One of the main driving forces of investing in real estate is the profitability that comes with it. And it goes without saying, different areas have different profitability statistics. Today, we’ll focus on just one area: the Tampa real estate market, one of the top locations for buying a rental property in Florida. How profitable is the average Tampa real estate investment? What are other motivating factors to invest in the Tampa housing market? Keep reading to find out!
Tampa Real Estate Market: The Data
The Tampa housing market, like many cities in the Florida housing market, is known to be lucrative. But just how money-making is it? To quantitatively find out, we turn to Mashvisor’s investment property calculator. Mashvisor’s calculator allows any investor to analyze a local housing market or specific investment property. If you are a Tampa real estate investor and want to try out Mashvisor’s calculator, sign up now!
In the meantime, here are the statistics for the average Tampa real estate investment:
- Median Property Price: $356,794
- Price-to-Rent Ratio: 19
Traditional
- Rental Income: $1,589
- Cap Rate / Cash on Cash Return: 1.6%
Airbnb
- Rental Income: $2,605
- Cap Rate / Cash on Cash Return: 3.7%
- Airbnb Occupancy Rate: 54%
6 Reasons to Buy a Tampa Real Estate Investment
So, why exactly should you become a Tampa real estate investor? Here are six reasons:
1. Profitability
First and foremost, Tampa rental properties are lucrative investments. Both Tampa short-term rentals and traditional rentals generate high rental income and return on investment, as seen in the previously mentioned data. These numbers only represent averages, meaning that most Tampa investment properties will likely boast higher figures. Also, the best neighborhoods in the Tampa real estate market, which will be mentioned shortly, have higher values than the city average.
2. Affordability
Tampa investment properties for sale are also very inexpensive, a staple of buying a rental property in Florida. While the city’s median property price is slightly higher than the national median, its property prices are affordable, nonetheless. The price of the average Tampa real estate investment in the city’s best neighborhoods, however, is less than both the city and national medians. What’s even better is that five out of the six neighborhoods to be mentioned in this blog have Tampa houses for sale that are less than $200,000!
3. Strong Economy
Tampa also has a strong economy, which is another common feature of investing in real estate in Florida. The area is home to many Fortune 500 and Fortune 100 companies. The city also acts as headquarters to 19 companies, generating annual revenue of over $1 million. Tampa’s economic sector includes finance, healthcare, insurance, national defense, and tourism.
Tampa also fares better than the US and the State of Florida in several economic categories. Its unemployment rate is 3.5%, while the state’s is 3.8%, and the nation’s is 3.9%. Over the last year, Tampa has had a job market growth of 2.3%. This is significantly higher than the national rate of 1.6%. This growth is expected to be long term, as the predicted job growth in Tampa over the next decade is 42.7%. The US average for this statistic is 33.5%. These economic trends heavily contribute to the success and appeal of every Tampa real estate investment.
4. Growing Population
Another factor influencing Tampa houses for sale is its population growth, which is heavily tied to its strong economy. Tampa has had a population growth of 10.34% since 2010. By comparison, the national growth rate since that time has been 5.96%. This makes Tampa one of the fastest growing cities in Florida and the US as a whole. Aside from the abundance of jobs, many are flocking to Tampa, and Florida in general, due to the state’s lack of an income tax, compared to the 4.6% US average. Tampa’s sales tax rate, at 7.0%, is also lower than the national rate, 7.3%. The combination of these factors widens the pool of tenants for a Tampa real estate investor. As a result, more than half of the city’s residents reside in a Tampa rental property.
5. Real Estate Prospects
Another reason why buying a rental property in Tampa is, and will be, a great investment is the ample amount of investment opportunities. While most markets in the US are seller’s markets, Tampa is finding the fine-tuned balance between a seller’s and buyer’s market. This is largely due to the rise in construction of single-family homes, which has increased by 12%, or 20,000 permits, in the previous year. Tampa was also ranked the second highest in homebuilding prospects for 2019 by the PwC. It is also in the top 10 for overall real estate prospects for 2019 in the same report.
6. Airbnb Success
The average Tampa real estate investment also has excellent Airbnb potential. But before we dive into it, is Airbnb legal in Tampa? The answer is yes. You can read more about the city’s Airbnb regulations, such as its 5% Tourist Development Tax, on Airbnb’s page.
It is an understatement to say that Tampa vacation homes are profitable. The Tampa Bay region, for instance, generated over $113 million in Airbnb revenue in 2018, accounting for roughly 14% of all of Florida’s Airbnb income. With the city’s sports teams, Florida weather and beaches, and cultural events, it’s easy to understand the success of Tampa short-term rentals.
Best Neighborhoods for a Traditional Tampa Real Estate Investment
The best locations for a traditional Tampa real estate investment, according to Mashvisor’s calculator, are:
East Ybor
- Median Property Price: $162,972
- Price-to-Rent Ratio: 12
Traditional
- Rental Income: $1,169
- Cap Rate / Cash on Cash Return: 3.5%
Woodland Terrace
- Median Property Price: $184,000
- Price-to-Rent Ratio: 12
Traditional
- Rental Income: $1,334
- Cap Rate / Cash on Cash Return: 3.3%
Ybor City
- Median Property Price: $176,465
- Price-to-Rent Ratio: 12
Traditional
- Rental Income: $1,206
- Cap Rate / Cash on Cash Return: 3.1%
Best Neighborhoods for an Airbnb Tampa Real Estate Investment
Want to know the best locations for investing in vacation homes in Tampa, FL? According to Mashvisor, these are the neighborhoods you should focus on:
Palmetto Beach
- Median Property Price: $275,967
- Price-to-Rent Ratio: 17
Airbnb
- Rental Income: $4,666
- Cap Rate / Cash on Cash Return: 11.1%
- Occupancy Rate: 45%
Terrace Park
- Median Property Price: $131,696
- Price-to-Rent Ratio: 10
Airbnb
- Rental Income: $2,237
- Cap Rate / Cash on Cash Return: 8.5%
- Occupancy Rate: 59%
Sulphur Springs
- Median Property Price: $135,216
- Price-to-Rent Ratio: 12
Airbnb
- Rental Income: $1,848
- Cap Rate / Cash on Cash Return: 7.3%
- Occupancy Rate: 53%
Want to search for a Tampa real estate investment? Click here to start your 7-day trial with Mashvisor to use its calculator to find the best Tampa investment properties for sale!