RENT SOARING IN RHODE ISLAND…HOW NEXUS PROPERTY MANAGEMENT CAN HELP
Last week, NBC 10 News, released a consumer report about soaring rent in Rhode Island. Nexus Property Management headquarters is located in the state and we are currently spearheading two ambitious housing projects meant to directly address this problem. As a company that’s set its sights on revolutionizing the property management and real estate landscape, we wanted to take the time to address and informally annotate the ideas in the recent article. We want to add context for hope and a blueprint for other local real estate investors because none of us want to see, as the article asserts, Rhode Islanders “migrating to cheaper cities” or states.
INSIDE THE NUMBERS:
The most recent Nexus article, Don’t Be Afraid To Raise Your Rents, adds some much needed context for property owners who read the headlines and wonder what the best plan is when it comes to increasing tenants’ rent. Our main conclusion and recommendation is this: the market may allow you to raise your rents significantly, but it’s not the right play because it’s potentially unfair to tenants and is a poor financial model for long term success. By our calculations (based on analysis of over 800 rental units Nexus manages in RI), rents have increased about 10% each year (statewide)…which means, a tenant who started a lease in 2012 at $800/month could realistically expect a landlord to ask for $1600 today, just because the market bears it. According to NBC 10, that number is actually 16% in Providence this year. Anyway you hash it up, these figures are not affordable for the majority of rental unit tenants.
Emily Volz, the report’s author, speaks to Oxygen Financial’s Managing Director, Mark Scribner, about the lack of inventory. Simple economics tells us that when there is very little supply, as is the case now, demand (and prices) will naturally increase. Scribner goes on to state, “occupancy rates in terms of rental space are about 96%.” With almost all rental units occupied, there is no check on these rising prices. The same financial expert predicts that rates will grow by at least another 5% this year. The only answer is to provide more housing options, or face the reality of more and more people leaving New England in search of more affordable housing options.
[ Learn More: AVOID SHORT TERM GAINS AT THE EXPENSE OF LONG TERM SECURITY ]
NEXUS IS DOING OUR PART TO CREATE A BETTER SOLUTION:
Volz and Scribner talk at length about inventory. They discuss the need for politicians to try to create affordable housing opportunities across the state. Scribner also goes on to talk about potential conversion of currently unused spaces into rental properties. Our Nexus team agrees and has already taken major steps in both Pawtucket and Woonsocket, two of the state’s most populous cities. With an eye toward “Connecting Rhode Islanders to Better Living”, Nexus is in the beginning processes of adding 60 brand new, quality living spaces to downtown areas where residential opportunities are limited.
Nexus Property Management bought the vacant Feldman Furniture building in 2014 and continues to renovate and reinvent this corner of the city. Coming soon: 27 new loft apartments.
FELDMAN FURNITURE BUILDING (DOWNTOWN PAWTUCKET, RI):
In 2014, Nexus Property Management® owner and CEO, Nick D’Agnillo, purchased the Feldman Furniture Building with the hopes of revitalizing the centuries old 60,000 square foot building. The building, which had been vacant for years, was built back in the 19th century as an urban horse stable (176 stalls), was later converted to a vehicle garage, and then just before WWII became the furniture store it is best known for. Of note, the property is right in the heart of downtown Pawtucket (next to the public library) and its highly visible decay and vacancy was symbolic of the recent realities of the city. Nexus’ Rhode Island office and Nexus Franchise Headquarters moved into a renovated 300 square foot office, gave the building a facelift and modern look, bought and upgraded adjacent buildings, and continues to be involved in projects in the downtown area. That being said, there is plenty more space and potential for this property. Prior to the pandemic, Nexus was hosting award ceremonies, real estate round tables, and even comedy shows, in the spirit of bringing people back into the city. Now we don’t just want them to come back in, we want them to stay and call it home.
To meet that end, Nexus is working with Leshinsky Finance and the city to create 27 affordable market-rate units in the heart of downtown Pawtucket. This $7.5 million project that began back in November of 2019, but has been delayed due to the pandemic, is one of the “largest investments in recent memory”, according to city Commerce Director Jeanne Boyle. The redevelopment will also include indoor parking, additional office space, and an enhanced event space. At this point in time, all preparation is completed, financials are being ironed out and certified, and construction should begin very soon.
[ Learn More: NEXUS SET TO BEGIN CONSTRUCTION OF DOWNTOWN LOFTS ]
Nexus has purchased Sacred Heart Church with the hopes of adding over 30 much needed townhouse apartments to the Fairmount neighborhood in Woonsocket.
Photo Credit: 150churches.blogspot.com
SACRED HEART CHURCH (WOONSOCKET, RI):
In December 2021, Nexus VP Gregory J. Rice went under agreement on the former Sacred Heart parish Church on Olo St. in Woonsocket. The Church had previously consolidated so the majority of the buildings at this location were unused. Nexus Property Management® Vice President of Franchise Sales, Greg Rice, is a huge advocate for the city of Woonsocket and saw this as a great opportunity to add quality, townhouse style living space to the Fairmount area, where so little supply exists and is badly needed. With Landmark Medical Center right around the corner, there is a lot of potential to house medical professionals and others who want to live and work in the city.
Rice and Nexus have built a team with Ben Hyman of Bentley Builders and ZDS Architecture and Interior Design to renovate the property and add 32 market-rate units to the city. There are three structures on the property, including the church, a rec center, and a three story rectory that already has seven units in it. The property also boasts communal green space and a sizable parking lot.
According to Rice, Woonsocket has only added 60 new residential units over the last 3 years! This project would add much needed supply at a time when Mayor Lisa Baldelli-Hunt has stated the Fairmount neighborhood is in “dire need for units of this caliber”. While she feels the investment in the community is a win for the city, Rice and his team are met some pushback while petitioning the city council for a Tax Stabilization Agreement to make the project actionable and financially realistic. Rice ultimately ended up receiving a TSA for 7 years. It will be voted and adopted as an ordinance during the first April session of City Council.
[ Learn More: NEXUS’ GREG RICE TEACHING PRE-RELEASE CLASSES AT RI PRISON ]
AND FOR AFFECTED TENANTS WHO DON’T WANT TO MOVE???
In addition to the lack of housing supply, what to do if your landlord wants to raise your rent and you don’t want to leave is also addressed in NBC 10’s Consumer Alert. Nexus addressed the same issue at length recently:
Both Scribner and Nexus agree, if you want to stay where you are, you need to let your landlord know as soon as you can. We remind readers that above all else, landlords want to avoid vacancy at all costs, so attempting to negotiate is a smart play. According to Scribner, tenants should “plead their case that they’re reliable, very easy tenants to deal with, and try to make a case that they’ll be there for a while”. We 100% agree. Long term, hassle-free tenancy is the holy grail of property ownership, and if you fit that bill, be sure to remind your landlord of the value you provide. A smart landlord values more than just market prices.
The word is out: rental prices are soaring and the best way to create win-win situations for the people of Rhode Island is to be creative in renovating and bringing more housing to market. Nexus is doing our part. As the Real Estate Investing Authority® and a national franchise, we’re happy to assist in any way we can. We are devoted to revolutionizing the real estate investment landscape. Be sure to reach out to our team if you are interested in learning more, in franchise opportunities, or if you’re a property owner looking for more information about potential management.
WHAT OTHER PEOPLE ARE CHECKING OUT:
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- SACRED HEART CHURCH TOUR VIDEO
Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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