Among the cases I reviewed, there was one where the monthly rent was calculated as pure profit after deducting only property taxes. Insurance, vacancy losses, and maintenance costs were not included, so the actual net operating income was far from the reported figure. Recently, this kind of misunderstanding has been particularly common in the Bronx.

According to Redfin data, as of May 2026, the median sale price in the Bronx is $347,000, which is a 26% increase from a year ago. Rental prices vary significantly depending on the type of listing, with the median rent for a one-bedroom apartment reported at $2,059 according to Leaseswap. Using this figure to calculate the total yield gives an annual rental income of $24,708, resulting in a yield of 7.1% when divided by $347,000. The Bronx is noted for having a relatively high rent-to-price ratio among the five boroughs of New York City.

However, one should not confuse the total yield of 7.1% with net profit. The property tax rate for Class 1 properties, which includes one to three-family homes, is 19.843% of the assessed value for the 2026 fiscal year, but only 6% of the market value is considered for assessment, leading to an effective tax rate of about 1.2%. For a property priced at $347,000, the property tax can be estimated at around $4,100 per year. If we apply the 50% rule for operating expenses, including insurance, maintenance, and vacancy losses, the net operating income would be around $12,400, resulting in a cap rate of approximately 3.6%.

Just looking at the difference between the total yield of 7.1% and the cap rate of 3.6% shows how much net profit decreases after expenses are deducted. If there is a mortgage involved, one must also consider the cash-on-cash return to see the actual perceived profit, which is calculated by dividing the pre-tax cash flow, excluding mortgage principal and interest, by the actual cash invested, making it behave differently than the cap rate.

Even within the Bronx, areas like Riverdale, which have high school district ratings, show different trends in rental demand and sale prices compared to other areas. Korean families looking to evaluate school districts should refer to ratings from GreatSchools or Niche, but since school district boundaries change frequently, it is advisable to verify the assigned school for the specific address before purchasing.

New York City's property tax assessment methods are complex and adjusted annually, so it is best to verify the actual tax bill with the New York City Department of Finance.

When applying the 1% rule to the cases I reviewed, 1% of $347,000 is $3,470, but the one-bedroom rent of $2,059 falls short of this benchmark. However, since the Bronx has seen a 26% increase in sale prices over the past year, it appears that the pace of price increases has outstripped that of rent, making it more challenging to meet the 1% rule.

Recent market observations indicate that the increase in sale prices must be factored in to accurately assess investment performance. The cap rate reflects only the net operating income at the time of purchase, while total income includes asset appreciation due to mortgage principal repayment and capital gains. However, in areas where sale prices have risen sharply in a short period, one must also consider the potential for correction, so it cannot be assumed that prices will continue to rise unconditionally.

In some cases I reviewed, the actual maintenance costs varied significantly based on the property's management condition. Since the Bronx has many older buildings, it is helpful to inspect plumbing and heating systems in advance to accurately calculate operating costs.

In areas where sale prices have risen sharply in a short time, it is beneficial to look at the trends in rent and sale prices over the past few years rather than relying solely on the cap rate at the time of purchase.

When comparing Riverdale to other areas, those with high school ratings tend to maintain lower vacancy rates, even if the cap rate is somewhat lower. If stable rental demand is prioritized, such areas can be a viable alternative.

This article does not constitute investment or legal advice, and it is recommended to consult with an accountant or real estate professional before entering into any contracts.