BP Thoughts On Rhode Island

[Yvonne Sheehan]

Evening all,

Happy Saturday. I have a question from my BP advisors. Although primarily focused on the Houston market for Buy and Hold investing (I am an out of state investor), a potential partner has inquried about Rhode Island, specifically the Cranston, Warick areas.

Most importantly for me is securing solid deals, with a medium to long term view with positive cash flow. Anyone have perspective on the Rhode Island market?

Thanks

Y

[Anthony Thompson]

Yvonne, let me start out by saying I'm a firm believer that there are good deals everywhere.

I think RI is a unique market in a few ways. For example our land evidence records are at the city/town level instead of the county level like most of the rest of the country. Also the local investor groups here aren't nearly as huge as in other areas of the country like Ohio or Atlanta. So there may be fewer investors competing for deals and maybe some opportunities from market inefficiencies.

That said, my honest impression is that the economy/demographics in this part of the country (the northeast) aren't really that good compared to other parts of the country where there is better economic growth, people are moving in for jobs, etc. I really don't see or hear about that sort of thing happening in RI at all (if anything, quite the opposite).

Also, you should know that RI really isn't the best state as far as being business-friendly. An article earlier this year at http://finance.yahoo.com/news/10-worst-states-taxes-2014-110000784.html wrote:

"The Ocean State lands close to the bottom of the list because it ranks poorly on corporate taxes and property taxes. Rhode Island was named least tax-friendly state in the country for retirees by Kiplinger Magazine, thanks to its practice of taxing Social Security benefits, pension income, and almost all other sources of retirement income."

Another factor to consider is that since real estate is essentially based on state law (e.g., every state has a different eviction process), if you're going to spend the time learning about the real estate related laws of a new state, wouldn't it make sense to choose one bigger than RI so that your efforts apply to a bigger area / more markets?

I'm not saying it isn't possible to do well in RI - I do think there are deals everywhere and it's much more that the investor creates the deal as much as finds it. However, unless you have some other pre-existing connection to RI (such as family) or other reason to do business here specifically, you'd do much better to pick another part of the country that has a lower tax burden and better economic prospects over the next 10 years.