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May 23rd, 2019 by Marco Santarelli
An Overview of Tampa Real Estate Investing
If you are looking at Tampa real estate investment as an option in 2019, you must read till the end. While you could find plenty of generic superlatives trying to get you to invest in Tampa real estate, the reality is that there are plenty of hard facts that justify it. Tampa Bay area has been named one of the nation’s top 10 markets for real estate investors. Its unemployment rate is less than 5%, and this is one reason why it is the fastest growing city in the state.
There are a number of economic and development prospects attached to this market and Tampa, FL was described as one of the hottest real estate markets in the US in 2018. Others move here for the cheaper real estate and lower cost of living, 23% below the U.S. average. The population growth fuels demand for housing, and that’s in short supply. Tampa investment properties are affordable with good annual appreciation potential. Let us discuss why Tampa is so highly ranked for real estate investing.
10 Reasons Why Tampa Is The Best Place For Real Estate Investment
1. Tampa Investment Properties Are Affordable
The Tampa real estate market was ranked the fifth hottest market in rental real estate in 2017, and the reason was because property is so cheap here compared to other prime rental markets in the state. The median home price here was less than $170,000. Homes here are so cheap, relatively speaking, that it ranked first among affordable markets for first time home buyers.
The median home value for homes in Tampa, FL would increase by 5.3% to $233,000 in Jan 2020, according to Zillow’s predictions. Currently the The “Zillow Home Value Index” for Tampa is $221,500. The Zestimate home value is Zillow’s estimated market value for an individual home and is calculated for about 100 million homes nationwide.
The median list price per square foot in Tampa is $192, which is higher than the Tampa-St. Petersburg-Clearwater Metro average of $143. The median price of homes currently listed in Tampa is $300,000 while the median price of homes that sold is $228,000. The median rent price in Tampa is $1,495, which is lower than the Tampa-St. Petersburg-Clearwater Metro median of $1,500.
2. Tampa Single Family Rental Homes Are Going Strong
Tampa Bay home values went up by double digits in 2018. Prices for single family homes increased in Pasco and Hernando due to a shortage of properties relative to demand. The median price of a home in Pinellas increased 14% while sales volume fell 12.8%.
Nor can we expect an influx of new home construction to help meet the shortage. This will cause many potential home buyers to become renters or bid up the few properties on the market. This makes the Tampa area a great place for those who want to buy single family rental properties.
Currently. Zillow has 1663 single family homes for sale and 257 homes for rent in the Tampa FL real estate market. Under potential listings, there are about 4 Foreclosed and 408 Pre-Foreclosures homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
3. Flippers Are Struggling Because Home Prices Are So High
A Jun 2018 article in the Tampa Bay Times said that the area’s flipping frenzy may come to an end because of the appreciation of home prices. The number of flipped homes fell 13% between 2017 and 2018. House flippers are having to pay so much for homes that they can’t clear much of a profit on many properties after the renovations and carrying costs.
The 34668, 33617 and 33763 zip codes were still profitable for flippers who could find cheap homes that were often well below $100,000. For everyone else, it means home prices are solid and steadily rising but not in the midst of a boom destined for a bust. Conversely, there are still plenty of opportunities for Tampa real estate investment for the “buy to let” crowd.
4. Tampa Multi-Family Housing Is Phenomenal
Freddie Mac ranked Tampa one of the top multi-family markets in the United States in 2017. Their forecast projected multifamily growth of 4.4% because vacancy rates hovered a little over 5.2%. That made Tampa one of the top seven markets in the country for multi-family investment, rivaling markets like Seattle and Phoenix.
West Shore offers high rents, as does Downtown Tampa. That makes the Tampa real estate investing an excellent choice for investors wanting to put their money down in apartment buildings and condos.
5. Tampa Downtown Redevelopment Provides Opportunity
A multi-billion dollar downtown development is underway by the waterfront. Tampa’s waterfront has attracted a wave of construction estimated to be worth $13 billion. Water Street Tampa is, by itself, a 3 billion dollar, 16 block development. It is near the University of South Florida’s new college of medicine intended to be the center of a medical technology cluster.
This will provide a mix of new residents, commercial growth and industrial redevelopment. The end result is intended to be a walkable community in downtown amidst attractions like the convention center, arena and aquarium. And all of it will be connected by the riverfront. These projects and others already doubled downtown’s population to 8,100 in 2016. Continued growth will only fuel the downtown Tampa real estate investing.
6. West Tampa Is Its Own Opportunity
West Tampa is full of large, often historic buildings that are prime property for redevelopment. Mixed-use properties are a key part of redevelopment here. It is also logical that property would start going up in value here, since there is already redevelopment in South Tampa, downtown Tampa and the West Shore Business district.
The long-term potential for West Tampa is good because it is cheaper than the areas being renovated now, and residents priced out of the newly revitalized areas will start to move into West Tampa.
7. Tampa Real Estate Appreciation Rates
The total value of taxable property in the Tampa Bay area is expected to rise at near double digit values in 2018. In unincorporated Hillsborough County, appreciation was about 10%. In Tampa, it was 10.4%, while St. Petersburg saw increases of 9.5%. In Pasco County, taxable values rose 8.5%. However, this is well below the 15% and 20% taxable rise in property values before the 2006-2007 housing collapse.
Tampa real estate appreciated 32.42% over the last ten years, which is an average annual home appreciation rate of 2.85%, putting Tampa in the top 20% nationally for real estate appreciation, according to NeighborhoodScout’s data. Appreciation rates are so strong in Tampa that despite a nationwide downturn in the housing market, Tampa real estate has continued to appreciate in value faster than most communities.
Looking at just the latest twelve months, Tampa appreciation rates continue to be some of the highest in America, at 11.74%, which is higher than appreciation rates in 97.12% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Tampa. Tampa appreciation rates in the latest quarter were at 3.39%, which equates to an annual appreciation rate of 14.25%.
8. Long Term Trends Are Promising
Tampa has been leading the state in job growth. This is fueled by companies like Amgen and Johnson and Johnson relocating here. The growing medical technology hub is expected to attract educated, well-paid residents to the area. That will cause both rents and property values to rise, since there are no more large open parcels to develop and smaller lots are being snapped up for redevelopment.
Forbes reported in March, 2018 that Tampa had a price to rent ratio of 18. A low price to rent ratio means the new resident should buy instead of rent, whereas a higher ratio is better for renters. A ratio that is increasing dramatically is a warning sign that the housing market is going to crash. This ratio means Tampa real estate investment is nowhere near overpriced. It is Naples with a ratio of 27 that investors should avoid.
9. The Area Is Tax-Friendly
Florida has no state income tax for individuals. Depending on your situation, you may owe a 5.5% state franchise tax. Florida has a lower overall tax burden of 8.9%, 34th out of the 50 states. Compare this to states like New York and Illinois where property tax bills may exceed your mortgage. If you’re living the adage that it is what you keep, not what you make, that matters, you’ll want to opt for real estate investing in Tampa over higher tax jurisdictions.
Regarding property taxes in Florida, though the state government does not collect any, local governments receive much of their funding through these taxes. These rates are assessed at the local level and can vary by county, and they are based on the value of the property. Property taxes in Florida are some of the highest in the country, although there are several exemptions to try to lighten the load on some Floridians.
10. The Area Is Landlord Friendly
Florida is landlord friendly. For example, Florida doesn’t have rent control laws that can wipe out a property owner’s return on investment once passed. Florida doesn’t require a written lease, though you should have one. This certainly means there are few rules regarding what a landlord can and cannot do. Security deposits can be as high as you think they need to be. If the tenant intentionally damages the property, you can order them to leave in seven days.
Investing In Tampa Real Estate: The Conclusion
Strong demand for rentals, limited opportunity for would-be home buyers, excellent future appreciation of Tampa investment properties and a number of other factors make Tampa a good choice for investing in real estate in 2019. Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.
Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. Some of the best places to invest in real estate in 2019 especially for turnkey rentals are Tampa, Houston, Dallas, Birmingham and Atlanta.
Buying an investment property is different from buying an owner-occupied home. Our Tampa investment properties for sale are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business. These are “Turnkey Cash Flow Investment Properties” located in some of the best neighborhoods of Tampa, Florida.
Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.
According to real estate experts, buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market.
We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities.
We can help you succeed by minimizing risk and maximizing profitability. We recommend contacting an Investment Counsel for our current markets and a FREE Strategy Session by clicking “here.”
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
West Tampa potential
Single family home appreciation / flipping
Tampa single family home appreciation
Freddie Mac rates Tampa top multifamily market
1st in affordable for first time home buyers
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