All Forum Posts by: Anthony Thompson

I've found that if you're wholesaling, there's a lot less targeting by area, you kind of just go where the deals are.

I mean, if you want to send out direct mail and target a specific area, both of those areas are fine though my sense is you might find more deals in Federal Hill vs the East Side (College Hill) since the latter tends to have more properties owned by folks with a decent amount of $ and I think you're less likely to find distressed situations there.

But bad things happen to good people everywhere, including the East Side, so I'm sure there are deals there also.

I'd recommend targeting by situation rather than by geographic area, or in conjunction with it I guess, for example something like "mail all the non-owner-occupied 2 and 3 family properties in Warwick" (or in 02905, or whatever) or "all the divorces that have happened in the last 6 months in Providence".

(I think both of those lists should be obtainable from list brokers; I can't recommend any particular ones unfortunately, but there are tons of recommendations for list brokers here on BP).

Mack, I've been active in various aspects of real estate in RI for about 15 years now, including wholesaling, buy-and-hold/property management, a flip here and there (rehab and hold actually), etc. so I'll be happy to assist if I can.

"Any advice about the area" is actually pretty broad, but it seems like more specific questions usually get answered pretty quickly here on BP, such as asking about specific areas in RI you might be interested in (for example).

For referrals and general information about investing in real estate in Rhode Island I'd recommend a local real estate investor group such as RIREIG (www.rireig.com). That's a decently-sized group and there are a number of experienced folks there that will be happy to help with referrals. They usually meet the 3rd Thursday of each month but confirm on the website if you plan to attend an upcoming meeting as (very rarely) sometimes they have to do a different day.

Also your profile says you're from Boston so if you do anything in Mass I'd recommend the Black Diamond Real Estate Investors group (blackdiamondrei.com) as they are also a good size and helpful (and, like RIREIG, don't try to sell you stuff :)

Raymond, the filing fee for an LLC is $150 if you mail it with a check or $156 if you do it online; see Articles of Organization available at http://www.sos.ri.gov/doc_lib/search/rilimitedliab...

HOWEVER, besides just forming the LLC there are other documents that should be involved beyond the Secretary of State articles of organization, such as an operating agreement (critical in the case of a multi-member LLC but still important even for a single member), some kind of LLC resolution(s) regarding the formation activities, additional docs if you reside out of state, etc.

There are also ongoing filing requirements (which believe it or not, a lot of people forget) and entity formalities (such as annual meetings, special meetings for major LLC activities/decisions, etc.), special ways you should be signing documents when transacting business in the name of the LLC, etc.

This is why I'd strongly recommend involving an attorney in the process, especially one with experience in tax matters.

I'd estimate that an attorney might charge you $1000 (could be less, could be a little more) but if this is your first entity, I think it would be well worth it for someone to guide you through the process and make sure you don't do things to endanger the entity protection right from the get-go.

Also in terms of other costs you should estimate at least $500 yearly for the tax return for the entity, there's a $450/year minimum corporate tax (which I believe applies to all corps, S- or C-) and an annual report filing fee with Secretary of State which might be $50 (check their website).

In terms of other states, I would strongly recommend setting up an entity in the state you're actually going to be doing the business activities in, though again that's a conversation to have with an attorney (which I am not).

Antonio, I'd be happy to give you some feedback; please send me the details.

Chris, I'm local to RI so I haven't really had a need to look for turnkey providers, but I haven't encountered any in my real estate travels either.

My sense is that Eric is probably right that they'd be rare in RI. I admit to not having a lot of familiarity with turnkey but my sense is that the RI market is small and overshadowed by Boston to the north and NYC to the south so a lot of big $ looking for stable turnkey returns probably gravitates more to those markets because the valuations are higher and appreciation is often better.

Additionally, unlike most states RI operates on a city & town basis rather than county, so there are 39 different, quirky ways to do things depending on which city/town you buy property in. That's a little exaggerated but there is some truth to it and I suspect it makes it a little harder to scale.

Lastly, I've written about this before so I'll try to keep it brief here, but I still don't see a lot of economic growth in RI that has any excitement about it. I do hear sporadically about this or that project, but on the whole there are just a lot of vacant storefronts and it continues to be a high tax, business-unfriendly state.

For local players who are already here, or folks who have a local connection, I think it can work, but for those who have their pick of the country I scratch my head because I know there are other areas of the country with a lot more going on economically.

That's a very lengthy way of saying, "I haven't encountered any, but I haven't looked and they could certainly be out there". I'd suggest Googling around a bit or maybe trying to find some turnkey companies you like in Mass or CT and seeing if they also serve RI.

Joe, you should plan to sit down and read the RI Landlord Tenant Handbook because while RI seems to follow Mass in many legal areas, I believe it carved out its own balance for residential real estate (i.e., it's different in RI vs. MA) so you need to be aware of the differences.

You should also spend some time researching the lead paint laws/regulations as that's another area RI differs from Mass and something you definitely need to be aware of and follow.

As an out of state landlord you'll also need to designate with the RI Secretary of State a Rhode Island agent for service of process (i.e., if you get sued), by filing a Nonresident Landlord form.

Additionally, you should check with the building department of the city/town the property is/will be located in, as there are often town-specific requirements for out-of-state landlords as well, such as the Providence and Warwick Absentee Landlord Enforcement Act requiring separate registration with the city clerk. (That's just one example, you should check on this regardless of whether the property is in Providence, Warwick, or some other town.)

That's all that comes to mind but it's quite possible I'm forgetting about something as it's not an area I have to personally worry about.

Of course, if you're using an attorney licensed in Rhode Island to buy the property, which you absolutely should do, s/he can probably give you better advice as to your requirements than I've listed here.

Thanks @Brian White - the site is ripropinfo.com - and beside's Brian's excellent insights you'll also need to register with the RI Secretary of State, @Steve Porcello, as an out of state landlord.

If you're serious about investing in RI I'd recommend joining or staying apprised of (and occasionally attending for relevant topics) RIREIG which usually meets the 3rd Thursday of each month (rireig.com).

RI often takes inspiration from MA with various laws, but they are not exactly the same and it's important to know the differences, such as various landlord-tenant considerations, lead paint, fire coding, etc. There's a lot of great info here on BP and elsewhere online but you can stay informed of the latest developments, as well as ask other RI landlords, at a REIA like RIREIG.

@Alexander Zurn Depending on what you said, it's possible you might be able to amend that later by saying you bought the property with your dad, so while you're "an owner" you're not the only owner and you actually have to go to your dad to get final approval for anything since he's the real "boss".

You could spin a small yarn about how this is your first property but your dad owns several properties and you wish you could let them do X but your dad is really a hard-*** maybe because he's learned to be after owning other properties for so many years, etc.

It's up to you. I can see (and respect) where some folks wouldn't be comfortable with that. On the other hand I have found it useful in many cases to be the property manager (or junior co-owner) rather than "the decision maker". The ability to blame someone else and say "Look, I totally understand where you're coming from, I'll ask my dad but I don't know if he's going to agree, I think it's a long shot" has come in handy for me several times over the years.

Years ago some guru said, "Be friendly with your tenants, but do not be their friends" and I think it was good advice. Sometimes it's hard to find that line but you'll get the hang of it and once you do it'll become second nature.

Alex, I'm not an attorney by any means, but I don't believe you would be liable for any tenant illnesses or health issues.

Also you should know that if the tenants are over 62, or you would have reason to think they might be, you actually must give at least 60 days notice of rent increase (RIGL 34-18-16.1 Rent increases – Notice requirements).

If it were me I guess I'd try to form a good relationship with them at first and try to understand whey they may have wanted to say bad things about the property or current (soon-to-be-former) owner. For example if they felt the owner ignored their maintenance requests, you may be able to start off on a better foot with them by assuring them you will take their requests seriously.

I'd also consider that you may not want a vacant unit in the middle of winter, so if it were me, I'd probably spend the first few weeks getting a sense for these tenants, their issues, etc. and determine if you think they're going to bad-mouth the property/you to others.

I guess as long as they seem like relatively reasonable people (i.e. not hostile), if you still want them to move I'd probably defer to giving them 90 days notice and basically tell them you're giving them more notice than you need to because you want to make sure they have enough time to move.

But also tell them based on how much you paid for the property you absolutely need to raise the rent - it's not a question of your being a nice/mean guy, it's a question of making the #s work so you can afford the mortgage payment.

I'd also consider searching out some community organizations and contact info for the Department of Elderly Affairs and anyone else who might assist older people in finding new living arrangements, and include that as a second page to the rent increase notice.

A lot of questions like this depend on the specifics of the people involved, whether you can build a rapport, understand and possibly address their concerns, whether you think they're acting in good faith, etc.

So it's hard to really give an exact answer but those are some thoughts. And obviously if you're seriously concerned about any potential liability contact an attorney :)

(I'm assuming you've already told the tenants that you'll be the new owner; if not, I'm fond of telling tenants I'm just the property manager and someone else is the owner, so "the owner" can be the bad guy and I can be just another guy trying to do a job for his boss.)

Bianca, that sounds wonderful.

Plumbing is one of the most frequent maintenance requests and it sounds like he already has some property experience so you guys are already off to a good start :)

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