New York duplex at $845,000 and $6,224/month — is the yield real?

[atlas.slow]

I’m assessing a New York 2-bed duplex priced at $845,000, with expected rent of $6,224 per month. That produces a headline gross yield near 8.8%, but I’m more interested in durable net cash flow.

My conservative model counts only eleven months of rent and deducts management, routine maintenance, plus a reserve for one larger repair. The building appears sound, although vacancy or tenant turnover could change the result materially.

Which local expense am I most likely underestimating—property tax, insurance, repairs, or something else? I also suspect my repair reserve may be too light. What net yield would compensate you for the risk?

 

[uma.park]

I’d focus first on the actual property-tax bill and a current insurance quote, not estimates based on the purchase price. At eleven months, collected rent is $68,464 before any expenses, so the apparent yield has already fallen to roughly 8.1% before management, maintenance and financing.

Personally, I’d want the unlevered net yield comfortably above 5% here because a single turnover or major repair could erase a large part of one year’s return.

 

[kai_cole]

Does “2-bed duplex” mean one two-level apartment, or a two-unit building with two bedrooms in total? That distinction changes the vacancy risk substantially. With one tenant paying all $6,224, turnover means zero rent until it is re-let. Two separate units would spread that risk but could create more maintenance and management work.

Also, who pays utilities and any shared-building costs? Those can make the quoted rent less meaningful.

 

[SimpleWall]

I’m not convinced eleven months of rent is automatically conservative enough. It covers one month without income, but turnover can also involve cleaning, repairs and management or leasing costs at the same time.

On the other hand, requiring a fixed 5% net yield without considering financing and the property’s condition is too blunt. I’d stress-test the actual annual cash flow under both a vacancy event and a large repair rather than rely on one target percentage.

 

[uma.park]

Fatima’s question is key. If this is a single 2-bed duplex apartment, I’d model the rent as concentrated income and use a separate turnover reserve rather than treating the missing twelfth month as covering everything. If it is a two-unit property, the rent should be broken out by unit and checked individually.

And Noor is right that financing matters: run the same model unlevered first, then add the proposed debt terms so a marginal property return isn’t hidden by assumptions about leverage.

 

[xavi_flint]

Before deciding, ask for the current property-tax amount, insurance cost, rent breakdown, utility responsibility, recent maintenance history and details of any shared charges. Then run three cases: full expected rent, eleven months collected, and a turnover year with both lost rent and make-ready costs.

I’d also increase the repair reserve until the deal still produces acceptable cash flow after one meaningful expense. If that leaves only a thin net return, the 8.8% headline is doing more work than the property.