My husband and I are starting out in real estate and will like to begin with a house hacking deal in providence area or north attleboro. (Basically a safe neighborhood not more than 45 min from taunton)
We were looking at a duplex to start off but there are not so many options out here. So we are also exploring the idea of single family home with an ADU. There's a lot confusing information out there regarding what is allowed or not.
Any advice on what direction to follow will be appreciated
Realtor · Providence, RI · Member since 2016 · 32 posts · 26 votes
6y
To add to @Anthony Thompson and @Peter Kuck ‘s feedback I'll add that you'll want to discuss any possible ADU with your lender early on in the process. If one exists or a "possible" ADU exists it may affect your loan. Best to have that discussion upfront with your lender rather than them finding out from the appraisal. I have heard that removing the stove can be a work around, but it is still prudent to check with your lender and local municipality. Hope that helps and let me know if you have any other specifics questions.
Buy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
6y
@Afoma Okwudiafor I'm actually not that familiar with ADUs in this area, though I know they're popular in other parts of the country (e.g., California). I haven't heard of anyone buying a SF and renting out an ADU around here but it's possible it's happening and I just haven't heard of it. The usual rule is to ask in the building department of whatever town you're considering buying in though as they'll be the definitive source of what's allowed and what's not.
I'd recommend starting with a mortgage broker or bank loan officer to see what you and your husband can realistically afford as that might help you narrow down what areas you're interested in living or investing in. After that you'll want to talk to a real estate agent (or better, interview several and see which one appeals to you the most) to start to narrow down some options, looking at some properties, etc.
Many new investors find that they can do a 2-family or 3-family by living in one of the units and renting out the other(s), which is usually what people around here mean when they say house hacking. There are a lot of great articles about it here on BP, episodes in the BP podcasts, etc.
Again, it's possible people do it with ADUs around here but I haven't really heard of it, at least in RI where I live and do most of my investing - except for some legislation a few years ago limiting it to family members (i.e., a bona fide "in law" unit). That wouldn't really be house hacking, since you can only have a family member living in it, not a general renter, and you also can't pass the unit on to a subsequent owner automatically - they have to apply to the town and be granted it for their family member, separately.
My guess is that you'll find properties in RI a bit more affordable than Mass but schools won't be as good and rents will be lower too. And of course, if you're living there, you have to make sure it fits in with your lifestyle, commutes, etc. All of that is something a good real estate agent should work with you on, so if you're not sure which state you'll wind up in, be sure to talk to a real estate agent licensed in both states so they can show you options in both RI and Mass.
@Afoma Okwudiafor Agreed with @Anthony Thompson. You don't see ADUs much in S. MA or Providence area. Those typically arise where land values are a significant price driver, thereby incentivizing maximization of the land utilization. You do see it in Boston, increasingly more every day, but that's the only place I've seen it commonly in this area.
I Do not know of the legalities, but when renting in this area I have seen people advertising renting out a camper in their yard once and renting "apartments" above garages many times which would be similar to an ADU. I think the hardest part of that would be finding a property with an ADU, but if you do I would reach out to the town/city hall on its rent-ability as a room or as an independent dwelling unit. My first home purchase was a duplex, and I have enjoyed it so far, although in Massachusetts it's very difficulty to cover full Mortgage cost in a duplex. If I didn't like the house so much I would have wished I started out with a 3 or 4 family to house hack. I'm currently looking to move on to a second house hack this year and looking to go in the direction of 4 family if possible.
Realtor · Providence, RI · Member since 2016 · 32 posts · 26 votes
6y
To add to @Anthony Thompson and @Peter Kuck ‘s feedback I'll add that you'll want to discuss any possible ADU with your lender early on in the process. If one exists or a "possible" ADU exists it may affect your loan. Best to have that discussion upfront with your lender rather than them finding out from the appraisal. I have heard that removing the stove can be a work around, but it is still prudent to check with your lender and local municipality. Hope that helps and let me know if you have any other specifics questions.
Realtor · Boston, MA · Member since 2014 · 159 posts · 75 votes
6y
Hello Afoma, I understand your situation as I recently moved from Mass to Rhode Island and purchased a two family. It just made more financial sense. I am a licensed realtor in both states and I do see more ADU in Boston and surrounding areas but not so much in RI. I do have a potential two family coming on the market in Attleboro soon and if you would like to discuss further, please let me know. I also have lenders that could assist you.
@Anthony Thompson@Peter Kuck@Brett Read we did get pre-approved. Since we are using an FHA loan, the lender did mention that we will only be able to get a single family or a 2 family.
We were looking for in law units but saw the same legislation regarding family members. Which is not what hoping for.
We would most likely lean towards a two family home. Living in one and renting the other. Hopefully we do find good deals in RI. As for schools, we would most likely do private schools. So that is not too much of an issue.