Tampa Bay is one of the hottest markets for investment rental properties in the United States. Booming with new businesses, upscale hotels, and an unmatched entertainment scene, this sunny paradise makes for the perfect destination to start or grow your investment portfolio.
As a property manager in Tampa, I know it can be difficult to navigate the bustling Tampa Bay area as an investor. Lucky for you, I’m here to give you my guide to investing in Tampa rental properties!
Why Tampa Bay?
If you’re reading this, you may be considering investing in the Tampa Bay area. As an expert in all things Tampa Bay, real estate, and property management, I’m here to tell you that investing in Tampa is one of the best decisions you can make.Â
Whether it’s because of the vacation lifestyle or the overwhelming abundance of restaurants to choose from, residents often argue that Tampa is the best location in the country. In addition to the fact that 51% of Tampa’s residents rent their homes, the list of reasons why Tampa is a superior investment location is endless, so let me tell you a few.
Tampa’s infrastructure is rapidly developing and expanding, both catering to the recent influx of residents and continuing to attract newcomers from all over the country. Money is flowing through Tampa as corporate, commercial, and residential investors have identified the potential for growth and success in this already thriving city. The presence of major financial, healthcare, and educational institutions such as Tampa General Hospital, Moffitt Cancer Center, Raymond James Financial, and University of South Florida, draw a large and diverse demographic ranging from students to highly successful multi-millionaires. With a strong economy and high employment rate, a Tampa Bay rental property is a sound investment decision for those looking for a promising and high return on investment.
In addition, the quality of life in Tampa Bay is a key factor contributing to the high population of renters throughout the area. The expansion of Water Street, with its luxurious high-rise residential complexes, 5-star restaurants, and modern workout studios, has helped Tampa cultivate a hip atmosphere, drawing a crowd of financially stable individuals. As opposed to owning their own home, Tampa residents are keen to rent and are willing to splurge on their accommodations.
Encompassing Tampa, St. Petersburg, and Clearwater, the Greater Tampa Bay area offers a diverse range of living environments, from suburban beachside neighborhoods to true city living. Tampa Bay caters to various demographics, including young professionals to retirees, making it the perfect location for investments of all types.
All three cities offer vibrant atmospheres and no shortage of amenities including restaurants and cafes, cultural history, and countless recreational activities. Whether residents prefer to relax at the beach, attend a concert, dine at a highly rated establishment, or cheer on their favorite sports team, Tampa Bay caters to everyone.
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Defining Your Investment Goals
The first essential step in the Tampa rental property investment process is to define and consider your investment goals. What do you want to get out of your investment? How long do you plan to rent or keep your rental property? Do you have a desired return on investment target? These considerations will guide you in finding the right investment property that aligns with your goals.
There are various types of investment properties including single-family homes, multi-family units, condominiums, and townhomes. Though differing from each other, they are all profitable rental property investments. The Tampa Bay Area, a diverse region made up of highly populated cities, beaches, and residential areas, boasts no shortage of all rental housing categories.
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Cash Flow
Cash flow is one of the most essential financial factors to consider when purchasing a rental property investment. Cash flow refers to the amount of money put in your pocket from your rental income after all expenses have been paid. Many investors use their rental income to finance their home and pay off operating expenses.Â
These expenses often include:
- Mortgage payments
- Property taxes
- Insurance
- Maintenance
If you intend to use your rental income towards paying off any expenses, it is critical to ensure the monthly income rate is enough to do so.Â
AppreciationÂ
Appreciation refers to the increase in value of your property over a period of time. Although the real estate market is constantly changing, historically, the longer you hold onto a property, the more valuable it becomes. The average sale price in Tampa currently stands at $401,000. Just 10 years ago the average sale price in Tampa was $209,382, meaning that if you had purchased a home in 2014 and sold it this year, you would have almost doubled your money.
When deciding how long to hold onto your investment, considering the appreciation potential is crucial. Owning a rental property over an extended period of time can provide long-term future wealth in addition to the monthly income generated. Doubling your investment won’t happen overnight, however, holding onto your investment and allowing it to appreciate with time will.
Several factors can help analyze the appreciation potential of your investment including:
- Location: Consider the desirability of the location of your investment. Factors such as proximity to downtown and popular amenities, crime rate, and walkability contribute to appreciation value over time.
- Property condition: The condition of the property itself is a significant influence on the appreciation rate. Properties with modern and upgraded features and amenities tend to appreciate more than properties with outdated features and appliances that may need major attention in the future.
- Future Development: Future development can play a huge role in the appreciation value of your property, especially in continuously developing cities like Tampa. In some cases, development can make or break the success and value of a property. For example, the development of a nearby public park with walking trails and recreational facilities will most likely increase the value of your property. On the other hand, the development of an industrial facility or major roadway causing noise, pollution, or traffic, would decrease the value of your property. Look into city planning and zoning to research any future developments that may already be planned in the area.
Where Should I Invest in Tampa?
The number one factor that affects your return on investment and success of your rental property is the location. The location of your property will determine a number of factors that will contribute to your experience as a rental property owner. These factors include the rental rate you can expect to receive, the safety of your property, your tenants’ satisfaction, and the property’s appreciation rate.
There are various Tampa neighborhoods where rental properties will continue to thrive. Some of the best places to invest in Tampa include:
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St. PetersburgÂ
Because of its peninsular geographical location, the further development of St. Petersburg is limited. While Downtown St. Pete is currently experiencing a surge in multifamily residential units, extensive growth across St. Petersburg is restricted due to geographical limitations.
The limited availability of land for development will increase the competitiveness of the rental market. As the population of St. Petersburg grows, rental demand will remain high and competitive. Now is the perfect time to invest in St. Petersburg as the city is experiencing a significant population increase, high rental rates, and an almost fully developed status.
The average rent in St. Petersburg currently stands at $1,991.
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South Tampa
South Tampa encompasses some of Tampa’s most desirable neighborhoods including Hyde Park, Harbour Island, David Islands, Bayshore Gardens and Palma Ceia. Investing in properties in South Tampa will come at a higher initial price compared to surrounding areas within Tampa Bay. In turn, your rental rate will also be high, making for a quick return on investment.Â
These areas are home to some of Tampa’s most beautiful residences, historic landmarks, as well as a plethora of dining establishments and amenities. The close proximity to the city, beaches, and walkability allow South Tampa investments to hold high appeal and appreciation rates.
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Seminole Heights
Seminole Heights, a historic Tampa neighborhood, has recently undergone a spurt of growth and revitalization, and offers a unique opportunity for property investors. The area has been filled with vintage thrift stores, unique restaurants, and eclectic shops, attracting a wave of new residents and transforming Seminole Heights into a thriving community. In addition to its vibrant retail and dining scene, the streets of Seminole Heights are lined with trees, well-preserved historic homes, and local attractions such as farmers markets and cultural events.
Though Seminole Heights has been established since 1911, its recent revival has made this up-and-coming neighborhood an excellent spot for a rental property investment. Seminole Heights offers renters a true residential feel just outside of the city and a short drive away from the beautiful beaches. As Seminole Heights continues to undergo development, rent prices will increase and investments will appreciate significantly.
The average rent in Seminole Heights currently stands at $1,536.
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Temple Terrace
Investing in a rental property in Temple Terrace presents a profitable opportunity for Tampa rental property investors. Temple Terrace is a suburban neighborhood which is home to the University of South Florida. Investing in a rental property in close proximity to a large university, such as USF, often offers investors a secure and stable income stream. The demand for rental properties in Temple Terrace is consistently high, with students, professors, and working professionals seeking long-term rental properties.
In addition to the University of South Florida, Temple Terrace offers a convenient and central location for commuters. The mix of shopping centers, restaurants, and parks make Temple Terrace an appealing place to live, and therefore, invest. The presence of a large university ensures frequent demand for rentals, long-term wealth, and immediate rental come for Tampa investors.
The average rent in Temple Terrace is $1,590.
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Due Diligence and Property SearchÂ
Property Inspection
Once you’ve chosen your location, conducting a thorough inspection of your potential property is crucial. Inspections allow you to identify potential issues or concerns that should be taken into consideration prior to purchase. If you’re prepared to take on a project, purchasing a fixer-upper may be a suitable option for you. However, if you’re looking for a move-in ready home, this inspection is especially important to ensure it is a true turn-key property.
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Analyzing Comparable Tampa Properties
When choosing an investment property, considering the potential rental rate should remain top of mind. Prior to acquiring a property, an investor should analyze comparable properties in the area to determine what they are renting for. Analyzing other rental properties in the area will give you an idea of what you can charge your tenants for rent, and help evaluate your potential return on investment.
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Tampa Zoning Laws
Understanding zoning laws is an essential part of the property search process. Zoning laws determine what you can or can’t do with your property, and you want to ensure that long-term rentals are a viable option. Failing to research zoning laws can disrupt your property’s success and profitability.
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Location, Size, and Condition
Factors such as location, property size, included amenities, and overall condition will significantly influence your rental rate. Locations with desirable amenities and close proximity to the city or beaches typically allow for higher rental rates. A mix of a popular location, decent property size, and a well kept property will maximize your investment potential and desirability.Â
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Investing with a Tampa Property Management Company
Investing in rental properties in Tampa is one of the most strategic decisions you can make as a current or potential investor. As Tampa is currently one of the hottest cities in the country, a rental property investment in Tampa offers investors the potential to generate significant income and achieve a strong return on investment.
Working with a professional property manager is essential for maintaining and operating a successful rental property in Tampa and will allow you to earn a passive income. A property manager takes over all daily management operations, relieving you of the responsibilities associated with running a rental property.
At The Listing Real Estate Management, we provide the best property management services in Tampa Bay. Our team of professionals provide a personal, proactive, and dynamic approach to residential management, offering comprehensive services including:
- Marketing and leasing
- Tenant screening
- Rent collection
- Maintenance and repairs
- Rental property accounting
As a boutique Tampa property management company, we take pride in managing all types of residential investment properties. We ensure that all of our client’s rental properties are well-maintained and thriving throughout the lease term and beyond.
With our property management team on your side, your Tampa investment property is in the best hands possible. Whether you’re a first time investor trying to navigate the Tampa rental market, or an experienced portfolio holder, our professional property managers and licensed Florida real estate agents are here to help!
Contact us today at The Listing Real Estate Management, your boutique property manager, to start your Tampa Bay investing experience!
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