All Forum Posts by: Luan Oliveira

I'd argue anything in the greater providence area is primed for growth. As the greater Boston area gets more expensive, more and more people are expanding outward. Look at how prices have changed in the last 5-6 years. in 2018 you could purchase a good 3-family in PVD for less than $300K. I recall seeing new build 2 families going for $340K. Today, a decent 3 family is no less than $500K. Those same new 2 family builds are going for $580K. Percentagewise, I'd argue the appreciation has been greater than Boston. When prices are already at $1MM plus, how much more can they go up each year?

There also seems to be a lot of businesses in the area. Most of the major chains are there, so that should tell you something. Just be ready to deal with a more blue collar working class. If you're seeing cashflow, I'd jump on it. Appreciation will just be the icing on the cake!

@Ian Halter You make some great points. However, I think that the reality is that 99% of buyers are not going to go through the efforts of looking off-market. Additionally, if you look on the MLS many of the homes that falling apart are listed in close value to those that are in good condition.

I'd also add that it may be good to consider that the premiums one pays on a turnkey home, can be easier to swallow for newer investors. I think most newer investors could not really pay $15k for a boiler (x2 or x3 depending on the property, 15K for a roof, or $15K for a siding job). Could these be had for cheaper if you have a team, or know subcontractors? Sure. But I think most people are going to call those companies on google, and get the much higher homeowner rate. That being said, many times it makes more sense to pay 80K more, especially when the down payment on that 80K is really only like 5 or 10 percent. 8K out of pocket is a lot easier to swallow in a down payment then all those costs upfront.

You did mention something I've never heard of, which is subsidized repairs. Can you elaborate a little more on that? I'd love to learn more about those.

Hey Neil,

Sometimes you have to get creative, and factor in some of the benefits of house-hacking. Right off the bat, I see some areas in you calculations where there is some "hidden" cashflow.

Let's start with insurance - I'd say 3-4K is the norm for the year if you shop around. This is assuming the Providence area.

Your taxes look like you are factoring is non-owner occupied. If you are going to be occupying the property, you can usually save some money on that too - let's say 20-40% depending on the city.

Vacancy. While it's great to account for this, I think an even more important thing to account for is good long-term tenants. If you have tenants that stay a long time, this vacancy calculation won't really matter too much. 

Repairs. How willing are you to tackle basic repairs? While repairs can be unexpected, a lot of the costs can be mitigated by doing them yourself. Obviously there are many areas where a professional is needed but there are also plenty of thing's most people can tackle on their own.

CapEx. This is important. My best advice here is that you should purchase a home where there is no foreseeable capex in the future. Newer roof, good siding, and newer mechanicals. This way you can be pretty sure you won't have too many big expenditures in the future.

Management. You are house-hacking. There isn't really a need for a manager. You should be able to handle this yourself. Keep in mind managers charge an additional fee for all services rendered. do this can add up too. You'll be paying $500 for someone to collect rents while you are still living there...

I think you have the right idea with factoring in all of these expenses, especially if it was a pure investment. As you are house-hacking, it may be a good idea to consider some of the items I mentioned above. Realistically I would look at it like this - Could two of the rents pay the mortgage and the majority of the expenses? If so, you'd be able to live for "free." When I say "free," I mean you'd be able to save about $2k a month additionally (assuming this is what you'd be paying on rent) for any unexpected things that may come up.

Feel free to reach out if you want some more perspective.

 Keep in mind that your (net) mortgage on the two family will probably be higher. You're probably looking at about a $3200-3500 mortgage on a two-family, with 1,800 in income. That'll put your out of pocket payment at 1400-1700 in this example. 

In a three family situation, even a 4,200 mortgage with 3,600 in rents puts you with less money out of pocket (600)!

As far as convinience goes, remember what Dave Ramsey says... Live like no one else today, so you can live like no one else tomorrow!

Best of luck in your search!

@Brandon Durant, have you considered a three family? It may make for a better house hack with two rents coming in! In the Pawtucket area you should be able to easily get $1,800 for a good quality updated unit. This would provide around $3,600 towards your expenses. Even though you won't be living for free, your out-of-pocket expenses will be a few hundred dollars! As others have said, also analyze it as a full rental, and in this case a 3, 3, 3, would gross about $5,400, notwithstanding any increases in the next 5 years. This puts you pretty close to the 1% rule around here, with prices hovering around 550 for a 3,3,3. While you won't have astronomical cash flow, the cash on cash return will still be pretty decent. Also, you can take the 1,000 to 1,500 you'll be saving in housing expenses for the next five years and use that to save towards another property! That should be at least 50K in the bank!

I've been house hacking in the area for a bit, and know others who have too. Let me know if you have any more questions!

Can we get a better breakdown of the features? Upon first look, Rent Redi is missing the accounting features and Invelo doesn't allow any real filters. What exactly are the benefits?

Have you considered the syndication route? With that amount of cash, you may be able to get into an GP position with the right investor. May take a little digging but that may have the largest upside, especially if you find someone willing to grind! Opportunity zones maybe another great option.

Reach out to Nate Green a Loiselle Insurance - 1 774 353 8027. He's very good about explaining insurance questions in a non pushy way. Just make sure all the quotes your comparing are similar in nature, and not wildly different coverages. 

@Rudy Ratner I'm not sure sub metering is really a thing in PVD.

As others have mentioned, I would not get too caught up with the extra expense of the water. I doubt it'll be more than $100/month extra for a 3-family. And at that point, the cost can easily be recouped by tacking an extra $40 to teach rent. I've got on multi where I have a set of washer and dryer in the basement. It's a regular set, and I do not charge. All the the tenants use it, and the water/sewer bill is about $250/month.

@Khaled Eissa a pet fee is fine. I can't speak to a pet deposit. As long as the fee is agreed to in the lease, than it can be whatever you want.

Do you have hard surfaces or carpet? Hard surfaces will fare better that carpet, so keep that in mind too.