In 2012, I became the proud owner of a 450 square foot studio apartment in Brooklyn, in a building situated conveniently right next to the Brooklyn Bridge. I never dreamed of owning property in NYC but I was really lucky. The economy was still recovering from the financial crisis and so property and mortgages were cheap, especially compared to where the real estate market stands today. I had a relatively good income, albeit I was still barely able to make ends meet (more on that here). I was able to borrow money from my mom and two aunts for the down payment (I promptly repaid my aunts as soon as I received my year-end bonuses but my mom’s loan is still outstanding, thanks mom).
Owning NYC property felt somewhat achievable because it was something my parents had accomplished for themselves. Like many Chinese immigrants, they were keen to build hard assets after moving to this country, and at one point, owned three houses in Brooklyn and Queens.
I purchased a coop (short for cooperative) apartment. It’s a real estate arrangement that is fairly prevalent in NYC and San Francisco in which I own shares of the coop, versus real property. At my closing, instead of getting a title to the apartment, I got a certificate of shares, which were predetermined when the building became a coop. From a practical standpoint, owning a coop means that I pay a monthly maintenance, similar to an HOA, there are restrictions to renting out or subletting my apartment, and I had to interview with the board. As a result of these limitations, a coop is more affordable than a condo or a house. I wasn’t bothered by these restrictions, though – it was all I could afford and I was just happy to be a homeowner.
Given the continued economic downturn and resulting low market demand for real estate, especially coming out of the housing bubble, I ended up buying my apartment at a steal, especially compared to where pricing is trending today. The low interest rate environment meant that I was able to lock up a low 3.25% rate, albeit as a 7-year ARM, which meant that I would either need to refinance before the 7-year mark or pay a market-adjusted interest rate after I hit my 7-year anniversary post closing. I wasn’t worried about it, though, because, well, 7-years seemed like a long time away, and I valued the immediate benefit of a lower interest rate (less cash flow impact). Also, given the sustained depressed economy, I did not anticipate interest rates rising in the near future, which, in hindsight, ended up being the right bet.
A few short months after I bought my apartment, my now husband moved in with me. What was already an affordable mortgage and maintenance (I was paying less than my previous rent!) became even more sustainable when split with another person. It meant that we had two people living in 450 square feet, though. But having a small footprint was actually beneficial in so many ways. We learned how to optimize our space. We spent frugally because there was no way to house any more stuff. We didn’t feel deprived, however. Our small apartment naturally fit our lifestyle and we entertained frequently and even renovated our kitchen, on a budget, and made it so much more functional. And over the course of 1.5 years, we saved enough to fund our wedding and honeymoon.
And after our wedding, it was on to the next adventure!