All Forum Posts by: Mario Ciccarelli

Investment Info:

Townhouse other investment in Newark.

Purchase price: $190,000
Cash invested: $25,000

My first investment, a house hack near the University of Delaware. It is a 3 bedroom 2 bathroom townhome. I live in the master bedroom and have the other 2 rooms rented out ($800/month and $700/month) which breaks even or cash flows $50 depending on utilities.

This house had 2 living rooms when I bought it (hidden bedroom) and I am in the process of converting it to an additional bedroom that will rent for $800/month. Once completed I should cash flow $600 after all expenses and cap ex given the projected rate of expense increase.

What made you interested in investing in this type of deal?

I needed to get started in real estate investing and knew a house hack would be the easiest way. I used to live in central NJ which is a very expensive market, however I had an opportunity to move to Delaware last year. The company I work for had a small, new office in Wilmington DE. I analyzed the DE market, new house hacking near a university would be effective for rent by room, and pulled the trigger. I moved 100 miles from friends and family to start this journey and I am pumped for more!

How did you finance this deal?

I financed this deal with a 5% down conventional loan.

I have one investment property right now, a townhouse I'm house hacking by renting out the rooms, but I am looking to partner on my next deal. My friend is interested in REI, has a boatload of investable savings, but has very little knowledge and experience in real estate. I on the other hand have spent the past 4 years reading, listening to podcasts, and now actually have a deal. I've been studying my market and the two of us would like to start acquiring properties together, him as the money and me as the muscle.

My question is, what is the best way to structure this? Do we create an LLC for each property? A parent LLC and then a new one inside for each property? Should we create this LLC now or after we find a deal? We're actively looking for them but I don't want to get held up in legal work if we find one and then don't have the entity set up. I also know I need to find a lender who will loan to LLCs as we are disqualifying ourselves from traditional mortgages this route.

@Eric Armstrong I did some digging and talked to a local investor. There are no interest requirements and he keeps his in a regular savings account. So I’m going to put my deposits in a regular savings account and I’ve opened a high yield account for the cap ex and maintenance!

I can't find anything in the code that mentions interest at all. Can you show me where you are seeing this? Or where you keep your deposits would be even better.

@Eric Armstrong

How do I open an escrow account? It’s not something I’m familiar with at all.

@Eric Armstrong

I just revisited the code and I’m not sure where I saw “interest bearing.” That’s what threw me for a loop because paying back those dividends from one account and deciphering who is owed what would’ve been a nightmare. But since that’s not the case, I’ll just keep all my deposits in one account, pocket the interest for myself, and easily pay the tenant their deposit back sans repairs.

Thanks!

I've contacted two attorneys so far and I've yet to hear back so I figured I would post it here too. The Delaware landlord-tenant code states: 

"Each security deposit shall be placed by the landlord in an escrow bank account in a federally-insured banking institution with an office that accepts deposits within the State. Such account shall be designated as a security deposits account and shall not be used in the operation of any business by the landlord. The landlord shall disclose to the tenant the location of the security deposit account."

So, I need an interest bearing savings account for each unit or tenant. Since I'm renting rooms for a househack, I will need one per tenant. Capital One offers a 360 savings account where you can add up to 25 sub-accounts. That would be perfect. BUT there are no Capital One banks within the state of Delaware. So is it legal for me to use that? Or do I need to open a bunch of savings accounts at my local credit union? 

PS: I moved here from out of state in October so feel free to connect! I need some Delaware BP friends

In the efforts of reviving this thread, I am a new Delaware investor. I moved here in October 2020 and I have my first investment, a single family townhome house hack, underway in Newark DE 2 miles from the University of Delaware. I'm looking for my next deal as well as learning the ropes of landlording through soon to be leased bedrooms. 

I'm hoping to connect with fellow investors in the area! 

@Joshua Hower

Welcome! I’m a new investor recently moved to the area from NJ. I live in Newark by UD in a house hack but I’m looking to buy at least one other property this year.

I dig your goals, I have aggressive goals as well and I hope to connect!

@Samantha Miller are you still renting your house out to roommates while living there? I just got a house in Newark Delaware under contract and I’m looking to do the same. Since you know the ropes, what worked and what do you wish you did differently? Thanks!