Hello again BP community!
I wanted to see if anyone has any experience/insight into the Providence RI rental market. I am looking into some multi family (2-3plex) in the city and there seems to be some decent deals out there but I wanted to see if anyone has any info on the general market and/or the tenant base and what to expect.
@Richie Pace the Providence market is very neighborhood dependent. Many people are drawn in by the low prices of most of the small multifamily inventory but without knowing what the neighborhood is like and what tenant base it draws you can be buying into some headaches. I would say this applies to any real estate as the number 1 factor is often said to be location.
Providence covers most of the tenant bases, white collar, blue collar, student, section 8 etc. Determine what "niche" works for you. I personally own a few rentals in the city which all attract "young professionals" based on the close proximity of restaurants, bars, and universities.
Overall I would say the market is pretty strong right now. Every time I post an ad for a rental I get 25+ hits within the first couple of days. The supply is very low for the demand in most of the city.
If you have questions about a specific neighborhood or area, feel free to PM me. I've lived in the city for 4 years and have a pretty good feel for what to expect.
I truly enjoy discussing the Providence market, because I actually love it and know it extremely well.
As an Investor and Realtor, I get to see the market from many different point of views. To say the least I think the Providence market is extremely interesting. That is not to say that it isn't an extremely challenging market, because it really is right now. If you aren't connected to a wholesaler or a good Realtor with investor contacts.... Good Luck!!
You won't be able to grab a good REO deal on the MLS right now, unless you're a cash buyer. Even when you're a cash buyer the chances of you obtaining that property aren't the best. You need to have a very proactive Realtor, and you need to be able to act fast! Cash buyers are purchasing REO deals quickly and with cash and then selling them for $10,000- $15,000 more to flippers or investors looking "BRRRR".
Here's why the market gets tough. When that Wholesaler/Cash Buyer is asking for that $15,000 more, your profit margin and LTV numbers can just drop down significantly! However, here's the positive side for investors: Yes prices are going up in the front end (REO, foreclosures), but they're also going up on the back end (Retail FHA/Conventional/ Traditional buyers). What this basically means is that yes investors are paying more for deals right now because the market it competitive, but when you go to sell that flip, you can put it on the market for top dollar right now and get multiple offers because inventory is just low.
With Rhode Island Housing offering their $7500 downpayment assistance to FHA buyers right now, there are a TON of buyers (that I help as a Realtor), looking for properties, but there is just not much out there. This is causing bidding wars! Which at the end of the day only benefits sellers.
If you could connect with wholesalers or if you have access to cash to get these REO or Short Sale deals, I still think Providence is a great great Market to make some money right now, if you're buying in the right areas obviously!!
I'm interested in the Providence, RI rental market particularly near Brown U and RISD. My son will attend RISD this fall and it makes more sense to buy a condo or multifamily in the area and rent the other units or room. Student rentals are very expensive and for what I would pay for his living expenses he could live almost for free or have some income . Any recommendations or ideas? Know of a good deal? Any flexible private or mainstream lenders?
I posted here on the forum asking the same questions if anyone has additional info.
Any assistance is greatly appreciated.
See link to my post below (I hope it's ok with BP to add my post link)
@Vic Lopez I answered some of this in your other forum post (thanks for linking to it!), but just FYI most private lenders I know won’t lend on something where there’s an owner occupied component to it.
That may or may not be a concern where it’s your child living in the property instead of you personally, but it is a question that will come up.
Another thing to consider is, since your purchase could be limited in time scope (namely, the period your child is attending RISD), to ask whether Rhode Island is the best place to invest your money over that time horizon.
Many folks I know aren’t crazy about the growth prospects of the Northeast over the next 5 years, so if you have alternative options in other parts of the country you’re comfortable with then it might make overall better sense investing there than RI.
On the other hand, if you’d don’t have such options and are limited to NY where you live and Providence, then maybe Providence would make sense.
Just something to consider, depending on your situation.
Hi Richie - I spent a good part of this year pretty rigorously looking for properties in Providence. As others mentioned, the market is very hot and extremely complicated. To boil it down, as a city, Providence is really divided into the East Side (Brown and RISD) area and the North, West and South Side across the river. The East Side with neighborhoods like College Hill, Hope, Blackstone and Fox Point are great- safe, vibrant and hip. The other neighborhoods have traditionally struggled a lot more economically- the exception is Federal Hill and some of the northern West Side that extends down from Fed Hill. Definitely do a lot of research on the neighborhood before you buy. I was attracted to the low prices on the West and North sides of Providence but you won't get much in rent, you'll be farther from Brown and some of the areas aren't the safest. The East Side could be great if you're OK with less cashflow but want a safer neighborhood with decent appreciation over the long term (Hope is particularly charming) Here's a ranked list of all the neighborhoods on NIche. Let me know if you have any other questions- I ended up buying in Albany, NY for the cashflow, but I did a lot of research on Providence neighborhoods and vendors who I'd be happy to share.
I have actively owned in and around the city for a number of years now. Overall it is a consistent market. Due diligence has to be done within neighborhoods as far as street to street in some circumstances. There are quite a bit of subsections of neighborhoods that someone may not ordinarily be aware of. Overall the economic future of the city is not optimistic, but believe it or not, the rental market should remain relatively consistent . Prices do appear to be bloated at the moment, and rents have increased over the last 18-24 months. It is all deal specific. In any market if you find a good deal and operate it properly you can make money. Having said that, I personally would not be investing in any retail deals in this market. I would be cherry picking select deals.
Looking for some advice from the South Providence, RI Community.
My wife and I bought our first three family in South Providence and inherited tenants on the first and second floors. They’re leases are up mid-May. What is the best course of action to “not renew they’re leases,” if we decide we want to get new tenants or convert to AirBnB?
@Matthew Soule inherited tenants are usually the most challenging. But basically you’ll want to send them a notice to terminate the lease agreement.
Usually that needs to be at least one full month in advance but read your (inherited) lease’s section carefully to be sure.
If you think there’s any possibility of the tenants opposing you on it, not moving out, etc. and especially if you haven’t done this before, then I’d recommend consulting an attorney to make sure it’s done properly.
There are a few “gotchas” about tenant notices so if you don’t do everything right and end up in court with the tenants, you can be forced to restart the eviction (if it gets to that point).
@Matthew Soule you simply need to send them a termination notice, which can be find on the RI district court’s website. Send it asap, as it needs to be send a full 30 days in advance. (Before April 15). Needs to be sent regular U.S Mail, and you can give them a copy by hand.
You can also send it after you receive April’s rent, to avoid being in a situation where they don’t pay you April in retaliation for receiving the termination letter.
@Sam Albert thank you!
@Anthony Thompson thank you!
Need some advice please,
My wife and I live in one of the units in our three family house. We are pretty sure that the first floor deals drugs and so we want to invest in security cameras to deter them doing business at the house. We’ve looked into companies like Simplisafe but they seem to be geared more for single family homes. Does anyone use any security cameras for their rental properties and, if so, which ones?
All the Best,
@Matthew Soule I haven’t done this but another investor I know said he uses “game cameras” (like game hunting) for surveillance on his properties especially the vacant ones.
Another option is Amazon Blink but make sure to get the ones that are rated for outside if you’re going to put them there.
Also keep in mind that you may wake up one day to find the cameras smashed or spray painted.
That’s a very tough problem if you live in the building. Hopefully they’re month to month but either way I’d end their lease as soon as you can. I wouldn’t mention drugs at all, just say that you want or need to renovate the unit and unfortunately it has to be vacant for that due to the possibility of lead paint poisoning due to lead dust etc.
End the lease ASAP. I also advise my clients to also do month to month.. this is primarily the reason why. They could pay you on time every month and still be terrible tenants. If they’re in a lease, it’s very tough to get them out through eviction for other reason than non-payment.
ADT is really good. I have it at all my properties. I have a local contact there, if you would like his number.
Something more affordable would be looking into ring. It picks up any motion/activity at your door.
Sam and Anthony both provide excellent points.
1.) A month to month is great because this helps against getting stuck with undesired scenarios. If a tenant likes the place they will not leave. If they don't and/or become a headache it is a shorter time to endure resolving the issue.
2.) When I assisted my family members purchase their first home we knew going in that the tenants were being inherited with potential risks. When we acquired the property we were very welcoming when we introduced ourselves while making mention that we had plans to renovate the units in the near future. It was not a lie, but we did plan to fix and increase rents. By doing this we gave them sufficient notice that eventually they would need to find another place to live. Some tenants may have difficulty finding a place to live so we gave them as much notice as possible.
There were times they did not pay on time and additional people were occupying that were not on the lease. There was definitely some type of illicit activity from one of the units too. I'm happy to say that both units were eventually vacated on good terms. So to Anthony's point - explaining that you are planning on doing renovations to the unit will open the door for discussion without making them feel as if you are kicking them out. I hope this helps!
@Sam Albert hi Sam. I’m a buyer looking for a realtor. Would love to have a chat with you. Just sent you a connection request. Thanks