Buying First Property In Rhode Island

[Brandon Walason]

Hello Everyone,

I took a hiatus from studying REI and from Biggerpockets, but I'm glad to say I am back and ready to go! My wife and I are currently going through the pre-approval process to buy our first property. We want to make our first purchase here in Rhode Island with REI in mind and make it serve as our first investment as well. Our goal is to house hack, but the multi-family market seems to be terrible right now. What would fellow RI investors suggest? Try to get into a multi and house hack, or buy a single with the intention on moving and renting it out? What has the market in RI been like for you, especially since the COVID outbreak? I want to enter property ownership in a way that helps set us up to start our REI business. Thank you!

[Anthony Thompson]

@Brandon Walason welcome back to REI and Bigger Pockets!

If you can afford a multi-family and are comfortable with it, I think that would be a much better start to landlording than just owning a single family.

Owning a multi will force you to deal with tenant and maintenance issues you just wouldn't be exposed to living in a single family property by yourself.

I can guarantee you it will be less pleasant and more inconvenient than having a place to yourself, but you will also learn a lot more and move further down the real estate investing road, by owning a multi instead of a single.

The RI market during COVID-19 hasn't been too affected, surprisingly enough. Demand is down of course, but so is supply (due to many sellers taking things off the market until this passes), so prices have generally seemed to stay up. Closings are seeming to take a little longer but people have been adapting (e.g., inspections and appraisals are a little more difficult).

Whether that's still going to be the case 6-9-12 months from now, is anybody's guess and depends on a whole lot of factors that are very hard to predict (e.g., will there be more economic stimulus from the government? a longer eviction moratorium? a longer foreclosure moratorium? the effects of record unemployment? etc.)

I can only say, in the face of such uncertainty, to make the best decision you can for yourself and your family, with the information currently available. For example, you might want to make sure you have reserves to make up to 3 months of mortgage payments if the state decides to suspect evictions for a few months.

And of course you'll generally want to run the numbers to make sure an investment would be cash flow positive. Even if you're going to live in one of the units, I'd recommend analyzing the property as if it was rented out at roughly market rates, because someday you may not live there and then you'd really find out if it works as an investment. So, better to do that kind of analysis up front if you can.

There are a lot of resources here on BP for analyzing buy and hold investments but you can also post questions in the forum of course :)