Federal Hill Providence

[Joe Rodriguez]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Providence.

Purchase price: $320,000
Cash invested: $25,000

3 Family buy and hold deal in the Federal Hill area of Providence, RI

What made you interested in investing in this type of deal?

I grew up in Providence, RI and knew of the potential upside of investing in the Federal Hill area.

How did you find this deal and how did you negotiate it?

I found this deal on MLS as I am a licensed real estate agent in RI. The property had been on the market for a couple of months and needed some work. The owner was an older gentlemen and had family living in another unit. Due to updated electrical codes, they had to upgrade the electrical panels and add a common electrical panel so I figured this would be a great time to buy as all of the electrical panels and wiring would be updated by the seller.

How did you finance this deal?

I financed this deal using an FHA 3.5% loan

How did you add value to the deal?

I renovated the 1st and 3rd units including flooring, painting, appliances, window blinds. I upgraded the 3rd floor heating system from an old steam radiator to a forced hot air system. I added coin operated laundry in the basement and separated the rest of the basement for my personal storage. I also added a full bathroom in the basement as the previous owner did the rough plumbing but never completed it.

What was the outcome?

I currently own this property and recently refinanced. With the equity in the property, I was able to get out of my FHA loan and into a conventional loan allowing me to purchase another property using FHA. Cashflow is at $1,400/ month.

Lessons learned? Challenges?

Focus on the right tenants. Fortunately, I waited to find the right tenants. I lost out on a few months of rent on the 3rd unit as I had many people interested but no one that met the criteria that I set. Now with COVID-19 and everything going on, I am still receiving rents and have minimal issues.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I represented myself as the real estate agent and the mortgage lender was John Folino with The Mortgage Network.

[Sohaib Mannan]

@Joe Rodriguez That's amazing, congrats on an awesome deal. So, my wife and I are looking at exactly this sort of thing because we are moving into the Rhode Island area for 1 year. So thinking of taking advantage of HomePossible loan or FHA and buy a multi family and house hack for the year and then when we move we can consider a property manager. The reason I am having second thoughts is because we will have minimal reserves after making the down payment and COVID being such a big variable and eviction moratorium is a bit worrisome. I am glad to see your tenants have paid rent throughout the pandemic. Any advice for us? Also curious about your tenant screening criteria!

-Sohaib