Frequently Used Terms
Some of the terms used may not be familiar to investors who are not local. Here is a quick glossary to help you out!
Assessed Value: This is the value that the City or Town uses to base the tax amount on. The City of Rochester is considered to be at 100% Assessed Value, which means, the assessed value they place on the property is considered to be the actual value of the house. The taxes are then rated at a certain amount per $1,000 of assessed value. However, you must note that the assessors do not go inside each house to inspect and while the assessed value of the property may be one amount, the actual value may be something entirely different. The best determination of value is the price a buyer is willing to pay for it. If you feel the assessed value of your property is too high, there is a grievance process in which you can protest your assessment.
Boston Style: This refers to a two-family residence with two apartments where one apartment is on the ground floor and the second apartment is on the second story of the home.
C of O: Certificate of Occupancy. The City of Rochester requires a valid Certificate of Occupancy (C of O) for a property to be occupied by tenants. More information regarding C of Os can be found on the City of Rochester website at http://www.cityofrochester.gov/article.aspx?id=8589935004.
Cap Rate: Short for capitalization rate, this number is a percentage that is used to determine the current value of a property based on estimated future operating income.
Copper to Street: this means that the original galvanized water line to the house has been replaced with copper lines. Galvanized lines sometimes crack or break with age and tree roots may infiltrate causing the lines to back up into the house. Copper lines are more resistant to this damage.
Duplex: A 2-family home.
DSS (or DHS) Tenant: A tenant who has part or all of their rent paid by the Monroe County Department of Social Services. The rent is sent directly by the agency to the landlord or property manager.
Eat-in kitchen: A kitchen where there is enough space to set up a kitchen table to eat at (not a formal dining room).
Gross Annual Income: GAI. This is the monthly rent x 12 (no expenses subtracted).
Hazard/Home Insurance: This is known as “Buildings Insurance” in the UK. The insurance policy is usually paid a year at a time and provides insurance coverage in case of fire/ property damage, and liability. It is imperative you have insurance coverage from day one of your ownership.
Net Operating Income: Also called NOI. Income remaining after deducting operating expenses but before deducting interest and income taxes.
Roof tear-off: This is a roof where all of the old layers of shingles have been torn off and brand new shingles have been installed. There is a limit to how many layers of roof can legally exist in Western NY, and as such, a tear-off roof is highly desirable.
Section 8 Tenant: Section 8 families pay a portion of their monthly income - generally, between 30% and 40% - toward monthly shelter costs. The difference between the family's portion of the monthly rent and the total rent is paid directly to the owner by Rochester Housing Authority. One nice thing about having a Section 8 tenant is that they are guaranteed to stay for one year; and if a Section 8 tenant is evicted, they will be removed from the Sec. 8 program and not be eligible to ever get back on. You can find information about being a Section 8 Landlord at http://www.rochesterhousing.org/Home/Section8/Landlords/tabid/86/Default.aspx
Separate utilities: In a multiple-family home, each apartment has individual meters for gas, electric, or water, and each tenant can be billed separately.
Storms: Term for storm windows. Storm windows are installed over existing windows in order to protect the home from the elements and improve energy efficiency.
Tub surround: This is the area of a tub or shower stall that is above the tub basin itself. Is frequently tiled, fiberglass, or other similar materials.