NYC Ownership Costs 2.2x Rent

Ramit shares a story about analyzing real estate costs in New York City.

"When I was in New York, I had a pretty nice place and I would always keep my eye on the real estate market. I was tracking stuff and negotiating my rent - in an 11-year period, my rent went down 4 times in Manhattan.

When I ran the numbers for an equivalent place that was just 2 buildings over - same view, same square footage, same everything - it would have cost 2.2 times more to own than to rent. Let's pretend I was paying $5,000 a month to rent. When I factored in taxes, maintenance, opportunity cost of the down payment, transaction costs, all of it - owning would cost about $11,000 per month for the same basic unit with the same view.

I thought 'I'm good - I'll take the $6,000 per month savings and invest it.' And that's exactly what I did. I've been doing that for close to 20 years, so that turns into a lot of money over time, and you get to live in amazing places."