Parent-Financed Apartments: Is it Wrong?

First apartment, Park Slope taken by dividedby.

BrooklynPotter writes on the PS message board: “is it really that wrong for a parent to buy their child an apartment?” A good question indeed. Is it okay for parents to use their financial power to give their children an advantage in the competitive NY housing market, especially in the coops and condos market where there’s often a long wait for qualified applicants looking to buy? One building adjacent to NYU has made it harder for students to buy, no matter who’s writing the mortgage check, emphasizing that it takes more than a chunk of change to be a co-op resident. Some brokers have followed suit since it can be hard to find a building that allows third party buyers. Concern have been raised on how responsible a grown child who needs (or wants) a parent to pay for their apartment would behave as a tenant–especially if the unit is bought primarily for long-term financial investment. Despite setbacks, the trend is on the rise.

linusvanpelt makes a good point on real estate investment, stating, “[It's] not as exceptional as people think. Yes if you bought NYC property in 1995 and sold it in 2005. Not if you bought it in 1988 and sold it in 1995. Over the long run, historically, it’s not bad and beats renting, but it’s not as good on average as, say, the stock market.”

For those with $300,000+ to invest, Cisco is trading at nineteen times their expected 2007 numbers, showing great momentum and huge potential revenue growth. Could you say the same thing about your kid?