Moving to Delaware New investor

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Moving to Delaware New investor

Jeff Bender
New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes

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!

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Account Closed
Accountant · Philadelphia, PA · Member since 2013 · 303 posts · 210 votes
5y

@Scott Mac

Income tax is just one type of taxation. There is no sales tax in DE and very low property taxes.

https://wallethub.com/edu/stat...

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  • Anthony Engel
    Investor · Philadelphia, PA · Member since 2021 · 11 posts · 5 votes
    5y

    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.

    0Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    5y

    @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! 

    0Reply
  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    5y
    FEMA has big changes coming in October which will affect flood insurance premiums at the Delaware beaches.
    It would be good to make sure you don't buy in a FEMA flood zone.  
    https://www.forbes.com/advisor...
    There was also an article a week or two ago in the Delaware paper, but I can't find it now.  Their search function is horrible.
    0Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    5y

    Thanks! @Lauren Kormylo I was unaware of this change. This is the best FEMA map I can find regarding this issue https://hazards-fema.maps.arcg... Their site also suggests '...contact your local floodplain administrator (often an official in the zoning or planning department).' Which I will definitely do before purchasing.

    0Reply
  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    5y

    @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.

    0Reply
  • Account Closed
    Accountant · Philadelphia, PA · Member since 2013 · 303 posts · 210 votes
    5y

    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.

    0Reply
  • Anthony Engel
    Investor · Philadelphia, PA · Member since 2021 · 11 posts · 5 votes
    5y

    @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.

    0Reply
  • Account Closed
    Accountant · Philadelphia, PA · Member since 2013 · 303 posts · 210 votes
    5y
    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.

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y
    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?

    0Reply
  • Account Closed
    Accountant · Philadelphia, PA · Member since 2013 · 303 posts · 210 votes
    5y

    @Scott Mac

    Income tax is just one type of taxation. There is no sales tax in DE and very low property taxes.

    https://wallethub.com/edu/stat...

    2Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    5y

    Thanks @Account Closed 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 .

    1Reply
  • Eric Armstrong
    Investor · Wilmington, DE · Member since 2013 · 394 posts · 123 votes
    5y

    @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.

    0Reply
  • Shawn McDonnellBusiness Member
    Real Estate Broker · Rehoboth Beach, DE · Member since 2020 · 14 posts · 11 votes
    5y

    Jeff, I specialize in second home/investment properties here at the beach. If you would like to chat about how I can help, I would be glad to set up Zoom meeting. 

    1Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    5y

    @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

    0Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    5y

    @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.

    2Reply
  • Eric Armstrong
    Investor · Wilmington, DE · Member since 2013 · 394 posts · 123 votes
    5y

    @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.

    1Reply
  • Eric Armstrong
    Investor · Wilmington, DE · Member since 2013 · 394 posts · 123 votes
    5y

    @Jeff Bender sounds like a great project.

    0Reply
  • Eric Armstrong
    Investor · Wilmington, DE · Member since 2013 · 394 posts · 123 votes
    4y

    @Jeff Bender update us!!!

    0Reply
  • Jeff Bender
    OP
    New to Real Estate · Lewes DE, United States · Member since 2018 · 7 posts · 7 votes
    4y

    @Todd H Sneidman Thanks for connecting, I'll send you a direct message.

    @Eric Armstrong You got it!

    The BP community came through, I'm happy to report. @David Guerrero introduced me to my Delaware realtor and fellow BP member @Shawn McDonnell While we were still in Colorado Shawn helped us narrow down our search to find something that fit our rather specific criteria. We ultimately bought a home in a STR friendly community in Lewes with a low HOA ($67/mo). Water access to the inland bays (boat ramp, kayak launch, boat docks, fishing/crabbing docks), community pool, clubhouse, playground etc. Friendly neighbors, great schools in the area and about 20 min to the beach.

    The house we bought is exactly what we were looking for, a live in flip. Similar homes at the time were going for 350k and up, we were able to close on ours at 310k with a 3.25% interest rate on a double lot. The previous owner had let things go a bit so we had a good deal of landscaping to do, replaced the HVAC unit, took up carpets and put down some LVT, interior paint and updating lightning. We plan on living here for 5-7 years so we have time to make it our own and eventually turn it into a STR. There is a large stick built two car garage 700+ sqft and a covered porch included in the home's foundation for further expansion to bump up that square footage.

    We are continuing to work with Shawn, trying to grab a more or less turnkey property for STR for the coming season. It remains rather competitive out here and buyers are willing to go 50k over asking with all cash offers. I think we may need to reevaluate our tact and go after the properties that have been sitting for awhile that we have a reasonable chance of getting.

    Plan is to get a couple STRs going and start working on some passion projects. I have done some digging into real estate listing APIs and found a couple that are interesting:

    https://rapidapi.com/mashvisor...
    https://estated.com/

    Zillow's once free API has become more restrictive and access can unreliable. 

    3Reply
  • David GuerreroPro Member
    Investor · Westchester County, NY · Member since 2016 · 3 posts · 1 vote
    4y

    Congratulations! What a fantastic update! I’m really happy that you found a property in Lewes that fit your criteria. Lewes is a great area and Shawn is an excellent realtor.

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    4y
    Quote from @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!


     Welcome aboard Jeff.

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