Investing in rental properties is one of the best real estate strategies for the US housing market. However, real estate investors shouldn’t just choose whatever location and hope for the best. Instead, make smart, strategic decisions and only invest in the best places to buy rental property. One such location (which we have analyzed for you) is the Tampa real estate market. Why is it such a strong market for long-term rentals and where can you find top-performing Tampa investment properties? Let’s take a closer look.
5 Reasons to Invest in the Tampa Housing Market
Tampa Bay is the second-largest populated metropolitan in the Florida real estate market. With a local economy worth $130 billion, and a metro area that ranked as one of the 20 fastest-growing markets in the US, the Tampa real estate market is definitely one that property investors want to be in. Let’s get into exactly what it is that makes a Tampa real estate investment in traditional rentals so profitable.
Here are some key Tampa real estate market trends:
1) Strong Job and Population Growth
Being consistently recognized as a high growth market, it’s no surprise that Tampa welcomes a new wave of people every year looking to call Tampa home. Over the past two years, the Tampa population has increased by an impressive 4.6 percent. People are moving to Tampa, and it makes sense why. The sunny beaches are not the only thing attractive about this city- its job market is too. STEM, financial services, and healthcare are just a couple of industries experiencing high job growth in Tampa’s local economy. And, with the headquarters of four Fortune 500 companies and a diverse economy, unemployment isn’t an issue for Tampa residents. Especially when you consider the fact that the Tampa metro area contributed about 40,000 new jobs in 2016 which helped boost Florida’s overall economy.
2) Growing Inventory
According to Zillow, the Tampa real estate market is currently neutral. Meaning it isn’t really leaning towards either side of the market- both buyers and sellers can score good deals. However, with such rapid growth in population and local economy, Tampa is heating up in the eyes of real estate investors and homebuyers.
Still, the construction of new residential property is what’s keeping the market balanced between a seller’s market and a buyer’s market. The PWC’s Emerging Trends in Real Estate 2019 survey ranked the Tampa real estate market second out of 79 cities in regards to homebuilding prospects. So for the foreseeable future, Tampa real estate investors will find a sufficient level of housing inventory.
Related: Should I Buy Investment Property in a Buyer’s or Seller’s Market?
3) Increasing Home Values but Affordable Selling Prices
Tampa real estate has increased in value by 3.2 percent over the past year and is currently holding a median home value of $218,900. While homes in the Tampa real estate market are appreciating at healthy levels, Tampa houses for sale are still quite affordable. With year-over-year growth of 4.9 percent in the home sale price, property prices are increasing, but relative to the nation, the Tampa real estate market is not expensive. In 2018, the median selling price of Tampa single-family homes was $236,000 (below the national median of $266,900).
4) Strong Rental Market
With all this talk about a large population and a strong housing market, real estate investors still need to know how profitable the rental market in any city is before investing. In the Tampa real estate market, over half of the population (53.3%) rents their housing. Combine this wide renter pool with the 2.6 percent year-over-year rent growth, and you’ve got yourself a strong rental market in Tampa.
Related: 5 Steps to Conducting an Accurate Rental Market Analysis
5) Stable Citywide Returns
Before listing the best places for rental property performance in the Tampa real estate market, we’re going to give you an overview of how long-term rental properties perform in the city. Using data and key calculations from Mashvisor’s investment property calculator, here is how Tampa rentals perform on average:
- Median Property Price: $739,706
- Price per Square Foot: $501
- Price to Rent Ratio: 26
- Average Days on Market: 51
- Monthly Traditional Rental Income: $2,372
- Traditional Cash on Cash Return: 1.1%
The Tampa real estate market has 177 constituent neighborhoods. Taking the average performance of so many different local markets can skew the actual profitability level of investing in Tampa. For example, the median property price of $739,706 doesn’t mean all Tampa properties for sale are that expensive. And the average return rate of 1 percent doesn’t mean all investments have a low return. Because neighborhoods performing at all different levels are included in the calculations, real estate investors need more of a deep-dive into the Tampa real estate market for optimal investment results.
Related: Top 5 Reasons to Invest in Tampa Real Estate
Let’s breakdown the Tampa housing market based on rental property performance in different neighborhoods.
The 6 Best Neighborhoods in Tampa for Long-Term Rentals
Again, using data from Mashvisor’s calculator, we will be listing the top-performing neighborhoods for Tampa investment property in 2019:
MacDill AFB Area
- Median Property Price: $215,000
- Price per Square Foot: $141
- Price to Rent Ratio: 8
- Average Days on Market: 17
- Monthly Traditional Rental Income: $2,230
- Traditional Cash on Cash Return: 6.8%
East Ybor
- Median Property Price: $126,738
- Price per Square Foot: $119
- Price to Rent Ratio: 8
- Average Days on Market: 55
- Monthly Traditional Rental Income: $1,285
- Traditional Cash on Cash Return: 6.3%
Channel District
- Median Property Price: $506,773
- Price per Square Foot: $303
- Price to Rent Ratio: 16
- Average Days on Market: 98
- Monthly Traditional Rental Income: $2,566
- Traditional Cash on Cash Return: 3.4%
Northview Hills
- Median Property Price: $138,726
- Price per Square Foot: $110
- Price to Rent Ratio: 11
- Average Days on Market: 86
- Monthly Traditional Rental Income: $1,025
- Traditional Cash on Cash Return: 2.9%
Rattlesnake
- Median Property Price: $541,890
- Price per Square Foot: $257
- Price to Rent Ratio: 12
- Average Days on Market: 148
- Monthly Traditional Rental Income: $3,861
- Traditional Cash on Cash Return: 2.9%
Live Oaks Square
- Median Property Price: $139,481
- Price per Square Foot: $98
- Price to Rent Ratio: 12
- Average Days on Market: 97
- Monthly Traditional Rental Income: $1,004
- Traditional Cash on Cash Return: 2.8%
The Tampa real estate market is full of investment potential and is the ideal location for investing in rental properties. Real estate investors just need to know where to look and which tools to use. Mashvisor’s got you covered in both of those aspects. Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties that match your criteria in a matter of minutes!