At some point in this edition of At the Core, there will be a small plot twist, but you’ll have to read at least half the story to find out exactly where. And at that point, even if you’re not fully invested, you’ll already be that far down the page, so you might as well just read the whole thing. Who knows… the ending could be amazing… or terrible. Either way, aren’t you dying to find out?

All across the city, people are buying apartments. Every day, dozens, or hundreds, maybe even thousands of people begin to search for a place to call home. They don’t know where to start. They need help. Sometimes they don’t even know how much they can afford.

The overall monthly payment is often the deciding factor when a buyer concludes their search for a property. Too often though, the assumption is made that a higher purchase price automatically equates to a bigger monthly payment.

If a buyer takes on a bigger mortgage, logic dictates that the monthly principal and interest payment would certainly be higher. But there’s more to a housing payment than what a buyer pays to their mortgage lender.

Taxes. Common charges. Maintenance. Insurance. They’re different at every building. It’s not difficult to find a $2 Million co-op with significantly lower monthly maintenance fees than a $1.75 Million co-op in the same neighborhood. Depending on the difference in those fees, the overall carrying costs could be lower for the property with a listing price that’s a quarter million dollars higher.

Some condo buildings have tax abatements, which simply means that unit owners in abated buildings pay little or nothing in property taxes for several years. So, a $1.3 Million condo unit with an abatement might cost a buyer less each month than a $950,000 unit in a building without an abatement.

Advice: Buyers should consider a wider price range when searching for the right place, taking into account the other carrying costs that could swing a monthly payment one way or the other.

Additional Advice: It’s your real estate agent’s job to know which buildings have abatements and which co-ops have low maintenance fees. If budget is your primary consideration, ask your agent (our team, we hope) to help you identify buildings with lower carrying costs.

We promised a plot twist.

Saving money is great, but your monthly payment shouldn’t be the only deciding factor. Sometimes it’s worth paying more in taxes and common charges and sometimes it makes sense to choose a co-op with a higher monthly maintenance fee. All you have to do is figure out when it makes sense to pay more.

Your personal budget is really just a level of comfort or a well-thought-out state-of-mind that’s often open to change when the appropriate level of logic is implied. So, when is it worth stretching your budget? To get an answer, we always start with other questions:

  • What if a property with higher carrying costs is far more likely to be the best long-term investment?
  • What if a building with low carrying costs has a history of imposing special assessment fees?
  • What if a recent engineering report recommends that major mechanicals are due to be replaced at a building?
  • What if a building’s management company has a reputation for being very slow to respond?
  • What if there is a major ongoing lawsuit inside the building?

Taxes are often higher in a building with a smaller number of units because there is a smaller base to share in that cost. But some people want less commotion and are searching for smaller, quieter, more boutique-style surroundings. Others might prefer a larger building with 30 units on each floor that offers a very tangible sense of community. How much are specific conditions like these worth?

What is an amenity and what is a necessity? The answer to that question is different for most people.

Where you live has an impact on the way you feel, and where you live plays a role in who your children become. Where you live might represent the biggest financial investment you’ve ever made, and the future market value of your home has a direct impact on your future net worth.

In real estate, value is where cost intersects with quality of life. Some people call it “getting the most bang for your buck,” but value is more than that. A buyer should insist on finding a home that will have the most positive impact on their quality of life whether that be physical, emotional, psychological, financial, or all of the above. During that endeavor, they should expect that their real estate agent can help them to identify the best value.