woonsocket rhode island

[Preston Juskavitch]

First off woonsocket is a tough market. I'm hoping to take advantage of this tough market in the long run. The reason I'm posting here is to shed some light on what i consider an opportunity for myself and others who may think alike. I'm terrible at writing and I will jump all over the place. Sorry in advance. But in short here is what I have accomplished so far. Not anything brag worthy yet. I started investing may of 2014 with buying my first 3 family for only 146k with an FHA mortgage. I figured I could live for free. Over the last few years I have renovated all 3 floors with new plumbing, electrical and all the cosmetics like ceramic tile, granite counter tops. While doing the renovations I started looking for my second rental property but somewhere along the line I decided to get my real estate license also. I know deals typically aren't found through mls but at the time it was all i knew and i saw it as an opportunity to make some extra cash. Im closing on my second rental property Nov 30th.

So far my numbers aren't anything too impressive but im still proud of them.

3 family

Mortgage is 1562.00 with pmi

3rd floor rented at 850.00

2nd floor owner occupied as of now

1st floor will be rented out shortly for 1000-1200

So in the next few months i will be making a small cash flow of 288-488$ while living for free which is nice!

2 family

mortgage is 998.00

unit 1 1200-1400

unit 2 1200-1400

The cash flow on this property should be between 1400-1800 per month.

Flame me or give me advice. Im open to both

[Anthony Thompson]

Preston, first off, I commend you for pursuing a market many others avoid. There probably is some opportunity in that, generally.

One thought that came to mind immediately was, if you're going to invest in Woonsocket, you better be OK with Section 8, period.

I can't find the exact reference right now, but at one point I'd read that Woonsocket absolutely dominates in terms of Section 8 housing units compared to the surrounding communities. Woonsocket is the land of Section 8, so if you're OK with that then wonderful, if you're not, then I recommend staying out of that market.

A few links worth checking out:

• Woonsocket Comprehensive Plan which includes good statistics such as, "Woonsocket’s ratio of homeowner to renter is 35:65... the total number of assisted units has continued to grow during a period of continued overall population decline."
• Washington Post article Food Stamps Put RI Town on Monthly Boom and Bust Cycle
• Despite Concessions, Woonsocket's Pension is Forecast to Run Dry (Valley Breeze, the local newspaper to read for Woonsocket stuff)
• Appeal Period Expires on Supplemental Tax Suit (Valley Breeze)

The last one is particularly relevant because the "supplemental tax" is a special extra tax bill Woonsocket sent out to property owners a few years ago, basically because they couldn't meet their expenses with property taxes alone.

I like the general concept of investing where few others are, however I also give huge consideration to the fiscal stability of a city or town and how responsible its leadership appears to be.

The latter is mainly because, if spending outweighs income a municipality can do one of two things: 1) reduce spending, 2) increase income (i.e., raise taxes). Historically, municipalities have often opted for #2, often because their hands are mostly tied on #1 due to various contractual obligations.

One quick way to check that, which should be followed up with more extensive research of course, is to check Moody's/Fitch/S&P reports on the municipality's bond ratings.

Surprisingly, in Woonsocket's case, while it's still a "junk" bond it was recently raised a notch which is good (another, similar report).

The big question is, what is the trend? What's coming/changing in the future? A proposed 12% tax decrease (not sure if it has been approved yet) is a good sign along with that raised credit rating. 

Another thing that has some people excited is a proposed set of new train connections linking Woonsocket to Providence and Worcester. However you should be careful about such things because they can get derailed (pun mostly unintended) by political and financial issues, or they could take much longer to materialize than planned (see After Almost a Century, the 2nd Avenue Subway Is Close to Arriving).

On the other hand, major retailers like Lowes pulling out of Woonsocket and going to nearby North Smithfield aren't great either.

As you can see, you should really get to know the particulars (and, unfortunately, politics) of a new market before committing to it too strongly.

(I own one property in Woonsocket so I have some familiarity with it, but by no means consider myself an expert.)