Looking for 4-Plex

[Dan Kaiser]

I'm looking for a 4-Plex in Rhode Island or the Massachusetts border. I'm single and willing to live just about anywhere, just want to maximize investment return. That being said, I would like to avoid dealing with the very bottom of the barrel tenants. This will be a 203(k), owner occupied.

Where would you suggest concentrating the search for best CAP rate?

Other than staying on top of MLS listing, any other plan of attack you would suggest?

Thanks for all the help. These forums are an enormous help.

Dan

[Anthony Thompson]

Dan, if you're looking for a 4-plex make sure it's already fire-coded or you plan for the expense. 4-units have to have a panel and that panel also has to have regular inspections so that's a potentially big up front cost (if no panel is there already) and an ongoing extra expense. That's why many people opt for 3-units instead, where the fire alarms need to be interconnected but no panel is required.

As @Robert Wodogaza said, it's certainly getting tougher to find good deals. Your best deals will be those you make directly with the seller, i.e., off market and not MLS. Those require more work to find and create, but if you can do it, usually pay off much better. And as he recommended, networking.

There is no magic "area with the best CAP rate" that I know of and can tell you (or anyone). If there were such a thing, everyone would start focusing on that area and cap rates would lower commensurately.

Generally people like cities/towns in northern RI, like the ones Rob mentioned, because they're closer to Boston so we get more spillover from the Mass economy. I'd say look at demographics (change in population, employment, etc.) in those areas and, importantly, drive through them yourself, to see what you like and what's convenient for you.

Also as I've recommended recently in other threads, be sure to check out the finances of any city/town you're planning to buy in, including current and historical changes in municipal bond ratings (Moody's, Fitch, etc.). A municipality that is more financially challenged is more likely to raise taxes in the future so that's something to keep in mind.