Tampa Bay!
Have you ever thought about investing in single-family homes? Well, you’re in the right place. Today, I’m going to talk about why these homes are a good pick for investment. But I’m also going to tell you about some challenges, like how they don’t always give you extra money right away.
Investing in single-family homes often offers steady, long-term growth. The value of these properties tends to appreciate over time, providing a financially sound investment.
Simplicity is another benefit. The single-family home market is generally easier to understand than other types of real estate. It’s akin to the residential environment many are already accustomed to.
Additionally, ownership provides control. You manage the property, which means you make the decisions—from maintenance to tenant selection.
Now, a point of caution: current cash flow from single-family homes in Tampa Bay can be lackluster with the traditional 10-25% down. Cash flow is the surplus money left after you’ve paid off all monthly expenses. At the moment, these properties in Tampa Bay may not yield much immediate profit. It may seem on the surface that they cover their mortgages, but what you haven’t factored in are reassessed taxes, insurance (flood if applicable), management expenses, repair and capex expenses, vacancy rates, and black swan events like the rare eviction.
But why is the cash flow lackluster? Housing prices have far outpaced rents in the area. In addition, while Florida doesn’t have any state income tax (YAY), they make up for it in property taxes. Additionally in addition, interest rates have gone up and up and housing has not fallen enough to compensate for the added monthlies. Housing prices do seem to be spring loaded against falling interest rates.
CASH FLOW
Despite this, positive cash flow isn’t out of reach. There are a number of ways to purchase. I’ll fire them off one by one…
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Fixer upper with a renovation loan
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Put 35-40% down – though I understand that may be difficult or adverse to many investors leveraging goals
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Auction properties (be prepared with a hard money lender if you don’t have cash in your bank)
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Buy with a primary home loan, live in it for at least a year
But what if I told you that single families can cash flow more via other rental strategies? Here are the ones I know about
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long term
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short term (airbnb, vrbo)
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mid-term (1-6 month stays, usually for travelling professionals)
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room rentals (padsplit, homeroom)
So you can see there are a TON of options. The magic really happens when combining the right house with the right purchase and rental strategy. But, while single-family homes in Tampa Bay may not offer an immediate cash flow bonanza, they hold their own merits as a long-term investment. Their relatively simple management and tendency for long-term value increase make them worth considering.
APPRECIATION
In the Tampa Bay area, one of the most compelling draws for real estate investors and homeowners alike is the long-term appreciation of both rents and sales prices. Over the years, this region has seen a consistent upward trajectory in property values, bolstered by a strong job market, influx of new residents, and overall economic stability. The same holds true for rental rates; they have climbed at a pace that outstrips the national average (though finally flatlining in 2023), making investment properties increasingly profitable over time. So, while you may grapple with the question of immediate cash flow, the long-term outlook offers a promising picture of sustained growth and profitability. It’s like the slow and steady turtle in the race—not flashy, but crossing the finish line with gains that are hard to ignore.
If you’re looking to dip into real estate investment, single-family homes offer a manageable, understandable starting point. Just don’t expect them to be your instant cash cow.