• Price per square meter: $7.244/m²

Important Facts – Property Investment in New York

There are a few things the experts swear by. If you want to invest in rental properties or generally non-owner-occupied real estate, these are the things you should keep in mind when thinking about investing in New York real estate:

• How long do you want to own the property?
• How do sales compare with the rent you will likely take in
• Find the right neighborhood
• Should you buy a Multi-Family or a single unit?
• Get your attorney to look over the building
• Buy the most bedrooms per most square footage
• Keep an eye out for tax abatements

How to Buy an Apartment

It’s of course a long and arduous process to buy an apartment, and takes a lot of time as well as financial investment. From beginning to end, there are irreplacable steps which, if you miss them, could be costly. If you’re not sure what real estate you should invest in, start here:

• Type of Real Estate – Which to Buy

Checklist – Things to do Before Buying

How to prepare for buying an apartment. Before buying real estate, you need to do these 5 things:

• Get knowledgeable about your finances
• Get together documents about your finances
• Speak to your possible mortgage broker
• Decide on the type of financing
• Find an attorney, real estate agent, and home inspector

Buying Apartment – Process from Negotiation to Close

To buy the apartment finally, you will want to start negotiating.

Make an Offer – How to Negotiate Sales Price

So you decide that this is your dream apartment. What now? Well now it’s time to make an offer. That means approaching the seller with an offer. There are two sides on which to negotiate, and you must pick one or the other. Either you try to reduce the size of the sale price. I.e. buying a property for $800.000 as opposed to $850.000. The other option is to negotiate the closing costs, e.g. agreeing on the sales price, but asking the seller to pay some of the additional costs, including real estate purchase taxes. These tactics of course mean either having more money in your bank account at that moment, or reducing the amount of montly costs in the future. You can typically expect to negotiate 5%-10% of the sale asking price.

Next Steps – Building Inspections

Your lender will most certainly require you to have an inspection of the apartment building, as well as the unit itself. This usually shows slight flaws, such as necessary maintenance in the future, or e.g. structural flaws.

Reducing Sales Price on Real Estate

Now you can renegotiate. You have found flaws in the building, and now have a strong negotiation stance. Let the seller know your concerns, and they will likely be more lenient in their negotiation.

There’s also a ton you can save on the many slight additional costs which come up when buying real estate, we give you the full guide

• All Additional Costs when Buying a Home

Final Important Step! Walk-through

Don’t forget the walk-through! This is one of the most frequent beginner mistakes. After moving out, things may change, the previous owner may have broken something, or a cabinet may have been covering up a flaw. Not doing a final walk-through can be your number one regret later on. It doesn’t take that long, and will most certainly be worth it, at least for the peace of mind.

What’s Different in New York?

There’s of course some caveats to buying an apartment in New York as opposed to elsewhere in the U.S. That means a few things to keep in the back of your mind when considering your purchase of an apartment. Of course, the normal process takes place, you buy a unit using a downpayment as part of your mortgage, pay closing costs, and then taxes, and then move in.

Property taxes vary from county to county, if you’re investing in New York,

• Property Taxes NY Explained

Before – Buying Apartment Preparation & Planning

The people which are required to be at your side are of course the same all over the U.S., but in New York there is one specific requirement. When buying an apartment in New York you are required to have an attorney on hand. That means you need to get one sorted (preferably with real estate specialization) before even starting your search.

• Mandatory to have an attorney

Taxes – Extra Real Estate Costs

Of course there’s different taxes in New York than elsewhere in the country. New York is one of the states which, along with the real estate transfer tax, requires a mortgage tax. Like for example the mansion tax, which kicks in when buying a property worth more than $1.000.000, or the flip tax, which is actually not much of a tax because it is private. The property taxes, how much they are and how they’re calculated is of course also unique in the Big Apple.

Pretty much everyone pays too much in taxes. It’s especially easy to save on real estate taxes. Learn how:

• Saving on Real Estate Taxes – Easy How-to

Insurance – Expensive Additional Cost

Not to forget is that you will have to pay homeowners insurance. In New york this can run around $2.000 a year.

• $2.000/year homeowner’s insurance

Sponsor Units – Affordable Apartments Trick

Sponsor units are only available in New York. They are a special types of apartments. These typically exist in multi-residential buildings which the developer or co-op have mostly rented out or sold. Yet, often these developers or cooperatives keep a few units to themselves for private use. These are often later turned into rentals or sold on. The advantage, in co-ops, the new resident will not be required to have to submit a financial package. Sponsor units are also usually cheaper to buy than other type of units.

• Cheaper
• Easier to get
• Rare

Rent Control? Stabilization? NYC Real Estate Law

Is it even worth it to buy an apartment? New York has rent-controlled and rent-stabilized apartments. These differ from the typical apartments in that they have much lower rent. But, because they are extremely rare and nearly impossible to find, it’s better to focus on rent stabilized apartments.

Rent Stabilizing – Meaning & Definition

Rent-stabilized apartments are apartments who’s rent cannot increase heavily. The yearly increase is regulated by the government. This protects you as a tenant. It also makes you lucky to live in such an apartment. Meaning that if you are at the moment living in a rent-stabilized apartment, you are likely to be paying less than many others. Therefore, buying an apartment is perhaps at the moment not the best idea.

• Rent stabilized = government-controlled rent increase

Where to Live in NYC – Best Neighborhoods

There’s the five boroughs, Bronx, Queens, Manhattan, Brooklyn and Staten Island. But within these, countless neighbourhoods, some world famous like Harlem, Upper West Side, Greenwich Village, Williamsburg, and the list goes on. So where should you move? Most everyone, we included will suggest you to get to know the city a bit first, research, and also just walk around the neighbourhoods and see which atmosphere fits you best.

Ultra-Luxury Penthouses & Lofts

Of course, some of the super-rich of the USA have ultra-luxury apartments in New York. Among them Superstars like Jay-Z & Beyonce and Justin Timberlake. One of the most impressive though has to be Jeff Bezos’ $80 million apartment in Manhattan.

Worst Neighbourhoods in NY – Danger, Crime, Low Standard of Living

The worst neighborhoods in New York are decided by how dangerous it is, how good they are to live in, and more. And if you think that you can make a clever deal by moving to one of these areas you are mistaken, as none of these neighborhoods are especially cheap.

• Woodlawn-Nordwood
• Hunts Point
• Brownsville
• Fordham
• Mott Haven
• Fordham
• Bedford Park
• Downtown

New York’s Hippest Neighborhoods – The Places to be in New York

There are a few neighborhoods you can’t miss. These are the classics like SoHo or TriBeCa. The top neighborhoods in New York City to invest are the famous ones of course. Think Greenwich Village or Williamsburg. The other famous ones, Astoria (Queens), Bushwick (Brooklyn), or Greenpoint (Brooklyn) are also safe bets, especially for younger or more culture-oriented movers. Some ones to keep an eye out for are Chelsea, where the nearby Hudson Yards project is driving down prices of top and up-and-coming real estate, or Bedford-Stuyvesant the prodigal son of hip New York neighborhoods, and lastly Park Slope, which will likely see a sharp increase in prices over the next years, meaning investment now is likely to pay off.

Classics: SoHo, TriBeCa, Greenwich Village, Midtwon

Hip: Astoria, Bushwick, Greenpoint

Future Stars: Chelsea, Bedford-Stuyvesant, Park Slope

You want more info. Where to buy an apartment in New York City? We tell you everything you need to know

• Best Neighborhoods to Buy – New York City

Best New York Neighbourhoods List

The best New York neighborhoods are difficult to pin down. Everyone has their own preferences, and their own needs. Making it impossible to say definitively what the best are. Below are what are considered some of the top New York neighborhoods.

1. TriBeCa
2. Gramercy
3. Battery Park City
4. Nolita
5. SoHo
6. Dumbo
7. Financial District
8. Murray Hill
9. NoHo
10. Kips Bay
11. Prospect Heights
12. Brooklyn Heights

Should I Rent a Co-op Apartment?

Co-ops are probably more famous and more popular in New York than anywhere else. Here, they make up almost half of all residences. Co-ops are slightly more challenging to get, with a complicated and time-consuming process, but the time investment is worth the reward, with typically lower property taxes, the possibility to build equity, and more.

What is a Co-op Apartment? Real Estate Corporation

A co-op apartment is an apartment which is administrated by a housing cooperative. If you buy a co-op apartment, you are not actually buying the property, i.e. the four walls which you intend to live in. Rather, you are buying a share in a legal entity. The shares you buy entitle you to use a specific part of the building. Therefore, you are not the owner of real property, but rather a membership which allows you to use the apartment you live in. This also means of course that you do not take out a mortgage, but rather share loans, i.e. a loan to pay for the shares.

• You buy shares, not property

Why you Should choose a Co-op – Explanation

Because you are not the owner of the property itself, you do not have to pay property taxes. Rather the cooperative pays the property taxes for the whole building, and these are divided among the members, i.e. residents. The main advantage of a co-op is that it is cheaper. The property taxes which each resident pays are lower, and any additional fees are also lower, because the co-op is not intended to make profit. Lastly, residents in co-ops, despite not actually owning the property, are entitled to many tax deductions which real estate owners are entitled to.

• Cheaper

How to buy a Co-op Apartment in New York – Step-by-Step

There are a few steps to go through before buying into the cooperative. Before approaching a co-op, or identifying an apartment which you are interested in, you have to gather an attorney, a mortgage broker, and an engineer. Although this is not necessary, it greatly increases your chances of getting the apartment you want. This is because, once you’ve identified the apartment you want, you apply. Your application is decided upon by the board. This board obviously wants the best possible residents, therefore it’s important to present yourself as a serious buyer. All co-ops have a certain list of requirements, which include the amount of downpayment you need to pay, and how much financial reserves you have. Following this, you contact the seller, begin the title search and mortgage application, and close the purchase.

Buying an Apartment NYC – Checklist

If you want to buy an apartment in New York, these are the most important things to do and keep in mind.

1. Decide! Rent or buy?
2. Prepare! Visit the city, research the market
3. Lawyer Up! Find your attorney
4. Choose affordable! Sponsor units, coops, or up-and-coming neighborhoods