Is the Cranston area a good place to invest in a MF?

Question

I am new to bigger pockets. I think I messed up my first post because I meant to post it hear but seems like it went to a more general forum. I am looking to by a MF unit in the providence area and saw a few that looked promising around the Cranston area by the zoo/botanical garden. Is that a safe area to invest in? Any other insights that you can share will be appreciated. Also since I will be an OOS investor, what would you suggest with regards to property management, work with a local company, self manage with a reliable local handyman etc??

Thank you in advance for your help

Jade Chau · Answer

@Anthony Thompson Thank you very much. This helps me get a better picture of the providence area.

Anthony Thompson · Answer

@Jade Chau in most places, as long as you're not asking above-market rents, vacant rates are very low. Demand from tenants is high and there is not much supply on the market. So you don't need to pick and choose a particular area to get low vacancy, that's pretty much everywhere as long as you don't get too greedy with your asking rents.

(Incidentally, this situation will not - cannot - last forever, enjoy it while it lasts but eventually there will be a recession, people will move back in with family or double up etc. and there will be more supply than demand. Hopefully that will be a long way off though! 🤣)

If you're lucky enough to put 50% down you can actually probably expect a reasonable cash flow, which is honestly a great place to be.

I have not done a comprehensive market survey, neighborhood by neighborhood and zip code by zip code, to tell you (or anyone :) where the "best" area to invest is in terms of cash flow, rate of return, etc.

However what I can say is that other investors have told me, and I have seen it myself over the years, that some of the "best" returns can be had in the most difficult areas. These are the C areas and worse, working class, tenants who will never be able to own property, etc.

Those areas can have the best returns because the demand is consistent but they have a stigma as "tough" areas (for good reason!) so prices tend to be more affordable. However I will also say, you will work/pay for those higher returns with issues and aggravation. (And no, hiring a property manager will not insulate you from all the issues.)

On the other end of the spectrum, A areas (e.g., East Side of Providence, parts of Newport, etc.) have very few issues and properties there really hold their value, but the investments usually have very meager returns because the properties are in such demand and prices are high.

So it really comes down to, you'll need to do your own research and decide where on the risk/aggravation-reward/return spectrum you want to be.

Jade Chau · Answer

@Anthony Thompson Thank you for the quick response. I will look at the crime maps. I maybe should have phrased it in a different way. I was wondering if it was good as far as investors ability to keep vacancy rates low and tenant quality high and just hold value? or are there other areas that would be better in terms of cash flowing with a 50% down for a 2-4 family property? Thank you again

Anthony Thompson · Answer

@Jade Chau I'm fond of Cranston in general, but some parts, particularly near Providence, can get a bit dicey.

As far as "safe", nothing is completely safe or completely unsafe. There are A areas (e.g., the East Side) that can get more crime than B areas.

I recommend you check out any neighborhood you're looking in, during the day and night, during the week and on the weekend, to get a sense for the area yourself. There are also many online sites that provide crime statistics, if that's your primary concern.

It's hard for me to mentally map the zoo/botanical garden in Roger Williams Park to neighborhoods outside the Park, but generally speaking the parts of Cranston that border Providence, around the Park (e.g., Elmwood and part of Broad St especially around/past the cemetery), are a bit tougher than ones that don't (e.g., near Park View middle school or parts closer to Edgewood than Providence).

As far as self managing vs. using a property management company, I don't really know your situation - e.g., how far away you are, how much time you have to devote to the property, managing service calls, going there if necessary, ability to do your own work, etc.

So that's something you'll really need to decide for yourself - though I would say as a new person, you should expect that you'll be there a bit more than you "imagine" you will be (at least that was my experience when I was new 15+ yrs ago).

If you do decide to hire it out, I can recommend a couple of local companies. I'm sure others can as well.