Rhode Island Multifamilies

[Erica Larence-Penna]

I am new to investing, but I am a real estate attorney in RI, MA, and CT.  Currently living in RI.  I was thinking about purchasing my first property in Florida (long distance; likely a single family), but I do not plan to move there for at least a few years, if at all.  My girlfriend, who I plan to partner with in our investments, is going to be renting up here and I thought that it might be a better idea to buy a multifamily in Providence with her living there for at least a year.  I am not sure if anyone has experience with investing in Florida and RI who might be able to provide some guidance.

[Anthony Thompson]

@Erica Larence-Penna I don't have experience investing in FL so I can only speak to RI and what I've "heard" about FL.

My impression is that just about every other part of the country, including Florida, has more going on demographically and economically, than RI and the Northeast generally.

So, if all other factors were equal and the #s worked in general for any given property, I think you'd have much more of a chance at appreciation due to support from more population & jobs, than Rhode Island. 

RI's population is flat, in fact it's in danger of losing a Congressional Representative depending on how the next Census works out. And another recent post here on BP used Providence as an example of a place you would not want to invest for that reason.

All that said, it sounds like you're only going to be in the state for another 2-3 years anyway, and I think you'd learn a lot more with her (or you and her) living in the property, as well as getting favorable owner-occupied fixed rate financing, that on balance, since it's short term, if it were me I'd still probably lean toward buying a multi here to get started, to start learning the landlording business, than doing long-distance with a SF in Florida.

Even though appreciation in general would be better in FL, because we're only talking 2-3 years the difference isn't going to be as pronounced, and I think education- and experience-wise it will be much better to invest where you and she are going to be.

Also, I wouldn't count on any appreciation (as far as making the #s work), but if there happens to be any appreciation even here in RI, and you've lived it the property at least 2 out of the last 5 years, then any of that appreciation/gain would be tax free when you sell.

Another factor is that if you'd be buying a single family in FL, versus a multi up here in RI, generally speaking you get much more "bang for your buck" (i.e., lower per-unit cost and better returns) when you buy a multi (especially 3 or 4 unit) compared to a single. Basically there are fewer people to compete against and bid the price up, with 3 and 4 units compared to single and 2 families.

The benefits from owner-occupying a multi are substantial, enough to warrant a special term for the strategy - "house hacking" - and it has extensive coverage here on Bigger Pockets. So if you're going to be in RI anyway for the next 2-3 years, that's what I'd do if I were in your position - house hack a 3-4 family up here if possible.

And I'd also recommend using that time to start to get familiar with possible living/investing areas in FL so that when you do move there, you can hit the ground running in terms of familiarity with good/bad areas, having some local contacts, etc.