Moving to Delaware New investor

17 Replies

Hello BP Community! We will be listing our home just outside of Denver next month with our sights set on the Rehoboth Bay area in tax haven Delaware. I took the past quarantine year to learn about finance, real estate and generally trolling all the useful information here. We are interested in purchasing a primary residence in the Lewes, Ocean View, Millville, Rehoboth Beach, Frankford, Dagsboro area for their excellent public elementary schools, proximity to healthcare facilities for my wife's job and near STR vacation hotspots.

I am a software developer interested in creating tools for real estate investing and making the transition into hosting multiple STR vacation properties. Also a former home inspector, stained glass craftsman and considering pursuing a real estate agent license in the near future. We are interested in having multiple exit strategies, homes that were previously profitable vacation rentals that need some updating, live in flips, utilizing BRRRR strategy, house hacking or implementing 203k rehab loan. Within 5-7 year span I would like to have as many rental properties and a well respected brand to bundle up and sell or utilize a 1031 exchange to level up and move on to the next adventure.

 I know I'm getting ahead of myself so let's connect and see if our interests align. Cheers!

Jeff: Why are you moving from beautiful Denver, CO? I've been trying to convince my wife to at least move to CO for a few years so I can at least get it out of my system. We recently started looking at Delaware with an eye toward a house hack and/or multi-family (Lewes, Rehobeth, or Bethany). We currently live in Philly.


@Anthony Engel It is indeed a beautiful place to live for awhile, we will definitely be back to visit. We've been out here nearly 6 years and want to reconnect with family back on the East Coast. Not to mention I miss the ocean! If you need recommendations on neighborhoods out here or best times to visit let me know, happy to help. Keep me updated with your Delaware plans as well! 

@Jeff Bender   Yes, that's a great site. There's also this one  https://floodfactor.com/
which goes beyond the FEMA mapping, and predicts flooding in the
future. It's good to use in conjunction with the other. For some
reason, the search function has a problem with Rehoboth, but all of the other
towns come up, and you can move from one to another.

In Sussex County where real estate taxes are low they are planning to reassess property values for the first time since 1974, so may see some wild swings in real estate taxes in the next couple years for properties that have been underassessed for decades.

Issue in the area is demand right now, especially in the towns you are talking about. Lots of people moving the area due to remote work or low taxes in retirement so the price of housing is high and multi-family is basically non-existent compared to a metro area.

@Tim Butters - Thank you for that one! After Googling it, there's plenty of info on Sussex and other counties in Delaware gearing up for reassessment, "at its true value in money," as referenced under Delaware state law. Hopefully, it won't hurt as much as the reassessments in Philly back in 2012-2013.

Originally posted by @Anthony Engel :

@Tim Butters - Thank you for that one! After Googling it, there's plenty of info on Sussex and other counties in Delaware gearing up for reassessment, "at its true value in money," as referenced under Delaware state law. Hopefully, it won't hurt as much as the reassessments in Philly back in 2012-2013.

Probably not as bad as Philadelphia, because they are going to adjust the rate, so the total tax collected by the county will be the same. Higher value areas like the coastal area will go up like 50% and more rural areas with lower values will go down 50% because in 1979 there wasn't that great of a FMV difference. Don't know what specific towns will do because many of them rely on the county assessments. Will definitely be a shock to some.

Originally posted by @Jeff Bender :

Hello BP Community! We will be listing our home just outside of Denver next month with our sights set on the Rehoboth Bay area in tax haven Delaware. I took the past quarantine year to learn about finance, real estate and generally trolling all the useful information here. We are interested in purchasing a primary residence in the Lewes, Ocean View, Millville, Rehoboth Beach, Frankford, Dagsboro area for their excellent public elementary schools, proximity to healthcare facilities for my wife's job and near STR vacation hotspots.

I am a software developer interested in creating tools for real estate investing and making the transition into hosting multiple STR vacation properties. Also a former home inspector, stained glass craftsman and considering pursuing a real estate agent license in the near future. We are interested in having multiple exit strategies, homes that were previously profitable vacation rentals that need some updating, live in flips, utilizing BRRRR strategy, house hacking or implementing 203k rehab loan. Within 5-7 year span I would like to have as many rental properties and a well respected brand to bundle up and sell or utilize a 1031 exchange to level up and move on to the next adventure.

 I know I'm getting ahead of myself so let's connect and see if our interests align. Cheers!

 How is Delaware a "Tax Haven" if it has a state income tax?

Thanks @Tim Butters ! Yes you're right that's a great link, after taking into consideration the overall tax burden (income, property, sales, retirement benefits etc.) Delaware ranks 47th highest taxed state or rather 4th lowest taxed. 


For the individual perhaps the a more suitable term would be tax shelter, however I can assure you @Scott Mac Delaware is a tax haven for many a corporation. Around 65% of Fortune 500 companies are incorporated there as of 2014 and there's approximately twice as many corporations based in Delaware than actual Delawareans. This is a great read https://itep.org/delaware-an-o... and if you are more of a movie buff there is always The Laundromat .

@Jeff Bender if you're looking to be "in" the beach towns, be ready to lay down a mil. You can get in the high 200's low 300's a few miles out. I dont have any STR at the beaches and don't know the numbers but I would think the numbers are tight when you really only have prime rental times from Memorial Day to Labor Day. The radius from the beach for LTR numbers to work is getting further and further out.

@Eric Armstrong You are hitting on a number of topics that I would like to take a deeper dive into. Are you mainly focused on LTRs in the Wilmington area and what makes a good deal in your area of choice? Yes, you're correct if you're talking beachfront or just about you will be shelling out the big bucks. My focus for now is a few miles out where the entrance fee is far lower and by targeting properties that would benefit from some updates and forced appreciation perhaps even lower still. I'm not so sure on your LTR idea though. My additional requirement of targeting properties within excellent school districts should provide a LTR exit strategy as well. And to also circle back to the advantageous tax benefits of Delaware, specifically as it pertains to retirement benefits, there is a consistent flow of retirees in the area that require housing. And what better way to spend those golden years than with your grandchildren by the beach? 

These factors should alleviate some of the low season drop off and provide some additional exit strategies should things go sour. The numbers of the prime Summer season need to make sense to make any of this feasible. Ideally a STR should try and maximize occupancy year round, which I agree is hard to do in a moderate to continental climate, unless you've got a secluded cabin in the Appalachians, near a National Park, Treasure, tourist attraction or what have you. Taking all this into consideration and for a number of personal reasons the Delaware beaches are our best option for the time being.

@Shawn McDonnell Thanks for connecting, I'll send you a direct message!

AirDNA

@Eric Armstrong Crunching those numbers to determine which properties make sense for which specific approaches is basically the tool that I would like to build. For my own selfish reasons and for the community as well. It would in essence consume the MLS and deliver alerts to investors given their own interests and specified requirements.

@Jeff Bender I'd say you're gonna need to go about 10 miles out for affordable price point for LTR that are not in HOA or are modular type homes. Of course this depends on your financial position as well. I like to have at least $400/ month gross flow cause I don't have a high paying W-2 or fat bank account if something pops up. If you're in that position then maybe you're only looking for a little or no cash flow.

I do Wilmington because I could(much harder now) get what I was looking for in non war zones.