Livingstone Partners
PO Box 7732
New York, New York 10150

Tel: +1 716 213 6490
Fax: +1 646 707 0365
Email:
info@livingstone-partners.com

FAQs

How do I buy as a non-US investor?
How do I get my monthly rent paid?
What are the downsides or possible risks?
What about income taxes for foreign investors?
Will I get an inspection report for my property?
How will I track my monthly income and expenses?
What is my exit strategy?
What is seller financing?
Do I have to pay for any renovation costs at close?
Will I own the freehold on the property?
Should I purchase insurance?
What about maintenance and repairs?
Do I have to provide appliances and furniture for my tenants?
What about taxes?
What other day-to-day costs will I incur?
What are your management fees?
How do I find my tenants?
What is assessed value vs. market value?
Why single family houses rather than multi-family housing?
Can I buy a double to generate higher yield?

 

How do I buy as a non-US investor?

The process is relatively simple. Click here to go to our “Buying Process” page for full instructions.

 

How do I get my monthly rent paid?

As your managing agent, we will collect all rent checks for your property. On a monthly basis, we will email you a spreadsheet, which details the income and expenses on your property. On a quarterly basis (or monthly if requested), we will wire the money to your bank account. If you are based in the UK or Europe, HSBC’s US headquarters is in Buffalo, which means you can request a US based account to be opened from your UK branch. We do not charge you for wire fees.

 

What are the downsides or possible risks?

Clearly any investment carries a certain level of risk. In a rental property investment, the two major risk components that affect your cash flow are vacancy and maintenance costs. Livingstone Partners specifically offers single-family houses because there is heavy demand for these assets, which enables us to pick and choose our tenants and fill our units quickly. Furthermore, we try and rent exclusively to Section 8 tenants, which means our income is paid directly by the government and, as the Section 8 program has a four-year waiting list, there is a large pool of prospective tenants available. Section 8 also markets the property to their tenant pool that minimizes placement cost and the program has stringent regulations for its applicants helps guarantee high quality, long-term tenants.

High maintenance costs can quickly impact yields. Livingstone only sources properties that are newly or recently renovated by our locally based, licensed contractors which helps minimize any upfront rehab costs to our investors and also helps reduce day-to-day maintenance costs in the first few years. We recommend that all our investors budget 5% of gross rents (click here to see our model) to cover any maintenance projects throughout the year and build a reserve fund for unforeseen projects that may arise.

 

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What about income taxes for foreign investors?

Any income earned in the US is subject to US income taxes. There are benefits to owning investment real estate, which allow you to depreciate the property over 27.5 years to reduce your taxable income and therefore your liability. You should consult with your accountant and/or tax lawyer to discuss your specific circumstances. Livingstone Partners have appropriate contacts, which we can share with you if you decide to proceed with an investment.

 

Will I get an inspection report for my property?

Once you have identified an appropriate house to purchase, Livingstone will arrange for a fully licensed inspector (chartered surveyor in the UK) to examine the property and provide a full report. You will receive a full copy of this report (inspections typically cost $500). If the report identifies any required repairs, we will include an estimate to have these completed or advise you if the seller agrees to perform the work prior to the close of the transaction. If the house has been newly renovated, it may not be necessary to perform an inspection, as our contractors are licensed home inspectors.

 

How will I track my monthly income and expenses?

We will provide you with monthly spreadsheets, which detail rental income and expenses incurred as well as any maintenance requests from the tenant, so you can track the ongoing maintenance of your property. In the event there are repairs in excess of $500, we will contact you to discuss prior to conducting the work.

 

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What is my exit strategy?

There are two options. First you can sell your property. Good quality, single family housing stock in Buffalo is in high demand and we anticipate that the market will remain liquid. Livingstone Partners is happy to assist you in the sale process and in the past we have purchased properties from our investors or sold them onto a new client. We can also recommend local realtors if you prefer to try the open market. The second option is called seller financing (discussed below).

 

What is seller financing?

This is a creative financing option, which is unique to the US market. If a suitable, good quality tenant wishes to purchase the house he is renting, but has poor or limited credit, it is unlikely he will be approved for a bank mortgage. In these situations, a property owner, with significant equity, can sell the house to the tenant at an agreed price and provide financing directly to the buyer. The seller will receive a down-payment of around 10-20% of value thereby releasing some of his equity, and going forward will receive a monthly income at a higher than average interest rate for an agreed period of time, typically 2-5 years. At the agreed time, the loan may be “called” by the seller, at which point the buyer, with improved credit, will be able to secure bank financing and pay off the remaining seller mortgage.

 

Do I have to pay for any renovation costs at close?

No. The majority of our houses are newly or recently renovated at the time of purchase. In the event there are repairs required we will provide an estimate of the costs.

 

Will I own the freehold on the property?

Yes. Our attorney conducts a full title search prior to completion. About three months after the close, you will receive the “free and clear” title document from our attorney.

 

Should I purchase insurance?

Yes. We advise all our clients to purchase adequate insurance on their properties. Buildings insurance will protect you and cover the cost of repairs in the event of a fire or similar misfortune. You may also purchase, at minimal additional cost, rental liability coverage, to protect your income as a result of this type of event. Our Buffalo-based insurance agent will provide a competitive quote – typically the annual premium on a single-family unit will be about $500 per year.

 

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What about maintenance and repairs?

The majority of our houses are newly renovated at the time of purchase and any major rehab work required (electrical system, roof, boiler) will have been identified and completed. We do not anticipate any significant repair will be required in the first few years of ownership. However like all houses, ongoing maintenance is required to keep the property in an appropriate condition for tenants, especially for Section 8, which conducts regular checks. We advise that our property owners budget approximately 5% of the annual rental roll for repairs. Livingstone Partners offers a comprehensive management service, which can take care of all the required work at a relatively low cost.

 

Do I have to provide appliances and furniture for my tenants?

No. Tenants are responsible for providing all their own furniture and appliances, including carpets and curtains.

 

What about taxes?

In Buffalo, property owners must pay both city and county taxes, both of which are due annually. As property manager of your unit, Livingstone Partners will pay these on your behalf and deduct the amount from your gross income. Taxes are based on the assessed value of the house (see properties page for details), but typically on the properties we supply, taxes are approximately $650 per year. The city also charges for garbage removal and for sewage, which total approximately $250 per year.

 

What other day-to-day costs will I incur?

Tenants are responsible for all utilities except for water, which is provided by the landlord/owner. We include a clause in our lease that stipulates we may pass any costs for excessive water charges onto the tenant. We estimate that annual water charges are around $550.

 

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What are your management fees?

Livingstone Partners charges a fee of 10% of the gross rent roll to manage your property which includes monthly inspections, payment of all property taxes and property related bills and tenant management.

 

How do I find my tenants?

We aim to provide you with a tenanted property at close. In the unlikely event that the property is vacant at close, we will guarantee the first two months rent. If the tenant leaves, we typically charge one month’s rent as a placement fee to source a new tenant, which covers our marketing costs.

 

What is assessed value vs. market value?

In the US, property tax on real estate is assessed and levied by local government, at the municipal or county level in order to fund local services. A tax assessor determines the value of a property for the purpose of apportioning the tax levy. When assessing a residence for tax purposes, the appraiser investigates the selling prices of all other similar houses in the county, the replacement cost, and the most appropriate price that the house should sell for. Then, the appraiser assigns a value, which typically lies within this calculated range, which is the assessed value.

In contrast, the market value is the price at which an asset would trade in a competitive setting and in property transactions is based on the fair value of the property in an open market. Typically the market value is driven by appraisals and comparable sales analysis.

 

Why single family houses rather than multi-family housing?

We typically buy single family houses because they tend to be in higher rental demand, have lower maintenance costs, lower vacancy rates and less tenant turnover. We are willing to sacrifice a small amount of yield for what we feel is a safer and less time intensive investment.

 

Can I buy a double to generate higher yield?

We are happy to source any type of property you wish.

 

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