Jeff Bezos, Ted Turner and I think alike. We like to buy on the rise and hold. For example, when others dumped their Amazon stock, Jeff and I stuck it out. Its stock price has been on a run lately. I could have taken a significant loss a couple of years ago, but because of my prescience, patience and confidence in Jeff, I'll now be taking a less significant loss.
On the rise, too, is Jeff and Ted's other stock: real estate. Bezos snatched up a few hundred thousand acres. He's now No. 23 on The Land Report's list of the nation's top 100 landowners, reports Thaddeus Herrick of The Wall Street Journal ("It's the Only Thing That Lasts" April 25, 2007). Turner is number one, at a cool 2 million acres, not to mention 45,000 tasty bison. (Try a slice at Ted's Montana Grill.) An acre of farm real estate costs on average $1,900. It's also a month's rent in Manhattan - if you're lucky. A $3 square foot in Marlboro country is $1000 in the City. In 2006, the price of an acre of farmland rose 15 percent from 2005. New York City's real estate market is also bucking the trend. While almost everywhere else in the country has seen real estate supply rise and prices freefall, Manhattan's prices are climbing steadily. Well, unless Cuba becomes America's fifty-first state, this country isn't getting any bigger, acreage-wise. That's likely Turner's and Bezos's thinking. It's also mine, that's why I made one of the dumbest decisions of my life - to buy real estate right now in Manhattan.
Luckily the days of sub-prime lending are ending. Because I have little luck and savvy, I could have had a foreclosure by now. Buy a home with 0 percent down. I have 0 percent- heck, I have double that. But not to break a losing streak, I, like others in Manhattan, decided to buy. Perhaps the reason prices are rising in NYC is that suckers like me sat out of one of the biggest bull runs this country has seen. We are making 5 percent in an ING account or on a C.D. but our money has grown. Jeff Bezos's has too, about $3 billion. If he buys, heck, why not me? But New York City is its own animal. One puts down 20 percent down, if not 25. Apartments are about $1000 a square foot. Despair when you compare that with $75 a foot in Texas (though not Houston, where prices are rising like NYC's). And then there are taxes and maintenance, which are at least $10 a square foot. Buy a 400K 450 sq. foot one bedroom - if you can find one - and you'll pay at least $450 above the selling price, likely $700 a month.
"Buy," actually, isn't the right word. No one ever really owns, even 30 years down the line when the last mortgage payment is made. In co-ops, one owns a share in the building co-operative. So even if you cobble the money - from savings, benevolent parent or from one's $400K Goldman Sachs average bonus - you not only don't outright own it, you likely won't even be allowed to buy it because you'll have to "pass the board." That's scary shit. It's like a financial strip search. If one is lucky to find a condo, then you own and don't have to get probed by middle-aged New Yorkers who have enough power to slam the front door on Madonna's face. Luckily, I haven't faced a board yet, because I backed out after I made an offer. That's where my thinking parted company with Jeff Bezos's and Ted Turner's.
It seems unwise to put oneself on a monthly hook of near $3,000 when zero dollars are coming in, but I needed something to do. I made an offer of about 400K. The apartment was a 500 square foot L-shape alcove studio in Murray Hill (the 30s, home of the aprรจs college crowd). That's a 20 percent discount of the $1000 a square foot. I found the listing on Thursday and made an offer on Friday. The seller accepted and I was a homeowner, kind of, that evening. Indigestion started on Saturday. In one episode of The Office, Michael (Steve Carrel) starts spreading the news around his office, that he is now going to be a homeowner, essentially, a club member in yet another club in which he needs to be accepted. The thrill ride ends when the broker goes over all the closing fees. The episode ends with him, knees tucked to his chest, sitting next to Dwight, his new roommate. I thought about him as I ran the pending outlay against the small box I just, kind of, bought - or co-opted, I should say.
It was too small for two people. There was just one room. No bedroom door to slam, no place to hide after a domestic bicker over not wanting to have pillow talk or some such nonsense (to me). I am 32, the last to couple, except for my friend Alan who had just spent 4 years in Afghanistan, Pakistan and some other 'stan. If I found a mate, I would have to sell. If the broker gets 6 percent, I'm out 25K. That's 35K down the drain. Suddenly, it didn't seem to be worth it, especially if I was thinking my purchase would be a good investment. The realization was cemented when I recalled my broker saying, this is not an investment property. You can never rent it out. So, I backed out. No big deal. No contract was drawn up. Heck, it was only 4 days since I had first saw the property. I liked my broker. A nice man. I didn't see a ring and thought he could marry my mom. One day I could call him "Pop." I, the prodigal son, emailed him, admitted I hadn't thought it through when I had made the offer last week. I still wanted to work with him, in the future, just not right now. I'd be in touch. His response was short and sweet, "You don't keep your word. I would never show you another apartment!" Brokers, I learned, are like flings: easy come, easy go.