Hoboken Mom Condo Living
Planning the long-term & juggling the everyday

Matching parents and employers with part-time flexible consulting opportunities

Career advice, job postings and more at hobokenmomconsulting.com.

My husband and I always knew we wanted to own an expensive home and to have kids. We started saving before we were married to achieve those goals, more at http://patch.com/A-tFJ

I am a saver. Ever since I was a kid, I always had a stash of cash in my bank (remember those little pastel metal banks with combination locks on the front? Man, I wish they still made them so I could give them to my kids) from birthday presents, Chinese New Year red envelopes, and holiday gifts.

I forced my mom to open a bank account for me when I turned 16, and started venturing into the stock market. This was in the late 1980’s, when the stock market was starting to climb, so I had lots of opportunities to make money on investments. After a number of false starts, I started investing heavily in Vanguard funds because I noticed the returns on those mutual funds consistently outperformed my holdings in other companies (Fidelity, Merrill Lynch, CSFBdirect and a few others).

Because I consistently saved and invested, I had the cash for a down payment on a one-bedroom in Brooklyn Heights a year after graduating from college. Anyone who has tried to rent in Manhattan knows what a headache it is. Exorbitant broker fees (15% of the first year’s rent), first & last month’s rent, security deposit, pet fees. The amount of cash we put down to rent our first apartment was not much less than our down payment, and none of it was tax-deductible. And then our lease got converted to a monthly one after the first year because the landlord decided she wanted to sell the unit, and all I could think was that we were going to get 60 days notice to go through that whole rigamorole again. That apartment also was dreadful; cockroaches and mice everywhere, leaky radiators, no kitchen counters, scaffolding in front of all the windows with workmen looking in all the time. We practically fled into the haven of homeownership, and our one-bedroom proved to be the launching pad of our financial future as a couple because our expenses were so low; we had many more opportunities to save than as renters.

Since then, we have rented once more and been homeowners another two times, and our experiences as renters vs. homeowners have been more or less the same. The other factor is that my investment returns slowed dramatically in the last five or so years, when the stock market stopped its steady upward climb and experienced a bunch of volatile ups and downs. There has been a lot of debate about how people can achieve greater returns by investing their money rather than locking it up as a down payment. That has not been my experience. Cash has been my best investment over the last five years.

And if I am sitting in cash, you damn betcha I am going to use it as a down payment on a home, as long as I get a reasonably good price on an unusual asset (Hoboken 4-bedrooms constitute 1% of the overall market). My monthly costs are very comparable to what I would be paying in rent on our condo, assuming I could even rent it (3BR+ rentals are very expensive and hard to come by in Hoboken; new construction ones are even scarcer), plus I can deduct my mortgage interest and property taxes. As long as we stay in our condo for at least five years, we are coming out ahead re. savings vs. transaction costs.

There is only so long I am willing to sit on a giant pile of cash when my family’s living situation is dire (ie. four people and a dog plus occasional guests crammed into 1,000 sf). And it’s not like people don’t spend their cash on stuff that has far less tangible results. I spent easily $20k on my dog throughout his life, and we were lucky to avoid the expenses of a major illness at the end of his life. We also never paid for dog walkers, spa visits, or grooming; add on another $5k-$7k/year.

Most of my childless friends go out to eat every weekend. By the time you pay for drinks and cabs, you can easily spend $100/night. That’s $10k/year. Vacation costs can run another $10k/year. Over a five year period, you can easily consume $100k, which is the down payment for your typical Hoboken two-bedroom.

When I was a teenager, my friends always bemoaned their lack of cash and tried to borrow from me. We all started out with the same amount of cash in hand, but they spent theirs immediately while I didn’t touch mine because I found I could satisfy myself with brown bag lunches from home. As an adult, I knew real estate was going to be a huge expense for us, and I prioritized that for my family because having a nice place to live is paramount for us. We have a stable base of operations to launch the next phase of our life; raising our children. I have been repeating the same cycle over the years; it’s just the scale that keeps getting bigger.

A couple of local realtors have contacted me to offer discounted real estate commissions to blog readers. I discussed a 4.5% commission and a flat $2k commission if you sell on your own.

The realtors are:

Kyle  Cook
Garden State Realty Group
50 Harrison Street #206, Hoboken, NJ 07030
(908) 627-1190 Phone
Kyle@GSRG.com

Marie Gomer
Liberty Realty
201-926-5040 Cell
mariegomer@gmail.com

The other route you may want to take is to list your unit using a flat fee MLS service (I highly recommend housepad.com) and offer a 3% commission. That is more than agents usually earn, plus you get to try to sell on your own.

From Kathy Zucker: zhobokenmom@gmail.com
To: Info@notjustrugelach.com

Date: Sun, Jun 20, 2010 at 12:03 PM
Subject: Farmer’s Market in Hoboken

Hi,

I attended the Brooklyn Heights farmers market yesterday and bought buttermilk biscuits, a stromboli sandwich and apple cider donuts from you. All were very delicious. I lived in Brooklyn Heights a decade ago but moved to Hoboken to start a family because we could get a lot more space at about half the price of the Heights.

I took a look at your website and saw you are updating your NJ open air market listing, any chance you could come to Hoboken? We have a farmers market here twice a week, details at http://bit.ly/ah8Hjh.

I blog and write a newspaper column about parenting in Hoboken, and I would love to be able to sample your offerings more regularly, please let me know if there is anything I can do to help bring you here!

6/21 Update: I got a call this morning from Jeffrey Michaelson, the owner of Not Just Rugelach, and has actually been talking to someone in City Hall about coming to Hoboken! His son lives here, so he is familiar with the area, plus it is close to the Not Just Rugelach headquarters in Kearney, NJ. Thank you for adding your voice to mine, he was really touched by the emails he received and is going to stay in touch with me to let me know what happens with the local farmer’s markets.

Every time I move I have to get rid of furniture, and it drives me crazy. Newspaper column at http://patch.com/A-sYl on how I approach furnishing my kids’ rooms to maximize quality and minimize costs.

Note: The high quality stores I frequent are Crate and Barrel, Room and Board, Pottery Barn (also Kids and Teen), Gothic Cabinet Craft, and Land of Nod. The stopgap ones are Ikea, Overstock.com and Target. I have gotten incredible bargains from Crate and Barrel’s outlet section and the Pottery Barn sale sections. Overstock.com is the place to go for carpets and leather storage benches, and the $2.95 flat fee shipping is unbeatable. I always google coupons when I shop online, and I belong to the mailing lists for all of those stores so I receive promotional single-use coupons. I also use MrRebates.com to get cash back ranging from 3%-8%.

The NYTimes recently reported that the Manhattan rental market is considerably stronger than it was six months ago, with rents up as much as 20% in prime buildings. Most landlords are no longer offering rent concessions or paying broker fees. Hoboken real estate tends to move in lockstep with Manhattan, so how is the stronger market playing out across the Hudson River?

The SW Hoboken rental market is noticeably stronger, and I imagine that also applies to the more desirable NE and SE areas. A 2BR in my old building recently rented for $2,500 within one month, a 1BR in my current building also rented quickly for over $2k/month, and the tenant paid a broker’s fee. A 2BR+den developer unit rented within three weeks at the full asking price of $3k/month, by three young professionals with top-notch credit who will each take one of the smallish bedrooms. Most young singles don’t initially want to be so far from Washington Street, but the much bigger spaces, nice finishes and included PARKING help them make the decision to rent in SW Hoboken.

The volatility of the rental market was a huge factor in my decision to upsize last year from a 2BR to a 4BR. In the eight years I have lived in Hoboken, rent increases and a tight rental market have been the norm. The only time the rental market has been weak was from October 2008-March 2010. My husband and I tend to stay put, which rewards homeowners, and we also wanted the higher quality of life that goes along with homeownership. There is no way I would be able to afford to rent my current 4BR condo, and even if I did, I would have to deal with the constant threat of the landlord selling the place. Yes, I am locking up my down payment, but with the current stock market performance, I doubt I would have been able to earn much income from investing it.

I hesitate to announce a return to real estate appreciation, but the much stronger rental market coupled with looser mortgage lending indicates that property values have stabilized. There are micro ups and downs in terms of consumer confidence (the NJ sale market was brisk from January-April this year, and has tanked since then, but overall the sense that the world is ending is gone. Looks like my real estate gamble has paid off.

I recently purchased a used armoire to furnish my daughter’s bedroom that I realized is too small for the space. The best course of action seems to be to move it into my son’s much smaller room and replace it with a larger version.

The current armoire is 35″W x 23″D x 65″H. The ideal replacement is 48″ wide x 24″ deep x 69″ high. I know it is good quality because it comes from Pottery Barn, so I don’t have to worry about whether the drawers have veneer bottoms that will warp within a year, plus I don’t have to deal with assembly. The current price is $999, which comes to $1,175.82 with shipping and sales tax.

Now that I have identified a shopping target, I can come up with a plan to bring my cash cost down as much as possible. I would like to spend no more than $500 out of pocket to buy this piece. My first step is to make sure I am on the pbteen.com mailing list so I receive promotional offers like free shipping. That will save me $99.90. My next step would be to place the chiffonier on a gift registry (end date tomorrow) so I receive a 10% completion discount. Unfortunately, it seems like pbteen does not offer a gift registry. Bummer, I guess teenagers don’t receive gifts, just babies and adults. So I will search online for coupons and sign up for new mover coupons* (usually 10% from Pottery Barn, Crate and Barrel and West Elm).

My next step is to check my American Express Rewards balance. I currently have 18,000 points and expect to accumulate another 15,000 in the next two months, bringing the total to 32,000. I can get an advance of another 15,000 points (you have to earn that amount within a year of taking the advance, which will definitely not be a problem since we put all almost all of our household and business expenses on our American Express cards). AMEX rewards points typically redeem at a rate of 5,000 points for a $50 giftcard, so that will give me a total of $450 in Pottery Barn giftcards. I am also keeping a sharp eye out for Rewards savings. There are always a few deals going (right now you can get a $25 American Express gift card for 4,000 points, a 25% discount); last year AMEX ran a deal of 50% off $50 giftcards, so I stocked up.

In the next couple of months, I will be keeping a close eye on the chiffonier price to see if it goes on sale. Pottery Barn tends to change its stock items fairly frequently, so the risk is that the item gets discontinued and I miss it. I need to be ready to pounce as soon as it goes on sale. If you look at other items in the beadboard collection, most of them are already on sale, which means the chiffonier should also be discounted in the next few months. Chances are it will only be initially discounted $50-$100. I can either buy it then with whatever giftcards and promotions I have on hand (AMEX is pretty fast to send out the cards either by email or regular mail) or wait to see if the price gets further discounted and take the chance that it sells out completely.

*Note: You have to complete the move documents but can use your old address (ie before you moved) since each address change only lasts 12 months and you might be getting mail at the old address that is not getting forwarded.

After you complete the address change and pay $1 (to avoid spammers), you can sign up for 10% coupons at PB, West Elm and Crate & Barrel. They get mailed to you in about two weeks.

6/21 Update: Gothic Cabinet Craft on Washington & 4th is closing, so all floor samples are 30% off. I bought a 39″W x x20″D x 73″H chiffonier for $604.55 including tax and delivery (original price $750).

Drum lessons at age 5, luxury bath/beauty boutique, a comic book store for my hubby, we always include First Street in our walks around Hoboken because it is so much fun! Column at http://patch.com/A-s7S

I bought my four-bedroom in March 2009. Back then, everyone thought the world was ending in Hoboken. The stock market had crashed (Dow was trading below 9,000), we were in the midst of the real estate crisis, Mayor Peter Cammarano had just been arrested on extortion charges, property taxes had a 47% hike, and many people thought we were heading into a worldwide depression. So, a great time to make the biggest investment of my life, right?

14 months later, the Dow has more or less stabilized, Hoboken property taxes have decreased, with many owners successfully appealing their valuations. Hoboken has been removed from State fiscal monitoring that was imposed by the state after many years of bad governance by prior mayors. Local government is focused on cutting spending while retaining services. Mortgage qualification terms have finally started to loosen up, and sales are steady, with about 5-6 months worth of inventory on the market. We are not even close to being back to the boom days of 2006, but the arguments for an L-shaped recovery look valid.

Many small businesses, including my own, had their best quarter ever in the first quarter of 2010. The economic recovery appears to be well underway, but nobody wants to talk about it, probably because we don’t know if this upswing is sustainable. The steady 9% unemployment also doesn’t help because it distracts attention away from economic growth.

Hoboken real estate mirrors the NYC market, and Manhattan rents are slowly increasing, with fewer/no concessions being offered. Interest rates are also slowly increasing, hovering just above the 5% mark. Hindsight is 20/20, but looking back at our choice to buy our apartment over a year ago, I am really glad we did. Nobody knows what the future holds, but the path my family has followed over the past 14 months has been a very positive one. And the 4.5% APR we locked in on a 30-year high conventional mortgage is unbeatable.