Newport, Rhode Island attracts a LOT of real estate buyers and for good reason! It's easily one of the most beautiful cities in the US, if not the world (America's Prettiest Towns, 24 New England Towns).
Newport has a thriving and well managed tourism industry, is home to the US Naval War College and Salve Regina University, and is host to a multitude of National and International Sailing Events. This creates the perfect storm of renters.
If you're in the market for a great investment property, start your search HERE. Keep reading below to learn more about becoming an investor in Rhode Island and Newport!
As a general (seriously, this is a "GENERAL" rule) you can legally rent two times per year in the city of Newport without too much restriction.
Out of state property owners are required to designate a Registered Agent. This should be a permanent office or Agency. Landlords who do NOT have a Registered Agent risk substantial penalties if any issue arises with their property. Hire a professional Rental Manager who can serve as your designated agent.
Properties in Newport are required to file a Rental Registration Form if they are going to have any lease terms that are less than 9 months. The cost is $20 for Registration and $25 for Inspection as of June 2017 for the January 1, 2017 - December 31, 2017.
Fines of $1,000 per day (!!!) can be levied for unregistered houses. The inspection is primarily a fire safety inspection to confirm you have up to date smoke and carbon detectors and do you have safe exits in case of fire. Rhode Island in general has pretty rigorous fire safety rules, many due in large part to the fall out from the Station House Fire in West Warwick, RI which claimed 100 lives. (Station Fire and Impact on Fire Regulations)
With the increasing popularity of AirBnB many investors in the Newport market are looking for homes they can use for shorter term rentals. Looking for more info on this type of rental? Email me at email@example.com or call/text me at 401-662-7204 or look for other articles coming soon that address this topic.
Summer/Winter Rentals: This post will focus on renting two times per year; Winter and Summer.
The most common scenario is a September to May or June tenant then a June-August tenant. Summer rentals are "premium" rentals and often at a much higher rate than a winter rental. Conversely, Winter rentals are often priced at a discount because it's a smaller market.
Successful summer rentals are usually furnished and fitted out with basic kitchen needs. Renters are looking for a nice place to live, and will shop around taking into account location, parking, amenities like laundry and well laid out kitchens, as well as the quality and finish of the apartment. They are generally willing to pay a premium for nice places.
Winter rentals are generally filled by Salve students, faculty and staff, Roger Williams students, faculty and staff (less frequently due to distance to Bristol) and maybe some geographic bachelors from the Navy. There are short term winter classes at the War College that will bring families for some odd lengths of time, maybe 6 weeks or 4 months, and that can help keep a rental property in the black financially.
So what can you expect to make? Here are a couple of winter rentals currently listed (June 2017)
67 Harrison - 3 BR 2 BA single family home - This home is listed for $2350 per month for the winter. This is not likely going to be rented to Salve students, the largest pool of winter renters. Rather, this house will compete for the smaller pool of short term military or local renter. ($2350 x 9 = $21,150 for the winter if a tenancy is secured and maintained for 9 months)
33 Hammond - 3BR 1BA This home is listed for $2200 for the winter, or $733 per bedroom. ($19,800 for the winter if a tenancy is secured and maintained for 9 months)
78-80 Thames - 3 BR 1 BA - This apartment is listed at $1800. It likely won't require any exterior maintenance on the part of the tenant and may appeal more to a short term tenant. ($16,200 for the winter if a tenancy is secured and maintained for 9 months)
Salve tends to pay in the range of $400 to $800 per bedroom depending on their family circumstances and the quality of the apartment. A two bedroom apartment for a winter rental is likely to run in the range of $1200 - $1600 for the winter. Some will include utilities, some will not. Nicer units with better furnishings bring more money. Updated units with energy efficient retrofits are more popular as a rule. Parking and location are also factors.
Are you able to rent out your house for the whole summer? There is higher demand in July and August than in June. You may consider taking your own Newport vacation in June so that you leave your property open in the busiest months to help off set the cost of purchasing your home. Here are some sample rental properties currently on the market (June 2017)
25 West Narragansett - In the heart of the Fifth Ward/Yachting Village - 3 BR | 1 BA Apartment . - Listed for $3200 per month including everything for June and July. This post is being written on Jun 7 and the apartment appears to be available still.
22 Dearborn Street apartment - 3 BR 1 BA for $4000 per month -
9 Ellery St - 2000 sq ft. Single Family Home - 3 Bedroom 2 Bath for $6000/mo
What's the best way to go?
It all depends on your goals. Are you looking to just cover the nut on your awesome summer pad in Newport? Or are you looking to purchase a property with an acceptable cap rate that allows you a reasonable return on your investment? Do you want to have a place where you can leave your favorite things and come back lots of times over the year? Or do you have a high risk tolerance and want to run a small business?
Whatever you do, hire an expert to guide you through! Call Warner Realty Group at 401-662-7204 for a free consultation today or check out www.nptrealty.com .
From searching for potential properties, to connecting you with local vendors and service suppliers to searching for and vetting the best rental candidates, you don't need to reinvent the wheel. Talk to a professional with a proven track record who can save you time and headaches.