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We’re priced out, what trade-offs can we make?

If you’re like most people, it’s extremely unlikely that money is going to come falling out of the sky. I have developed a theory called “The Four Cs of Real Estate” that basically indicates that if Cost is too much for you, you have three tradeoffs:

* Condition. You can buy or rent an apartment that is less beautiful than you otherwise would have hoped. I am reminded about this because someone asked me about having a rent-stabilized apartment in Manhattan, which I did from 1990 to 1996, and my bathroom ceiling fell in. More than once.

Ideally, your condition tradeoffs are things you don’t find terribly serious (dumpy 70s bathroom) rather than things that make you truly crazy (complete lack of light).

Capacity. You can get an apartment or a house that is smaller than you’d ideally like. You can create more rooms by remodeling the attic (though that increases your heating bills), converting the dining room, refinishing the basement, or discovering the wonders of a Murphy bed.

Of course this will raise all sorts of clutter and storage issues (we have four storage units in three zip codes). Don’t let those apartment therapy people make you feel bad, they have a summer place in the Hamptons.

Convenience. I came up with this because “cneighborhood” is too hard to say — but living on the fringes of the neighborhood you want, or going for an up-and-coming school district, will save you money.

A lot of time and energy go into predicting whether a neighborhood will gentrify. One of my favorite indicators, as I mentioned in the April issue of Glamour: new coffeehouses and boutiques can be good signs of an upswing.

For more about the Four C’s, or to buy Diary of a Real Estate Rookie, click here.

Posted in For Buyers and For renters 12 years, 6 months ago at 11:30 am.

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