From: myfirstmillionpod
Exploring the real estate market in Brooklyn reveals the significant financial commitments required to own and maintain property in prime locations.
Personal Exploration of Brooklyn Real Estate
During a 10-mile walk through various fancy neighborhoods in Brooklyn, one podcaster used Zillow to gauge the cost of living there [00:04:32]. He found that desired houses were often priced around $8 million [00:04:56]. This led to an analysis of the astronomical expenses associated with living the desired lifestyle in such an area [00:05:23].
Hypothetical Living Expenses
A specific example of a preferred home is a 3,000 sq ft brownstone in Cobble Hill priced at $5 million [00:06:17]. The financial breakdown for this hypothetical purchase includes:
- Down Payment: Approximately $1.1 million [00:06:31].
- Monthly Mortgage & Interest: Around $20,000 [00:06:35].
- Monthly Maintenance: An additional 3,000 [00:06:43].
- Furnishing Costs: Between 150,000, depending on the furniture brand (e.g., Restoration Hardware items can cost 10,000 each) [00:06:48]. Each room can cost 25,000 to furnish [00:07:14].
- Nanny: 50,000 per year [00:07:35].
- Food: Approximately $30,000 per year [00:07:38].
The estimated total annual cost to live this lifestyle in Brooklyn is 700,000 [00:07:43]. Considering that half of income over 1.2 million annually just to break even on these expenses [00:08:00]. This figure is supported by friends living in the area, who report spending 650,000 annually [00:08:19].
Even renting is expensive, with top-floor apartments in brownstones costing $12,000 a month [00:14:47].
How People Afford These Costs
The sheer number of expensive homes and apartments in prime locations like Brooklyn and Manhattan raises questions about how so many people can afford them [00:08:52].
Historical Ownership & Inheritance
Many homeowners acquired their properties before prices soared to $5 million, possibly when they were worth less than half or even 30-35% of their current value 10-15 years ago [00:09:01]. This significantly reduces their monthly payments and property taxes [00:09:27].
Another major factor is inheritance or substantial financial help from family [00:09:37]. Research into property records of $5 million brownstones in NYC found that many owners were teachers, artists, or professors who don’t typically earn enough to buy such homes [00:10:30]. The conclusion is that they likely received significant help, possibly even the house free and clear, covering just the living expenses [00:12:44].
High Income and Asset Sales
To afford these costs independently, individuals need to earn a substantial amount of money [00:11:00]. Saving 25,000 a month in living expenses in New York would take around 15 years if making $1.5 million annually [00:11:36].
Income at the million-dollar-plus level typically comes from specific professions:
- Traditional High-Paying Jobs: Finance, law, medicine (self-employed), or consulting [00:13:15].
- Entrepreneurship: Owning a small or large business, like a contracting firm. Entrepreneurial income is often lumpy, with periods of “nothing, nothing, nothing, a lot, a lot, a lot, huge, then back to nothing” [00:14:10].
- Selling a business or other assets often provides the large lump sums needed to afford these properties outright [00:13:04].
The Mystery of Wealth
For many, the reality of this level of wealth and spending is a complete mystery [00:15:52]. The numbers—such as spending more than a person’s life savings in a year—are foreign [00:16:55]. This lack of understanding can lead to either bitterness or inspiration [00:17:18].
[00:18:00] “I’m taking this foggy map that I have this cloudy map where I couldn’t really see and I’m just pushing away the fog I’m getting Clarity on wow there’s a thousand ways to win and wow winning it can be a lot bigger than I even imagined.”
Observing how others achieve significant wealth, often through unique or unexpected means (like a mushroom farm or a treadmill tread manufacturer), can provide a “foggy map” that slowly gains clarity [00:18:19]. This aligns with discussions on real estate investments in prime locations and the benefits of renting vs owning property depending on one’s financial situation. The realization that there is “so much money out there, so much opportunity” can be enlightening [00:14:59].