Providence, RI Investment oppurtunity?

Question

How well of an investment opportunity is Providence right now, currently looking to FHA a multifamily and am looking in the providence area.

Curious to hear your thoughts!

Thank you!

Anthony Thompson · Answer

@Paul Joseph how well of an investment opportunity is Providence, compared to what? Other big cities in different parts of the U.S.? Other cities/towns in RI? Itself five or ten years ago?

When you say “FHA a multifamily” do you mean “house hack” (i.e., live in one unit and rent the others out)?

Generally house hacking is a good idea; as long as you don’t mind living next to your tenants it’s a great way to learn the business with the best financing terms possible.

Just be sure to screen your tenants very well (there are plenty of resources here on BP to help you with tenant screening) since a bad tenant will not only impact your cash flow but potentially your personal living situation.

Prices are high right now, so are rents but I’d also caution you to consider what the cash flow situation would be like if rents were 10% lower. Rents have been on a tear for a while but nothing goes up forever and it’s a good exercise to think about how things would look if they fell.

In general, you’re going to have to learn how to look at the numbers on rental properties to check if the rents (current or market) support the asking price. Again, there are many good resources here on BP for learning rental property analysis.

To some extent your lender will help you try to avoid making a huge mistake - they want you to succeed just as much as you do - but they’re really looking at it from a mix of “you” and “the property” while you really need to look at it from just a rental perspective.

Along those lines, I highly recommend seeing if the rents would support the mortgage and other property expenses if it weren’t a house hack, if you were to move out - because someday you may want to do just that, and you don’t want to find out it wasn’t a great investment after all when that time comes.

Frank Patalano · Answer

Hottest Market ever.

If you are house hacking you can probably do okay if you are careful. We haven't bought anything on the market in 5 years. Off Market we have done some flipping and sold them on market.