What type of rental property to buy in Tampa
This is Part 2 of our blog series addressing what type of rental property to buy in Tampa. In Part 1, we talked about multi-family properties, so today we are talking about single family properties. By single family, I mean single family homes, townhouses, and condos. They are not multi-family properties. I have owned both single family and multi-family properties over the last 30 years, and during this time we have also provided property management in Tampa for hundreds of properties like that for landlords. There are pros and cons to investing in single family properties.
Advantages to Owning Single Family Properties
Typically, your tenants are going to stay much longer when you own a single family home. We found that on average, they stay twice as long as they do in multi-family properties. That helps with your cash flow because vacancies are lost money. The best thing you can do as a landlord is to keep a tenant for multiple lease terms.
Single family properties are attractive to tenants, so when they come available on the market, they rent quickly. In fact, they rent twice as quickly as multi-family properties do. Another thing that surprised us during this analysis is that legal costs associated with single family properties were quite low. There are not many evictions or civil actions relating to the properties. With multi-family homes, the legal fees were significant.
Disadvantages to Owning Single Family Properties
Single family homes have higher maintenance costs. That’s because there is no economy of scale. If you own four single family properties, someone must drive all over town to service them, whereas if you have a fourplex, all your units are right there; you have one roof and one yard.
Another problem with single family investments is that there is less consistency with cash flow. If your tenant vacates, there is no cash flow. With multi-family homes, a vacancy in one unit levels out because income is still flowing from other properties in the building. So, always have a rainy-day fund if you decide to buy a single family home. You never know when a tenant will leave unexpectedly or you’ll need a new air conditioning system.
You’re typically going to pay more for a single family property. That’s because you’re competing with owner occupiers who want to live in that property. They might be willing to pay more than you are willing to pay on an income property.
We think single family properties are great investments for anyone; whether you’re experienced or just starting out. If you want to buy a single family property, talk with your property manager before you buy. You’ll get information like how much rent you’ll earn, how long it will take to find a tenant, and what kind of expenses you need to be prepared for.
If you have any questions about this topic, or anything pertaining to Tampa property management, please don’t hesitate to contact us at Hoffman Realty.