Where to Buy Investment Property in Tampa Bay
This is the second part in our blog series on where to buy investment property in Florida, particularly Tampa Bay. In part one, we discussed where to purchase investment homes and what to look for. In this blog, we will discuss where not to purchase investment property. At Hoffman Realty, we have been landlords and property managers in Tampa Bay for about 30 years, so we think we have some experience in this area that will be helpful to landlords and investment property owners.
Here are the three places we recommend not investing in Tampa Bay.
Associations with restrictions on rentals.
There are several ways that associations can be restrictive when it comes to rentals. One of those ways is to have quotas. There may be 100 units in the association and they will only allow 20 percent to be rented. We’ve had some experience with this. There’s a property that we managed for an investor over the last five years, and it’s a three bedroom, two and a half bath condo in an association. The last time it came up for re-rental, we had to go on a waiting list because the association had enacted a quota. We had to leave it vacant for five months, waiting for the unit to get to the top of the waiting list. Our investor lost money on that unit because of the vacancy. Since then, the association has reduced the quotas and the next time the unit comes vacant, the landlord may have to wait a whole year before he can re-rent it. That’s destroying his cash flow.
Associations can also be restrictive by taking a long time to approve someone to rent in the community.
Most associations can approve a tenant within one or two weeks, but others take more than 30 days. That isn’t renter friendly and most renters won’t wait that long to find out if they are approved. Another restriction to look for is time limits. Once you purchase in an association, you might be required to wait one or two years before you can rent the property out. The association wants owner-occupants in that situation, and you don’t want to purchase an investment property in a community like that.
Properties in flood zones
Properties in flood zones require insurance, which is a cash flow robber for property owners. Flood insurance is predicted to get considerably more expensive in the next few years. It can get as much as 10 times more expensive than it is today. That extra insurance will destroy your cash flow, so don’t buy in flood zones.
Real outskirts of the urban core.
You don’t want to buy a property that’s too far from where people need to go. For example, this might mean Spring Hill, Brooksville and Plant City. Those houses look very attractive and they are also priced lower than homes in Wesley Chapel or Valrico, but that’s a very long commute if someone has to get to Tampa for work. The rents are also proportionally lower, so make sure you understand that and try to buy in a different area.
Hopefully this has helped you understand where you don’t want to buy investment property in Tampa Bay. Contact us or give us a call if we can answer any questions at (813) 875-7474.