Is it Better to Rent vs Buy in New York City in 2018

Rent vs Buy For New Yorkers in 2018?

Rent vs Buy has always been a huge question for many New Yorkers…

The pros and cons of ownership vs renting vary from person to person.  On one hand, the benefits of ownership gives the buyer an opportunity to build equities, enjoy tax benefits and shields you from hiking rents.  On the other hand, renting allows the tenant to enjoy freedom and flexibility as well as freed up cash for other investments.

In general, we can divide the comparison into two categories: financial gains(quantifiable) and psychological gains(unquantifiable).  

In this article, I’ve put together a overview of the pros and cons of ownership vs renting.

Since this has been a much debated topic; there has been many articles addressing the issue.  I’ve also used two sources to show the financial gains/losses of the two options purely based on calculations.

Hopefully, these information and data will help you make a well-informed decision.

Home Ownership


  • Appreciation
  • Build Equities
  • Mortgage and property taxes are tax-deductible
  • More predictable costs
  • Greater Privacy
  • Can customize based on your own taste
  • Psychological Well-being of ownership


  • Long-term financial commitment
  • Gets in way of life-changing decisions
  • Ownership responsibility (Repair & Maintenance)
  • Higher monthly payments unless significant amount of down payment is made
  • Considerable initial investment



  • Lower housing cost
  • Shorter commitment
  • Landlord is responsible for repairs and maintenance
  • Flexible lifestyle (leases are generally 12 months in New York)


  • No tax incentive
  • Risk of rent hikes
  • Landlord won’t do cosmetic upgrade for you
  • Rent does not build equities

Obviously, psychological and emotional benefits are hard to quantify.  However, we can quantify the financial gains/losses of each decision. To make things easier, we can use two calculators provided by New York Times and SmartAsset.

Source #1 – New York Times

New York Times had a very interesting article in 2014 titled “Is It Better to Rent or Buy?” Inside, you can plug-in the calculator and based on the indexes, interest, rent and house prices, and the calculator will derive a baseline suggestion for you.

Since it’s a hassle to plug in all the numbers, I have done that for you, and something interesting occurred… (see below for actual data and sources)

Manhattan Tenants: If your rent is lower than $4,661, you should rent

Brooklyn Tenants: If your rent is lower than $3,333, you should rent

NW Queens Tenants: If your rent is lower than $3,163, you should rent

Source #2 – SmartAsset

Interestingly, SmartAsset also has a Rent vs Buy calculator for potential buyers.  And when we plug in the same numbers from previous values, we get the following message….

“Renting Will Always Be Better Than Buying Over the Length of the Loan.”

In addition, when we plug in higher sales prices ($1.5M), the hurdle to tip the decision drastically increases to $7000 over 15 years of ownership.  In other words, it only makes sense if the rent is above $7000 and the owner stays in the apartment for over 15 years.

Final Conclusion & Verdict

Obviously, the calculators do not factor in the psychological benefits of ownership vs renting.  However, if you care about maximizing profitability and return, it is best to rent and optimize cashflow with Obligo’s deposit free living service.

Obligo uses pre-authorization billing technology to allow tenants to rent without paying security deposit upfront, instead the tenant pays a very small monthly fee during the duration of the lease.  The service frees up security deposit and allows tenants to re-invest their fund in other channels. In the event of damages and claims, Obligo enables tenants to pay in 4 installments without extra charge.

Sources & Data


Interest Rate 4.25%

Cost of Sale 8% (5-6% Broker Fee & Transfer Tax in NY)


Manhattan Median Sales Price $1,100,000

Manhattan Median Rental Price $4,661

Brooklyn Median Sales Price $780,000

Brooklyn Median Rental Price $3,333

NW Queens Median Sales Price $739,000

NW Queens Median Rental Price $3,163

*Data sourced from 2018 Douglas Elliman Real Estate Report

**According to 2011 Census, People in Manhattan 40% of current New Yorkers moved in the past 5-years and 72% of the New Yorkers who moved in the past-5 years.  To err on the safe side, we will estimate 6 years instead.