New Investor and Newport, RI Market

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New Investor and Newport, RI Market

Nick Deterding
Member since 2018 · 11 posts · 3 votes

Hello Everyone!

I am new to the rental property investing but I am looking to get started soon! I am currently serving in the Navy and will be heading to Newport, RI for more training. This training will be 6 months long until I move again which is why I figured I would ask the question here.

Should I look at buying a house in Newport, RI to basically Live-in/rent while I am in training to then turn it into a rental property once I move on to my next duty station or should I just wait until I get to my duty station after schooling?

I have not used any of my VA Home Loan (granted I do not know too much about this) but I know it is definitely worth considering. I also know that the markets in Newport fluctuate a ton depending on the seasons because of how "touristy" Newport is!

I would love to hear as many thoughts and considerations that many of you may have for a new rental property investor! 

Thank you!

Nick

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  • Timothy Maloney
    Lender · Syracuse, NY · Member since 2016 · 165 posts · 92 votes
    8y

    @Nick Deterding As a former Marine and lender (who once used my VA benefits) I must caution you. Aside from the fact that the VA may not fund given your short term assignment there are significant penalties for what you *might* be doing.

    The VA benefit is designed only for owner occupied veteran homes. Yes, there are instances where a loan may be assumed but I am unaware of any change that allows us to use our benefit for an investment property.

    If you are on active duty the UCMJ is going to be much more harsh that the typical slap on the wrist civilians get for what is essentially bank fraud.     

    I highly advise against it unless you are 100% certain you are able to do this legally.     

    0Reply
  • Nick Deterding
    OP
    Member since 2018 · 11 posts · 3 votes
    8y

    @Timothy Maloney Thank you for this advice! I will definitely look deeper into this before making any decisions. Thank you!

    0Reply
  • Timothy Maloney
    Lender · Syracuse, NY · Member since 2016 · 165 posts · 92 votes
    8y

    No problem at all and Thank You for your service!

    0Reply
  • Jason Schmitt
    Newport, RI · Member since 2013 · 2 posts · 0 votes
    8y

    Hi Nick, We PSC'd to Newport last year and bought a house, which is now a rental. Newport is a great town, but a very unique market.

    The desirable parts of Newport can be expensive, and are generally above the max VA loan amount. We ended up using a Navy FCU 7 yr ARM and bought an old colonial in the yachting village/ lower Thames.

    Many people lease for the summer months (July-Sept) at 4-5X normal rents (up to $10k during sailing events, tennis tournaments etc.), then cut the rate for off season months to Salve Regina students, or Navy on extended TDY /training. From our perspective, there is a strong demand for Naval War College students who PCS in July and need a year-long contract. We lose that extra summer rental cash, but we have the security of the full year lease.

    Feel free to reach out with any questions! I would love to hear about your experiences in town. 

    -Jason

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  • Nick Deterding
    OP
    Member since 2018 · 11 posts · 3 votes
    8y
    @Jason Schmitt thank you so much for that information! I’ve been watching all the main stream realtor websites (realtor, trulia, etc) and have noticed it’s a pretty tough market to get into. I have also heard about the huge fluctuation in rent prices during events which is why I’ve been looking at something I could fix up while I’m in Newport, and then rent out once I leave. Again, thank you for this information! -Nick
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