Any thoughts about Rhode Island for Buy and Hold?

Question

Hi Folks,I'm in the process of building my knowledge and saving.  My goal is to work primarily with buy and holds with the occasional flip.  I was wondering if anyone had feedback on the RI market in general for buy and hold.  I know that the RE market in that state is not as strong as here in MA (where I am) and that appreciation is probably not something to count on.  But, because of that the entry price on many of the smaller multi's seems much more reasonable.  If you were looking for monthly cash flow would it make sense to look in this area?  I ask because I have "Rhode Island" set up as a keyword but almost never see anyone talking about it.  Thank you for reading and any thoughts you are willing to give a newbie :)

Anthony Thompson · Answer

Jim, I think you hit the nail on the head with not counting on a lot of appreciation, but a lower entry price making it much easier to get into deals than Boston.

It always comes down to the #s. A 15% return on 15K down on a 150K house in RI might be generally better than a 6% return on 45K down on a 450K house in MA - unless you have a lot of $ you need to "put to work", then it might be better to do a few bigger deals at a lower return than many farther-away deals at a higher return.

(I'm not saying you can easily get a 15% return in RI, I'm just speaking hypothetically about #s.)

I'm definitely a #s guy, but there are other factors to take into account with real estate as well. We pay for those tax benefits (depreciation) with illiquidity and hassles - your stocks probably never call you up about their broken toilets or sue you.

As @Colleen F.  pointed out, generally speaking the laws are a bit more landlord-friendly in RI but I wouldn't let that be the deciding factor. (I wouldn't say that RI laws are landlord-friendly, just that my understanding is that MA laws are more tenant-biased and RI laws are more even-handed, so relatively speaking RI is better as I understand it.)

For you personally, I'd say if you're new to landlording then definitely stay local in MA while you learn the business. I know that there are people that hold properties long distance but to my mind that's more of an "advanced" strategy, once you know the business and can better manage whoever you have on the ground managing things.

(And then, if you were going to go long distance anyway, I'd say you might want to pick an area with better economic fundamentals than RI.)

Also as Colleen alluded, it helps if you have some other reason to be in RI besides only a property or two. One of the reasons I recommend new people stay local is because, especially at the beginning, you're going to be over at your property for one reason or another, more often than you expect. Having to do that for something that's far away is a little less painful if you have some other reason/benefit to be in the area (e.g., family).

The main site for RI properties is riliving.com so for your question of "would it make sense to look in this area", I'd say find some properties in the area, look at their asking price and what you'd likely have to put down for them, and then look at Craigslist for rental comps. For several example properties, you should be able to answer your own question of "does it make sense".

If you don't know how to do this, there are plenty of resources here on Bigger Pockets, and you should definitely learn how to analyze a rental property before buying one! I'm sure if you have specific questions about the analysis you could post here and get help too.

Joe Impagliazzo · Answer

@Jim Burnard

you should attend the Rhode Island Real Estate Investors Group meetings in Warwick, 3rd Thursday of every month.  They get a good attendance, probably 60+ and the only good REIA I am aware of in RI

Bruno C. · Answer

Herman I'm also looking actively in RI and would love to discuss with you on both strategy and investment opportunities in the Providence/Pawtucket area if you could spare the time.

Colleen F. · Answer

You won't see much traffic here from Rhode Island just think how small it is compared to a Texas or California.  We do alright in South County, RI.  I know there is a strong rental Providence and Warwick too. We started in RI with a second home in Narragansett. We live in Shrewsbury, ma, living in Sutton you may find Worcester, Ma as good a choice as some of those RI as for affordability.  I like RI for other reasons.  The area we are in has a summer and winter market for students and  for that reason it was a better fit for us. I also like the tenant laws a bit better. you do need to register with the state as an out of state landlord and the lead laws are no worse then MA.   Pick a couple target markets and see what you can afford and what you might want to do.  Go to the REIA meetings if that is something you think you would like, it certainly is a good source of knowledge.

Jim Burnard · Answer

Will do Account Closed

Wish I could make this months but it starts in about 5 mins :)Jim

Paul Timmins · Answer

@Jim Burnard

Say Hi to my buddies Craig and Don at the meeting.

Paul

Mike Hurney · Answer

@Herman R.

"hey jim i lived in RI for 24 yrs and i can tell you i have moved over  543 houses there and 16 in Boston ma in box me and i can share more  information "

You should post in Services Offered, this is mostly Buy-Fixup-Sell/Rent but if I need to move I'll be sure to look you up!

Thanks, Mike

Brandon Ingegneri · Answer

If we connect next week I can also discuss this area as the vast majority of my rentals are in these areas.

Herman R. · Answer

hey jim i lived in RI for 24 yrs and i can tell you i have moved over 543 houses there and 16 in Boston ma in box me and i can share more information

Vania Castillo · Answer

Anthony,

Thank you so much for posting those links and your imput regarding RE in RI. Very informative.

Any thoughts about Rhode Island for Buy and Hold?

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