I'm in the Massachusetts market, south of Boston. I have been looking at Rhode Island for more favorable prices. My wife and I found a 3 family in Providence (east side a couple blocks from Brown University) we really like. Asking price is 349k and we could get it for 335k (we are in the middle of negotiation). It has a new roof put on a year ago with a lifetime warranty. All capital expenditures are good for a long time. Each unit was updated along with windows in 2013.

The units are all rented but rent is below market - 950, 950, 900 (2BR, 2BR, 1BR). I want to add access to the basement (it was closed off due to the stairs collapsing a number of years ago), to give tenants storage access and also to install washer and dryer units (these updates don't need to be done immediately, but I'm factoring them into the analysis). Considering these additions along with some minor cosmetic updates and where the market is at, I feel like rents could be 1200, 1200, 1000 (sellers agent says 1200-1400 for the 2brs but I think that is high given the smaller sq footage). Leases are up in March, April, May. If the current tenants stay I may only go up by a smaller amount - 1100, 1100, 950. I've been told they are excellent tenants.

The link below is the BP calculator analysis with current rents. As you can see, metrics like cash on cash ROI are not favorable. We really like the area, the property, and the fact that it attracts quality tenants and I know you can't put a price on that. Should I move forward with this under the assumption I should be getting better rents and knowing there aren't any big expenditures around the corner (pending an inspection)? I have analyzed a number of properties over the years and have been less excited about properties with better numbers that come along with other issues.

I know appreciation is lower and taxes are high in Providence. Also I'm funding a portion of this from a HELOC and that int payment will eat into some cashflow. However, if the rents can come up to where they should, cash flow would be an additional $600 cushioning that blow.

Thanks!

https://www.biggerpockets.com/calculators/shared/257326/9f4dfe3e-ad5d-4e9f-9607-37c274f7203e

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