Does House-Hack In Rhode Island ???
Rental Property Investor · RI · Member since 2022 · 13 posts · 7 votes
Does House-Hack In Rhode Island ???
Most Popular Reply
Real Estate Agent · Providence-Boston · Member since 2019 · 20 posts · 9 votes
3yHi Brandon,
I live in Pawtucket and am currently house hacking. It still can work, but it would be hard to find a deal that would enable you to live for free. Not impossible though!
That grant is wonderful but it's sending more buyers in the market with very little inventory already.
Are you analyzing deals? Do you have a budget? Are you house hacking a SFR by the room or Multi-unit by apartment?
I would recommend finding a Real Estate Agent that is experienced working with Investors. They can help you find what might work for you. I know several if you'd like to PM me. You can swing by my place and check it out too if you're in the area. BTW Rhode Island has a Real Estate Investors group. You can find us here -> https://rireig.com/
Best of luck!
16 Replies
- Real Estate Agent · Providence-Boston · Member since 2019 · 20 posts · 9 votes3y
Hi Brandon,
I live in Pawtucket and am currently house hacking. It still can work, but it would be hard to find a deal that would enable you to live for free. Not impossible though!
That grant is wonderful but it's sending more buyers in the market with very little inventory already.
Are you analyzing deals? Do you have a budget? Are you house hacking a SFR by the room or Multi-unit by apartment?
I would recommend finding a Real Estate Agent that is experienced working with Investors. They can help you find what might work for you. I know several if you'd like to PM me. You can swing by my place and check it out too if you're in the area. BTW Rhode Island has a Real Estate Investors group. You can find us here -> https://rireig.com/
Best of luck!
- 3yAnthony ThompsonPro MemberBuy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
@Brandon Durant congratulations on starting your real estate journey!
My best advice for potential house hackers is, run the numbers as if you weren't going to live there, and see if the property is still cash flow positive (and by how much).
Someday you may want to (or may plan to) move out and make it a purely investment property, and it's good to know in advance whether you will be able to do so and still have the property be cash flow positive.
- Rental Property Investor · RI · Member since 2022 · 13 posts · 7 votes3y
Quote from @Jeremy Trier:
Hi Brandon,
I live in Pawtucket and am currently house hacking. It still can work, but it would be hard to find a deal that would enable you to live for free. Not impossible though!
That grant is wonderful but it's sending more buyers in the market with very little inventory already.
Are you analyzing deals? Do you have a budget? Are you house hacking a SFR by the room or Multi-unit by apartment?
I would recommend finding a Real Estate Agent that is experienced working with Investors. They can help you find what might work for you. I know several if you'd like to PM me. You can swing by my place and check it out too if you're in the area. BTW Rhode Island has a Real Estate Investors group. You can find us here -> https://rireig.com/
Best of luck!
Hi Jeremy,
Thank you for that insight. We have a budget of around $450K and will be looking to put down about 10% (that 17.5K as part of the 10%) on a duplex. We would ideally like the property to cashflow soon after moving out of it, we plan on living in one of the units for 4-5 years. I appreciate the link to the group, I'll look into that right now
- Rental Property Investor · RI · Member since 2022 · 13 posts · 7 votes3y
Quote from @Anthony Thompson:
@Brandon Durant congratulations on starting your real estate journey!
My best advice for potential house hackers is, run the numbers as if you weren't going to live there, and see if the property is still cash flow positive (and by how much).
Someday you may want to (or may plan to) move out and make it a purely investment property, and it's good to know in advance whether you will be able to do so and still have the property be cash flow positive.
Hi Anthony,
That is a great idea, I've been running the numbers with the calculators here on Bigger Pockets. All are helpful and eye opening. We've been looking for a 2 family for about 2 months now and think an upcoming open house this week will hopefully be the one. I'll keep everyone here updated if possible.
Thank you for the help
- Investor · Member since 2022 · 36 posts · 17 votes3y
@Brandon Durant Pawtucket is a good strategy, especially if you're close to the East Side or East Providence, since you'll get better tenants and enjoy the lower tax rate. I've been seeing rental inventory at the top of the market increase, and I buy the story that there's little incentive for people to move and pay more rent when everything is already so expensive. Factoring low inventory of well-kept houses (a pessimistic view) - I would be more conservative in what you could charge for rent and increase what you expect repair expenditures to be
- 3yRyan ThomsonBusiness MemberReal Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
What?! 17.5k loan instantly forgiven. That's amazing. A couple pieces of advice:
- find a realtor who works with investors. If they have house hacked themselves or focus on that, even better. You are wasting your time looking at open houses if you don't know what to look for. You also really want a realtor in your corner to advocate for you and guide you through the process on the first one. The seller pays your realtor's bill so there is no cost to you there.
- Remember that real estate is a long term game and that with rising prices and rates the cashflow doesn't always look good. But if you look at the bigger picture of returns with loan paydown, appreciation, and tax advantages you will have a great return (and MUCH better than renting).
The Assumable Guy544 Reviews - 3yAnthony ThompsonPro MemberBuy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
For folks in Rhode Island who are skeptical or want more information, it is in fact basically free money, a $17,500 grant:
"applicants must be first-time homebuyers purchasing a 1-4 family home or condominium in Rhode Island; meet income and credit score guidelines; and must live in the home as their primary residence. Homebuyers must also complete a RIHousing-approved Homebuyer Education class to prepare them for sustainable homeownership. The down payment assistance is a grant that does not need to be repaid... RIHousing is administering the program... Interested first-time homebuyers can find complete details and how to apply online at www.ristatewide-dpa.com"(from Governor Announces Launch of Statewide Program to Help First-time Homebuyers - January 25, 2023)
- Rental Property Investor · Providence, RI · Member since 2018 · 76 posts · 64 votes3y
@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!
- Rental Property Investor · RI · Member since 2022 · 13 posts · 7 votes3y
Quote from @Luan Oliveira:
@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!
Thank you for the reply Luan,
We have slightly looked into 3 unit properties but would prefer a 2 family just for the lower overall mortgage and convenience. We would like the property to cashflow when we move out, but would be okay if it just breaks even. Wanting to hold the property for years to enjoy the tax benefits like @Ryan Thomson had mentioned, have an investment that beats inflation and enjoy the income when we're older.
We are looking to move out of the unit we live in after about 5 years and buy our own single family primary residence and just have this one investment on the side while working to maybe purchase a cash based business sometime further in the future
- Rental Property Investor · RI · Member since 2022 · 13 posts · 7 votes3y
Quote from @Ryan Thomson:
What?! 17.5k loan instantly forgiven. That's amazing. A couple pieces of advice:
- find a realtor who works with investors. If they have house hacked themselves or focus on that, even better. You are wasting your time looking at open houses if you don't know what to look for. You also really want a realtor in your corner to advocate for you and guide you through the process on the first one. The seller pays your realtor's bill so there is no cost to you there.
- Remember that real estate is a long term game and that with rising prices and rates the cashflow doesn't always look good. But if you look at the bigger picture of returns with loan paydown, appreciation, and tax advantages you will have a great return (and MUCH better than renting).
I interned 2 years ago for the agent we are using. She also owns 2 properties as investments and is also looking for another property to househack. Great advice!
- Rental Property Investor · Providence, RI · Member since 2018 · 76 posts · 64 votes3y
Quote from @Brandon Durant:
Quote from @Luan Oliveira:
@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!
Thank you for the reply Luan,
We have slightly looked into 3 unit properties but would prefer a 2 family just for the lower overall mortgage and convenience. We would like the property to cashflow when we move out, but would be okay if it just breaks even. Wanting to hold the property for years to enjoy the tax benefits like @Ryan Thomson had mentioned, have an investment that beats inflation and enjoy the income when we're older.
We are looking to move out of the unit we live in after about 5 years and buy our own single family primary residence and just have this one investment on the side while working to maybe purchase a cash based business sometime further in the future
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!
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Considering Real Estate as an investment route can be a great way to build wealth, but it is important to run the numbers and make sure the property you are considering would still be cash flow positive if you were to move out. This will ensure that your Real Estate venture will be profitable in the long-term. My best advice for potential house hackers is, calculate your potential returns as if you weren't living there and determine whether or not it's still worth investing in. With this knowledge, you'll have peace of mind knowing that no matter what happens down the line, Real Estate will remain a wise financial decision for you.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes3y
This grant sounds awesome, I hadn't heard about it before. I used a similar grant/tax credit (the first time homebuyers program that came out in 2008, which became an $8k grant in 2009). This made my down payment on my first property super low, enabled me to get into a property with very little down and was literally life-changing for me. That property transformed my life. So Do it!
My advice would be to buy the lowest value property in the highest value location you can get into aka the ugliest house on the best street you can afford. Then fix that property up to the median quality of the surrounding properties in order to force appreciation quickly/ capture equity. That's the name of the game in wealth building through real estate, it's all about location, location, location, and the bigger spread between your property and the surrounding properties you can get, the more equity you can gain/ wealth you can build. But be careful not to take on too much of a "fixer" for your first property: look for something with "good bones" that just needs cosmetic updating to increase the value and salability. Most retails buyers are looking for "cute" and "move-in ready", so buy the ugly one surrounded by the cute ones and make it a cute one. Definitely find a great Realtor who also invests to help you, and have a good inspector/lender/contractors help also. Find the Realtor first and they can set you up with the others. I lived in Newport and Providence briefly long ago, love that area of the country. Good luck!
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes3y
This grant sounds awesome, I hadn't heard about it before. I used a similar grant/tax credit (the first time homebuyers program that came out in 2008, which became an $8k grant in 2009). This made my down payment on my first property super low, enabled me to get into a property with very little down and was literally life-changing for me. That property transformed my life. So Do it!
My advice would be to buy the lowest value property in the highest value location you can get into aka the ugliest house on the best street you can afford. Then fix that property up to the median quality of the surrounding properties in order to force appreciation quickly/ capture equity. That's the name of the game in wealth building through real estate, it's all about location, location, location, and the bigger spread between your property and the surrounding properties you can get, the more equity you can gain/ wealth you can build. But be careful not to take on too much of a "fixer" for your first property: look for something with "good bones" that just needs cosmetic updating to increase the value and salability. Most retails buyers are looking for "cute" and "move-in ready", so buy the ugly one surrounded by the cute ones and make it a cute one. Definitely find a great Realtor who also invests to help you, and have a good inspector/lender/contractors help also. Find the Realtor first and they can set you up with the others. I lived in Newport and Providence briefly long ago, love that area of the country. Good luck!
- 3yRyan ThomsonBusiness MemberReal Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
Quote from @Brandon Durant:
Quote from @Ryan Thomson:
What?! 17.5k loan instantly forgiven. That's amazing. A couple pieces of advice:
- find a realtor who works with investors. If they have house hacked themselves or focus on that, even better. You are wasting your time looking at open houses if you don't know what to look for. You also really want a realtor in your corner to advocate for you and guide you through the process on the first one. The seller pays your realtor's bill so there is no cost to you there.
- Remember that real estate is a long term game and that with rising prices and rates the cashflow doesn't always look good. But if you look at the bigger picture of returns with loan paydown, appreciation, and tax advantages you will have a great return (and MUCH better than renting).
I interned 2 years ago for the agent we are using. She also owns 2 properties as investments and is also looking for another property to househack. Great advice!
Glad to hear it! Excited for you and your house hacking future. @Brandon Durant
The Assumable Guy544 Reviews - 3yMichael DiossaPro MemberInvestor · RI · Member since 2023 · 191 posts · 163 votes
To improve your chances of success, seek out a realtor who specializes in working with investors. Ideally, you should try to find someone who has experience with house hacking or who focuses on this strategy. Attending open houses without knowing what to look for is unlikely to be productive. A knowledgeable realtor can serve as your advocate and provide valuable guidance throughout the process of buying your first property. It's worth noting that the seller typically covers the cost of the realtor's services, so there is no expense for you in this regard.
When it comes to real estate, it's essential to think long-term. Keep in mind that rising prices and interest rates can make it challenging to generate positive cash flow in the short term. However, if you take a broader view of the potential returns, including loan paydown, appreciation, and tax advantages, you will likely enjoy a significant return on your investment. This return will almost certainly be superior to what you would experience through renting.
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