Rhode Island Multi Family Investing

[Mike DeMille]

Hi everyone, I can tell from reading the forums that there are several talented and knowledgable resources for investors in the Providence RI and surrounding areas. I have been out of investing for a few years to focus on my career and luckily that has been very successful finally. At this point I am ready to rejoin investing in RI and from the looks of it Pawtucket and Woonsocket seems to have what I am looking for.

So my question is to see if these numbers align with what investors are currently seeing, and if not where I should make adjustments in my calculations. The goal would be to find a multi-family for around $250,000 and the following relevant metrics.

Purchase Price: $250,000

Closing Costs: $3,500

Pre-rent Holding: $6,000

Estimated Repairs: $15,000

Total Cost of Project: $247,500

Down Payment: $50,000 (If 15K in repair would try to get purchase price down to 225K) if that then... $45,000

Loan: $200,000 (If 15K in repair would try to get purchase price down to 225K) if that then... $180,000

Cash Needed: $65,000-$70,000

Loan Amount: $200,000

Loan Period: 30 years (If I can I might go for lower, if my current job could support quicker loan pay down)

Loan interest rate: 3.5%

Monthly Mortgage: $870

Rent: Three Units $1000 each, so $3000

Taxes: $300

Insurance: $90

Vacancy: $150

Repairs: $150

Cap-ex: $150

Water/Sewer/Garbage/Gas/Snow Removal/Lawn/Electricity/Cable: Tenant pays

Property Manager: $300

Total Expenses: $2,010

Cash Flow: $990

CoCROI: 16.9%

Does this seem reasonable? Am I missing something here??? Thanks for all of the help!

[Nancy DeSocio]

Hi @Mike DeMille, congratulations on your initiative to take the plunge back into real estate investing!

I think you are outlining all of the expenses, which is a fantastic start!  So many people forget all the little things that need to be paid for.

For a multi-family, you will likely be paying some of those utility bills that you noted you'd pass onto the tenant.  While you might find a MF that has separate electric and gas meters, water and sewer are typically paid by the landlord.  In addition, snow removal and lawn care is typically under the realm of the landlord as well (you can outsource that to the property management company or outsource it on your own).  I'd suggest factoring that into your expenses.

My only other note is that it may be difficult to predict rents until you actually identify a property.  $1000 is warranted in some areas of Pawtucket and Woonsocket but not all, and it also depends on your mix of units (i.e. one-bedroom apts don't usually rent for $1K).  Unless you are only specifically looking at properties that you know will bring in that income, expecting $3K per month might be high.

Those are the quick things I spotted in your post, and I'm sure others will chime in.  You're on the right track...good luck on your journey!