Several years ago, my wife and I decided that we were done travelling--what we got out of it just wasn't worth the stress or the cost. Instead, we devised a plan to buy an apartment in Manhattan and use the city as our vacation destination. This website describes how we did it, our mistakes, and how you can do it better.

Our plan for for staycationing--vacationing close to home--is gaining popularity as travel issues often turn flying into a nightmare and costs skyrocket. Millenials, for example, are now taking three staycations a year on average. It makes sense, for most of us there's usually plenty worth visiting close to home, especially if your home, like ours, is near Manhattan.

Of course, a staycation doesn't require that you buy an apartment in your staycation destination. However, trying to be realistic, we imagined that "commuting" back and forth from Staten Island to Manhattan eventually get old, and that if we didn't immerse ourselves in city life, our resolve to become staycationers would erode over time.

On the other hand, we were not so obsessed with the idea that we were ready to become full-time Manhattan residents. We figured that we would use our new staycation home 40-50% of the time.

There's a word for this--not it's not crazy--it's pied-a-terre, a French phrase that literally means "foot on the ground." It refers to a second home in a city which is used to take advantage of city life on a temporary or part-time basis. A pied-a-terre doesn't replace your primary residence, it is simply a getaway like a beachhouse without the beach. For us, a pied-a-terre would allow us to keep all our existing doctors, neighbors, friends, restaurants, and activities while taking full advantage of all Manhattan had to offer...a brilliant compromise.

Which brings me to my first bit of advice:

A corollary bit of wisdom is to make sure your pied-a-terre is reasonably comfortable, a place you will enjoy visiting...but more on this later.

Living anywhere has it's pros and cons. To buy a pied-a-terre in a staycation destination, however, it's critical to understand what these are, to think and talk about them with your partner, and to write them down for future reference. This is especially important in a place with extremes like Manhattan, where it's easy to get seduced by the pros and ignore the cons.

Here's are the lists we made and discussed ad nauseum.

Manhattan Pros (a partial list)

Manhattan Cons (a partial list)

I hope you're getting the idea--buying an apartment, even a pied-a-terre, in manhattan is not for the feint of heart. You can greatly reduce the stress, however, with preparation which mostly involves understanding your options and the decisions you will need to make. Most of us who have been around for a while understand these when it comes to real estate; what we don't typically appreciate is in Manhattan the conditions, rules, and processes you will face are clearly designed by people on mind-bending drugs.

Here's the list that we defined:

It's almost too obvous to say, but with so much at stake, remember to confirm what's in your mind with on-the-ground trials.

Boston...?

In the beginning, we had the idea that our staycation pied-a-terre could be in Boston. It's a great city with lots of history, and it's close. As a bonus, our daughter's family lives nearby. So we rented an apartment on Beacon Hill, across from Boston Common to try it aout for six weeks. We lasted for three. Yes, Boston is a great city--beautiful, walkable, cultured--but it's too small for a lengthy staycation. Manhattan is a massive, high-energy metropolis with literally 10x more people and space and far more attractions, think Broadway, Lincoln Center, Greenwich Village.... So we dumped that idea.

Manhattan...?

Armed with insights from our Boston staycation, we rented a hotel room for a week in Manhattam across from Lincoln Center. We quickly discovered that unlike the rest of America, Manhattan is not part of the car culture; people walk everywhere, which means you need everything within walking distance. (Imagine taking a bus or subway to buy groceries or drugs or to have your hair done or to see a movie or to....). Our second lesson about Manhattan was that the neighborhood had its own personality. Our hotel room wa in a cultural center (Lincoln Center) which meant the neighborhood was for tourists and people rich enough not to care that they were paying tourist prices for everything.

Rental...?

Getting closer, we decided that a rental would allow is to try out a new neighborhood without making a huge financial or emotional commitment. This was true (more on renting later), but it was also true that most rentals were fundamentally different than owner-occupied apartments. First, the people who rented high-end apartments in Manhattan are generally young and transient. Second, the rentals were generally locasted in areas that attracted, well, renters--people with special, short-term interests--like students around Columbia, medicos around Belleuve Hospital, and diplomats and staff around the U.N. Third, don't count on getting permission to change a rental to make yourself more comfortable. Adding a wall and a door, for example, to make a small second bedroom would probably not be allowed.

Neighborhoods...?

Being foreigners to Manhattan, we had lots of preconceived ideas about what different neighborhoods were like. So we spent time in them attending events, eating in restaurants, going to movies, or just walking around. This changed our minds in very profound ways. For example, we hated Hell's kitchen...far too crowded, and Times Square...too touristy and tacky; we dislike Chelsea except for the untouchable High Line area...the people were too far from our values; we thought downtown was boring...home for Wall Street execs; etcetra.

You get the idea. Being on the ground and experiencing things first-hand changed our strongly-held opinions in fundamental ways.

Most people believe that renting, even if the apartment you want requires a two-year lease, is much less expensive than buying.

I disagree. According to my analysis (shown below), it costs the same to rent a $1,000,000 apartment as it costs to buy it if you must stay there for two years. Worse, if you decide this apartment is the pied-a-terre for you, it will cost you $101,000 MORE to rent than to buy for five years.

Sure, I've made several assumptions like
...the buyer is a New York city resident and that his/her combined marginal fed/state/city income tax rate is the maximum 51.8%, which is not unreasonable given that the buyer can afford to buy a million dollar pied-a-terre;
...the appreciation on the apartment is 2.5% a year (the average annual appreciation for Manhattan condos is about 9% over the last 25 years);
...the building's monthly maintenance is $1,200 and the apartments monthly real estate tax is $1,200 which is about the average for a high-end building with "good" facilities and personal services;
...the current real estate tax deduction max. of $40,000 is maintained as is a 20% rate on capital gains and, of course, the mortgage interest deductions on a second home stays.
Which I believe are all reasonable.

This suggests to me that buying is a better option than renting if you are committed to the staycation and pied-a-terre plan. According...

This is what we did so we could make changes and improvements that fit our needs. This is a significant advantage as your long-term use of the apartment depends on how much you enjoy staying there. Whatever you "save" in renting is irrelevant if an unsatisfactory condition of the apartment undermines your plan.

If I believed that renting was the "safer" route than I would reevaluate my commitment to the plan as the absolute safest and least costly option is to do nothing.