Living In New York City On $1,200,000 A Year (My Plan)

Yeah, I just went on a really long walk and I went and walked around all these fancy neighborhoods in Brooklyn and I started, you know, I do what, what people do. I pull up Zillow as I'm walking and I'm like, you know, I wonder what it's like to live here. And the houses that I like, what I usually will do is I see a house and I go, oh, I would like to live there. And I pull it up and it's $8 million. And $8 million, that's one number. But then you actually look at how much money you need to come up on at closing, and then you look at how much money you need to spend each and every month on the mortgage and on your interest and on maintenance and things like that. And I started thinking, I think I'm going to live over here in Brooklyn, and I wanted to like map out how much money I would expect I would spend to live the lifestyle I want to spend. And it is astronomical. And I want us to talk about some, some of those expenses. You want to talk about something? How much?

Walk me through it.

Okay. So listen to this. First of all, I'm going to talk about the life that I'm going to live when I move to Brooklyn and all the listeners, there's going to be a bunch of them that's going to say, oh, Sam, no one needs an $8 million house. Yeah, I get it. You know, like all I need is like a bucket of water and like some apples and like a pair of Crocs and I'm happy. But this is the life that I choose to live. So like, I get it, no one needs this, but I'm picking this. So get off my back on this hypothetical case that might be a reality in 2 years. So I just gotta get that outta the way. But in terms of hypotheticals, it's not entirely hypothetical because I went and talked to a couple friends who do this. But listen to this shit. So I found a home that I wanted to buy and I actually linked to it on the, the MBD Master doc. Okay. So it's a StreetEasy, it's on StreetEasy. It's a nice house. Okay, it's only 3,000 square feet though, but it's a brownstone in my favorite neighborhood of Cobble Hill. It's $5 million. I actually think the range of things I want are between $5 and $8, but this one I just found, it was available. It's $5 million, which basically means I got to come up with $1.1 million as my down payment, and then I'm going to spend around $20,000 a month in mortgage and interest and things like that, not including maintenance, which is going to be more expensive. It's going to be probably another $2,000 or $3,000 a month. Then I think it would probably cost on the low end $50,000, on the middle only end of like $150,000 to furnish it the way I'd like to furnish it. Right. Have you ever furnished a house? Yeah.

Yeah. It depends if you go like, like my wife, she's like, oh yeah. I'm like, what do you like? She's like Restoration Hardware. I'm like, ah, geez. Like, you know, every item in the store is like, you know, $5,000 to $10,000. And so, you know, you just add that up per room, you're putting in like $20,000 to $25,000 worth of stuff per, per room, uh, in the house, which is pretty nuts.

Yeah, totally. So like $150,000 is— that's just kind of what it would cost if you want to go that route. If you want to go West Elm, West Elm, then yeah, you can maybe get it done for $175,000, but it's quite expensive. Then if I'm going to get this fat house, I'm getting it because I have 2 kids or a couple kids, so I need my $40,000, $50,000 a year nanny. I imagine I would spend around $30,000 a year in food. And so basically it comes up to where I think I'm spending $600,000 to $700,000 a year to live the life I want to live in Brooklyn. But here's the kicker. If you're making over $1 million a year in Brooklyn, or, or for sure in Manhattan, it's even more than this. Half your money goes away to taxes. So basically, if I'm spending around $600,000 a year, I need to make $1.2 million just to cover my, my monthly break even, just to break even. And if I, if it's, and I talked to two friends, one friend who lives in Brooklyn, he told me that he spends around $500,000 a year. And then another friend that also lives nearby and he told me he spends $800,000 a year and he spent me, he sent me his list, but he goes, I have an additional house in North Rhode Island. But if you take that vacation home, we are spending around $650,000 a year. So to live like this, it's crazy. And when you go and walk on these streets, you know, there's a house every block. If you go in Manhattan, there's this fancy apartment every block. How on earth do you think people— so many people afford this? It's crazy. Like when you actually think about the logistics, right?

Well, Well, a lot of the people who own these homes, they own them before they were worth $5 million. So go look at the, you know, the Zillow history of this thing 10 years ago. What was this home worth? You know, I'm guessing it's less than, you know, less than half this, maybe 35% of this price 10 years ago, 30%. And so you're— what you're talking about here is like, you know, a home that, what, that they bought in, their basis is $1 million, $1.5 million, something like that instead of $5. So now the monthly payment is less and now the property taxes are less. And so, you know, you cut out your biggest expense in this case. Um, you, you trim that down. So I think that's, that's the answer for how a lot of people have this is inheritance or, um, or buying in, you know, 20 years ago, 15 years ago when these were worth a fraction of what they're worth today. And so that's why they can afford to kind of live above their weight.

Well, so I had 4 takeaways when I started thinking about this. The first was that there's a story behind everything. So all these people, like a simpleton like me, is like, oh, you just got to earn this much money. And they did it by starting a business. It's like, no, that's not the reality. And Zach Crockett, who works at The Hustle, he basically— we were talking about this and he was going to write a story on this. And he said that he researched a bunch of these homes. And what he did was he, for all the $5 million brownstones, for a bunch of $5 million brownstones in NYC, he used a tool called Melissa and he looked up the property records. Then he Googled the names of each person who, quote, owned it. And then he, like, looked at their family records, which he just did this all through just sleuthing and, like, looking through stuff. And he found out that a bunch of them, like 7 out of 10 of them, were like teachers or artists or, or, or a professor, things that you basically, like, you can earn a bunch of money, but you're not earning enough money to buy this home. And what he surmised and came to the conclusion was like, they just get a lot of help. And so, like, it's hard to own a $5 million brownstone when you're a reporter at the New York Post or something like, you know, $120,000 a year job. So I think there's a story behind everything. The second thing is I think you just have to earn a lot of money, dude. Listen to this. If you earn, uh, uh, one—

hang on, hang on. That was a killer insight.

What?

The— you gotta earn a lot of money?

Yeah.

Where'd you come up with that?

You gotta earn a lot of money. But listen, let's, let's put the math on this. How many How many years do you think you need to, uh, how long would it take you to save $10 million if you lived in New York?

To save $10 million?

Yeah. To get a portfolio of $10 million.

Uh, I have no idea. I don't know. Let's say 20 years.

Okay. So if you make $1.5 million and you're spending around $25,000 a month in living expenses, it's gonna take you around 15 years to be able to save $10 million, which is pretty crazy. Now you've gotta figure out how to earn at least $1.5 million for 10 years or for 13 years, which is like, it, that in itself is impossible or not impossible. Very, very, very challenging. And so the, hold on.

Your fir— your first thing was like, these people are teachers and artists and you said they gotta have some help. You're talking about like family help. You're not talking about like, there's nothing else, right? You're saying you have rich family.

Yeah.

Okay.

All right.

Sorry.

I think, I think that, I think just having a real, like, I underestimated that. When I think about this, I'm like, whose parents would give them $2 million for a down payment on a home? And I think the answer to that is actually a lot. I can't, I can't imagine that, but the, like, that, that was hard for me to, cause you know, I don't fucking know that my mom and dad, like the best gift they ever gave me was when I turned 21, they gave me $1,000 and that was like the last birthday present I ever got.

I don't even think it's a down payment. Cause okay, you're a teacher. Great. Your down payment is covered. Where are you coming up with $25K a month of your monthly, monthly payment just for your home. Like, I think they get an allowance.

I think they're—

this is a, this is an all cash. Here's your house free and clear. You get to live here and you cover your life expenses. If you're paying for a latte, that's you. But, uh, I'll buy you this brownstone. I think that's gotta be what it is.

I think that's it. That, that has to be what it is. Or the second thing is you got to earn a lot. The third thing is I think you gotta— I want— how many of them do you think sell a business? I think earning a lot, like a big nut of $10, $20 million. It seems like impossible to do without selling an asset.

You got to be in finance, law, um, maybe medicine or consulting to be pulling in a million dollars a year of income. I don't think there are many other jobs that do that. We're not talking about athletes, entertainers, because that's just a small— such a small portion of the population. But of jobs that a normal person can get, that's going to make you $1 million to $2 million a year, I'm pretty sure you got to be either a banker or banker or consultant if you're employed, or you got to be self-employed as a doctor or a lawyer or something like that to be able to pull that in. So that's like, am I missing one?

That's like, those are non— those are, yeah, those are non-entrepreneurial jobs. Like the other way, and then you could start your business.

Yeah, yeah, yeah, exactly. You own a small business, you own a big business, you, um, you know, you own a contracting firm, you do construction around the city, whatever it is. Those are the other way where you can do this. And that's usually, you know, you're not earning some steady $1.5 million per year. You're earning like nothing, nothing, nothing, a lot, a lot, a lot, huge, and then back to nothing, you know, like that sort of thing. It's this, it's this lumpy curve that an entrepreneur has where you're basically broke till you're very un-broke. Um, so yeah, but, uh, yeah, what else you got to say about this?

And my third and final takeaway here is basically There's so much out there. There is so much money out there. There is so much opportunity. You walk by all these places and again, Ben's laughing at me. This is obvious, but when you see it in real life, I walk down the street and I'm like, oh, that apartment that costs $12,000 a month to rent in that top floor of that brownstone. And there's 3 of those in there. So like there's 3 people each paying $12,000 and there's just like home, home, home, home, home, home, home. Astronomical. There's just so much money out there to be made. It's just so much opportunity. So anyway, I did this 3-hour walk yesterday and I just, I felt enlightened and I just wanted to come to the table and fill you in on that.