New to this: AirBnB in Providence, RI?

Question

Hi All -

My husband and I are looking to buy our first multi family property on the east side of Providence, RI. The home we're interested in is a duplex with 6 bedrooms and 3 bathrooms. We plan to live in the upstairs unit which has 4 bedrooms and 2 bathrooms and rent out the bottom unit as it's more updated and will need fewer renovations (if any, really - it's actually quite nice)... Based on what other places are rented for in this area, the rental income will likely cover more than half of our estimated monthly fee (mortgage, property taxes, etc.)

I'm wondering if anyone who owns a property in this area has dabbled in AirBnB and what their experience has been like? Having the extra rooms and bathroom seems like a waste since it's just the two of us right now so I was hoping to maybe make some money off of them if at all possible. I'd definitely add a refrigerator and some appliances to that floor: toaster and microwave to make it more accommodating. My biggest worry is buying all the furniture and items we'd need to make the space a BnB but then it totally failing.

I don't want to spend all that money if I'm not going to make it back. If that's the case, it would make more sense to furnish those rooms over time like when we're ready to have kids down the road. Has anyone done AirBnB in Providence and seen it be profitable? I'd have to do some more research as far as what the going rates are in the area, but I've had friends in other cities see a really high ROI from AirBnB. Just wondering if it's worth it?

PS I plan on doing all the cleaning and management on my own so I at least wouldn't be paying someone for that.

Any advice is much appreciated!

Thank you,

Kaitlyn

Anthony Thompson · Answer

@Kaitlyn Curtis my understanding is that there is a specific tax for short-term rentals anywhere in Rhode Island, not just Providence specifically, that has been in place since 2015.

I have been told, though I have not confirmed it, that AirBnB collects and pays this tax for you. I would double check with your accountant on that though as you don't want a nasty surprise down the road (and you know what they say about assumptions).

As far as Providence & the East Side, I attended a neighborhood meeting a few weeks ago with some people from the neighborhood and some folks from the Providence Building Department.

It does sound like they are leaning in favor of some additional regulations for AirBnBs in Providence, which may involve needing to get a special permit. So if that's a concern for you I'd inquire about it now. But nothing has been proposed or passed yet to the best of my knowledge.

Joseph Kotey · Answer

@Kaitlyn Curtis Yes I believe they pay the taxes for you as it will show as a fee when you try to book a room or someone books yours. I'm in some political spaces and they are trying to pass similar regulations that Boston and other cities have. Primarily the owner occupied requirement. Hopefully they don't restrict the number of days  you can rent it as NYC has which basically put an end to AIRBNB there. The Providence city council should be making decisions soon on it. The mayor stated that he will support more restrictions as well

David Goldstein · Answer

Guess I better have other plans. Thanks.

Anthony Thompson · Answer

@David Goldstein I don't know of anything definitive, but it seems Providence is moving in the direction of other cities with heading toward restricting AirBnB to mainly owner-occupied properties and requiring registration/permits for AirBnBs. Boston has apparently had a registry for AirBnB/short-term rental properties in effect since Jan 1st, though compliance is apparently still an ongoing effort.

David Goldstein · Answer

Hey there- I was wondering how this turned out for you as I’m considering doing something similar.  Any updates on Airbnb regulations or limitations in Providence?

Kaitlyn Curtis · Answer

Thanks, Anthony. I will definitely check into whether or not AirBnB handles the taxes - would hope so as that would be the ideal scenario.

I will inquire about the possibility of needing a special permit as I’m not sure if it would cause issues in the neighborhood. It looks like there are a few airbnb’s in the Hope area where I’d be located, but none on this specific street.

Thanks so much for the advice!

Kaitlyn Curtis · Answer

Thanks, Anthony. Do you know if there are specific taxes in place for short term rentals in Providence? I read that AirBnB will send a 1099 at the end of the year if your rental exceeds $20k in income, but I'm not sure if RI has any of it's own laws in place.

It looks like there are quite a few AirBnB's on the east side so I'm assuming there are no laws against operating a short term rental here, but then again, I really don't want to assume. Is this something I should be asking the planning department about? I just worry about parking if we have guests staying in our home on a semi regular basis. The home has a two car garage and space for tandem parking, but I would like to offer two of those spots to the long term tenants.

Thanks!

Anthony Thompson · Answer

Kaitlyn, I haven't done it myself but I do know a few people in Providence who have done it. I would do exactly what you're planning to do, living on the 2nd floor and AirBnB-ing the 1st floor. It's good that you know & expect it will be a little demanding on your time for cleaning and management at first, as long as you expect that going into it, I think you'll do fine.

New to this: AirBnB in Providence, RI?

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