Out of State Investor Looking at Delaware

6 Replies

Hello!

I am looking to invest in Delaware as an out of state investor looking for SFR to buy and hold. I'm choosing Delaware because I currently live overseas and will have family who are looking to retire in the state of Delaware. They will act as my "boots on the ground" to help keep an eye on area trends and what not. I've been trying to determine the good markets in Delaware but am finding that assessing the areas to be quite challenging mostly due to the small population size and the ease which people can commute to and from other states for things like work and fun.

Some brief criteria I'm looking for are

1. 3+ bed 2+ bath, 1/2+ acre lot
2. B to B+ area
3. Decent schools
4. Not in a college area as I don't want to deal with the college age population.
5. Consistent population growth
6. Consistent median income growth

What areas are good places to start diving deep into?   I dove into the Millsboro area and based on what I'm seeing, the rental market seems pretty weak.  I compared some recently sold homes (past 90 days) to roughly match the few houses I could find for rent.  I cannot seem to make those sold homes cash flow unless I use some aggressively low estimates (4-5%) on things like maintenance and cap ex and knock $20k or so off the purchase price.  That being said, that is using Zillow.  Once I get my familiar with a 2-3 areas I plan on reaching out to a real estate agent that came recommended to help find some better deals.

Any advice you can offer will be greatly appreciated. 

Originally posted by @Eric B. :

Hello!

I am looking to invest in Delaware as an out of state investor looking for SFR to buy and hold. I'm choosing Delaware because I currently live overseas and will have family who are looking to retire in the state of Delaware. They will act as my "boots on the ground" to help keep an eye on area trends and what not. I've been trying to determine the good markets in Delaware but am finding that assessing the areas to be quite challenging mostly due to the small population size and the ease which people can commute to and from other states for things like work and fun.

Some brief criteria I'm looking for are

1. 3+ bed 2+ bath, 1/2+ acre lot
2. B to B+ area
3. Decent schools
4. Not in a college area as I don't want to deal with the college age population.
5. Consistent population growth
6. Consistent median income growth

What areas are good places to start diving deep into?   I dove into the Millsboro area and based on what I'm seeing, the rental market seems pretty weak.  I compared some recently sold homes (past 90 days) to roughly match the few houses I could find for rent.  I cannot seem to make those sold homes cash flow unless I use some aggressively low estimates (4-5%) on things like maintenance and cap ex and knock $20k or so off the purchase price.  That being said, that is using Zillow.  Once I get my familiar with a 2-3 areas I plan on reaching out to a real estate agent that came recommended to help find some better deals.

Any advice you can offer will be greatly appreciated. 

The state of Delaware is not known for it's public school system. So saying close to good schools is subjective. And like you said the areas that are going to meet all of your criteria are going to be a stretch on cashflow because they're very popular right now given the taxes in PA and NJ and the market is just really hot, especially if you're only looking on the MLS and do not have source of off market deals. If you're looking for access to other states you'll definitely want to be in New Castle County. If you're looking for B areas than you'll want to look into Claymont, New Castle, Elsmere. Most of the area around Newark that doesn't cater toward students is going to be pricier unless you go over to Maryland and look in Elkton. If you're willing to go into the City of Wilmington, (not necessarily most people's definitions of good public schools, but there are good private schools in the city that people living in the nicer areas tend to send their kids to) you'll want to look at the Northwest Wilmington, Midtown Brandywine, Little Italy, Union Park Gardens areas. Again...most of the areas I've listed above will hit some of your criteria but likely not all of them. I can't claim to know every part of Delaware, but the hit every perfect piece of your criteria in the current market environment and still cashflow is going to be difficult (unless you buy your cashflow with a larger down payment)

Thanks @James Masotti .

I don't have the expectation to find a property that hits all of my criteria.  I just wanted to mention some things I am considering when making any sort of purchase.  Overall, my goal is to have a few areas for my family to at least drive through when they get to the area.  

I appreciate your list of areas to dive deeper into. I did notice that they seemed to be mostly situated in Northern Delaware. After looking at your LLC's website, this makes sense. While doing more due diligence, I realized that the Air Force base in Dover would likely be a driver for the rental market in Kent County. Do you have any insight in this regard?

If you would be open to it, I would love to be able to pick your brain a little more via PM. I am new to REI and have read extensively on the subject. I just have far less real world experience.

Thanks again,

Eric

Originally posted by @Eric B. :

Thanks @James Masotti.

I don't have the expectation to find a property that hits all of my criteria.  I just wanted to mention some things I am considering when making any sort of purchase.  Overall, my goal is to have a few areas for my family to at least drive through when they get to the area.  

I appreciate your list of areas to dive deeper into. I did notice that they seemed to be mostly situated in Northern Delaware. After looking at your LLC's website, this makes sense. While doing more due diligence, I realized that the Air Force base in Dover would likely be a driver for the rental market in Kent County. Do you have any insight in this regard?

If you would be open to it, I would love to be able to pick your brain a little more via PM. I am new to REI and have read extensively on the subject. I just have far less real world experience.

Thanks again,

Eric

Dover is indeed a good market. State capital is there. The Air Force Base is there. The race track and casino are there.  I don't personally invest in the area, so I can't really weigh in much on that other than to say it is viable as there are plenty of people who do invest there. 

@Eric B.

Based on some of your criteria, I have compiled a list of cities in Delaware. 

All these cities rank a "B" or higher based on eight curated risk factors.

All areas have positive income and population growth from 2013 to 2018 as reported by the Census Bureau.  

I have charted both the percent change in income and population for you to see. 

As @James Masotti has stated, these areas will no have as much cash flow potential so it may be worth looking in other places as well.  

See link to chart

Chart Link

Hope this helps! 

This post has been removed.

Sounds like a plan but as mike tyson says everyone has a plan till they get punched in the face.

Now you just go out there if your expectations are achievable with that criteria.

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