Should I rent in NYC

[Nik Parks]

I could use some advice on this.

Originally, I wanted to buy a multi family home in NYC with a FHA loan. I thought I could be a OO and live rent free AKA let my tenants cover the costs.

Thank goodness for BP! I may not have discovered the holes in my strategy until it was too late if it hadn't been for these forums. The numbers simply do not add up here. The market is just ridiculous here.

I thought I could find a fourplex for $600k in Astoria…they're over $1 million. If I apply the 50% rule of thumb…I'll be underwater with one of these million dollar homes.

In addition to that, FHA is changing a lot. The PMI payments are going up. Plus, there are different regulations as far as how long my wife and I would have to live in the house.

So here's my question:

I'm trying to figure out which strategy would be better. What do you guys think?

1. Buy a multi family home just outside of NYC (perhaps New Jersey) and be a OO. The downside: commuting to work might be awful because I do not have a car. RE is also very expensive in the surrounding areas: Upstate NY, Long Island, nearby cities in NJ, ect.

2. Invest much further outside NYC and make it an investment property. The downside: I'll need 20% down instead of 3.5%, I'll have to find a good property management company, and I'll still pay rent to live in NYC.

So what do you guys think would be the best option? Just FYI, my wife loves NYC very, very much. I love it too but I'm much more willing to make sacrifices now (moving away from the city) to build long term wealth. She supports me 100% but I don't think she wants to leave the city. That, obviously, is a big part of the equation as well :p