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In 1998, I moved from New Jersey, Exit 151 to Brooklyn. I had it in my mind that I would never pay rent again and wanted to be a happy home owner. Of course Manhattan was out, because of the price tags for 1 bedrooms about $130-150K and I didn't want to live in a studio at $70-90K.
So my dad and I set out on a Brooklyn expedition and found a very nice area on the South West Side of Prospect Park called Windsor terrace.
At 175 Prospect Park South West was an amazing conversion. I found a 1 bedroom on the first floor, about 8 feet above ground level for $83,000.
I had saved enough for the 20% down payment and actually got a loan from Apple Bank. It was an adjustable rate mortgage and it started at 8.5%.
My monthly debt service including mortgage and maintenance was around $800 per month.
I was making about $35K per year and I was a home owner. Wow, 24 years old and I owned something!
Well, about a year later, the sponsor of our building went on the fritz and stopped paying his maintenance fees for the unsold shares of the building.
The building was teetering on bankruptcy and then, the real estate market collapsed!!!!!
That same 1 bedroom apartment that I bought for $83K was now trading for $38K! All I could say is F__K! Instead of bailing, I knew that I still needed a place to live and I could afford the payments, so I forged ahead.
In 1991, I met a lady and moved to NYC and began to rent out my apartment in Brooklyn. The co-op had almost no rental limits. The first 2 years , I lost a few thousand bucks, between my debt service and what I was collecting on rent.
In the 3rd year, I started to see a positive cash flow on my investment and it continued for another 5 years.
The market started to pick up in 1995 and I sold the apartment in 2000 for a very sweet profit.
I guess what my story tells us, is that you can never really time a top or bottom of a market. If you are in it for a 7-10 year period, I feel that real estate is a great investment!
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