Net Yields
There are some expenses which are unique to each property and have to be considered when calculating the net yield. BPI makes an individual report for each property which shows all expenses in US Dollars and Sterling. The Net Monthly Rental Yield is clearly shown for each property. The expenses calculated include Property Taxes, Water, Hazard Insurance and Property Management, all detailed below:
Property taxes vary depending on the area. Buffalo is generally $1000 per annum; Rochester and Syracuse are more expensive. We do look to avoid areas with high taxes.
The taxes incorporate schools, fire department, police, rubbish removal, snow removal etc… The taxes are based on the value of the property, so if you purchase the property under market value, you can apply to reduce the taxes accordingly.
Water: Most landlords in the US pay the water bill for their tenants. This is normally between $35 – $45 per month for a single family house, and $45 – $65 for double. Individual arrangements can be made for tenants with pools.
Hazard Insurance is roughly the same as building insurance. We can recommend several insurance brokers who provide competitive quotes. The costs vary and are dependant on the building condition and area. Typically, the costs for a single are around £18 per month.
If you are purchasing a property with a mortgage the lending bank will want to see that insurance is in place before closing (completing) the purchase. The lending bank will sometimes request that six months of the insurance premium is paid in advance.
If you are purchasing with cash we strongly recommend that you also have insurance in place when the sale is closed. It is the buyer’s responsibility to make sure that the insurance is adequate for the purpose for which it is required.
Property Management is taken from the rent at source. Management companies in Buffalo and Rochester charge 10% of all rent received for there services. In Syracuse the charge is between 5 to 10%, this takes into consideration higher property taxes in the area.
Other expenses: No figure is shown for maintenance issues; this is due to the difficulties in calculating the need of repairs. All perspective purchasers should be aware that the maintenance of the property is thier responsibility, and from time to time unforeseen issues may arise.
No figure is shown for void periods. There are very few void periods for single family homes. These properties are in high demand. There is a slightly higher turn over of tenants in double units, but again, if the property is in good condition void periods are low.
