Newbie in Newport, RI

[Michael Shea]

Greetings everyone! I'm a new active investor having acquired my first 4-plex earlier this year in Newport, RI. Truthfully, I wasn't looking for a 4-plex, more like a vacation home I could buy and rent to break even until I'm ready to move in full time in 10-15 years. But the economics of a 4-plex, particularly if viewed as the starter to a portfolio to build over that same period had a lot of appeal. 

The configuration is four (4) 1-bed/1-bath 850 sq. ft. units, two over two, plus 4-car garage and off-street parking. Tenants pay all utilities. Pretty rare. I was fortunate that the two top floor tenants would move prior to closing. We renovated (new kitchens, appliances, refinish hardwood floors, sheetrock ceilings, fixtures, paint) and were able to increase rents by 40%. When a hard-living tenant on the first floor then agreed to leave, I was ecstatic and renovated that unit as well for the same 40% gain. The fourth unit is rented by a long term tenant who is welcome to stay indefinitely and agreed to a 10% rent increase, no renovations required. We did sub-meter the water meter to charge for water/sewer. So I'm very happy with the net and current cash-on-cash ROI as the business case was built on original rents.

Key to success so far is absolutely my sheer luck in finding a go-to contractor/handyman with quality trade contractor contacts. It's a great chemistry and collaborative fit. Without him, this could have turned out differently. 

Now fully occupied, we're in process of acquiring the adjacent property, a 2-bed/1-bath cottage on another .25 acres. Cute as heck, great expansion potential. We'll renovate and use this ourselvves seasonally and to keep an eye on the 4-plex. With this level of scrutiny, we may convert from annual to seasonal leases and VRBO/AirB2B on the 4-plex for greater gains. Hopefully a third unit is in the cards for Q2/16.

Biggest question with the 4-plex is when to replace the four 'snowmen' oil boilers? Tenants pay the oil bill and they are essentially bullet proof. Its about $8k 'all in' per unit to switch to natural gas.

Nice to find this site and look forward to sharing helpful infornmation!