Tampa Triplex yay or nay??

Question

Hello BP,

I am in the midst of my first deal, and wanted to get some second opinions on the property, hopefully from Tampa area experts. It is a Triplex in Ybor Heights, definitely a C class neighborhood, but the property has excellent rental history and many recent updates. Hopefully it is ok that I add the link to this post. I have run the numbers and it will cash flow no problem. Mainly wondering about the neighborhood. Inspection is done and only minor termite damage found. Offer is in at 360K. Thanks for any help!

https://www.zillow.com/homedetails/1105-E-28th-Ave-Tampa-FL-33605/45099413_zpid/

Michael Haynes · Answer

Hello Eric Aldrige. Are you in Portland Or. trying to find a multi-family property to rent for positive Cash Flow? Like you don't know the Ybor area, East of the I275 highway? My helper, Allen, lives on 28th just a couple houses away. A new 3/2 was just sold across the street from him that was a City sponsored improvement project for cheap. Three more are being finished just North of there in the alley. Ybor City is under the Gentrification Process for a very old, run down neighborhood, by the Fippers who ran out of affordable Flips on the West side of I275, all the way to North Tampa. The main question is if you would live there if it does not work out? I would not. Did you see that it Sold on 8/9/18 for $52,000? They are asking $396,999 and there is a Pending Offer. There is only 2511 sq. feet of construction and it was built in 1920. If you figure the lot is worth $20,000 and new construction cost at $100 per sq. foot would be $260,000, the whole place is only worth around $300,000. Did they termite tent and upgrade all the electric etc? The pictures look good, but, it is still an old bungalow house. Every other property within two blocks is worth $200,000 or less...I have noticed that the Investors who are looking for Duplexes and Tri's are looking on the East side of I275 because there are not that many on the West side all the way to MacDill AFB. The time to show a Profit is when you Buy and not wait ten or more years to gain Appreciation with the R.E. Cycle, which is at the top right now. 1% in Rent from the Sale Value would be around $4000 a month. Good luck getting that and if you did find three tenants to pay that much, good luck getting the second months rent. Did you look at the Parking? There is only room for one car to park in the back and parking on that narrow street is not going to work. Are you the kind of person who would live in the front house and rent the two apartments in the back and put up with the neighbors? I am Closing any day now, on a $380,000 half acre down near the AFB. I will clear $350,000 Cash. In Tampa you only need $200,000 to make money doing Flips. Duplexes and Triplexes are usually found in St. Petersburg. If you live in Portland, there must be lots of opportunities out there that don't involve, long term Tenant nightmares. If you don't own your own Home, then, that is the first place to start for a fixer upper and sell it two years later Tax-free. I am fixing up my ten year, 3/1 Rental that I moved into two years ago to make it my Residence to sell Tax-free. It is just a mile up the street by the I275 and Sligh Ave. exit. I need another month to get to refinishing the terrazzo floors and I will ask $199,000 to make a $50,000 Profit. I always tried to clear at least $100 per month on each Unit. I don't look to be a Landlord anymore as it took another 11 years from the 2008 Crash in the Economy to get back to where I am Debt Free! and Flush with Cash to do simple Flips, one at a time. I have four properties on my Target List that I can fix up and move into and have a $50,000, upfront Profit when I Sell two years later. The Market has slowed down, but, there are still Pending Offers on some properties and some do get Sold. If you do your Due Diligence, you can find Fixer Uppers that are affordable if you have the Cash to snatch them up. Your competition are the new 3/2's with garages that they sell for $250,000. And they are building new Townhomes, 3/3's with a single garage for $190,000 in some areas. Would you want an old bungalow or the new home across the street?

Bryce Wade · Answer

I have a couple duplexes in Ybor. Like Michael said, defintly alot of gentrification happening in the area which is a plus...as long as you are still getting in at a decent price obviously.The property does seem to be a bit high price wise. Just work closely with your PM first couple months to ensure that the place is getting ran correctly. Best of luck to you and if you need a contractor recommendation or some other local resource feel free to reach out.

Michael Haynes · Answer

Hello Reese Newell, I can see where you got your FMR of $1575. But, that does not answer your questions. I don't know how your quick breakdown numbers work, but, I live about a mile from that triplex that Eric Aldrige was asking about in the 33605 Zip Code on East 28th Street. All you have to do to actually see how much houses in that area are selling for and then how much they are renting for. with pictures and all the data you want is on Zillow. My Agent gave me access to the MLS in the new area that I have targeted to move to and it has shown me absolutely nothing in two months. All the homes that I have on my Target list came from Zillow with pictures. I take them to my Agent and get her to alert me to the ones that are Pending that I would rather have, if one comes out with a new Active Listing while I wait for the Closing on my Commercial property. Single family homes in Tampa have almost never produced positive Cash Flow from rents. How are you going to make money on a house that has already been fixed up for $200,000 when you expect to get $1575 per month on the rent? You need 20% down and a Score of 740 or better and a JOB that has not been interrupted by the the Virus shutdown. 30 year fixed loans can be 3.28%. Then, the Governor is giving renters 90 days to not pay their rents with the idea that they might go back to work and have enough money to pay off the three months or more that they are late? You think that idea works for you? Your bank may let you slide on one months mortgage payment with the idea to catch up later, but, don't count on it. With the sale of my Commercial property I will be back to where I was in 2008 before the Crash. Everything I do from here on will be with my own Cash. One fixer upper at a time.

Reese Newell · Answer

I am moving to Florida in 10 days and looking to invest potentially in that area.  Do you mind showing us what your numbers look like so we have a better idea with your projections.  From rentdata.org that zip code shows FMR of around $1575/month.  Do you think you can get this? What do the current leases rent at? What criteria have you set your goals at for returns.  If some stuff goes wrong, will you still be able to cash flow?

My quick breakdown

-20% down and 4.875% you're looking at a monthly Mortgage of $1524.

-Rents of 4725 w/ 45% expenses.  NOI of ~@2600.

-Monthly cash flow 2600-1524 = $1,076

-w/ 2% closing fees your CoCR --> (12*1076)/(72000+7200) = 16.3% CoCR excluding rehab

-If all these numbers are true, seems like a solid investment if that fits the returns you are looking for.  Curious to hear back on the actual rents in place and your projections.  Best of luck on your first deal! I hope to close my first one soon.

Eric Aldridge · Answer

@Michael Haynes

I really appreciate your help. This is our first time investing in the area, but we are set on doing long term rentals. The reason we dont start in the Portland area is because we are starting off on a bit of a budget and 300K wont get you a shack where we live. We looked in St Pete as well and like that area as well, but with the rate we are getting this place in Ybor really makes sense on paper, even with one unit vacant we will cash flow. I am actually the one under contract on this at about 350K. Inspection came back with some deficiencies for sure but im using that to get a discount, and much i am requiring seller repair before closing. Hopefully we can just keep tennants in there, it has good history. Thanks again for the help!

Eric Aldridge · Answer

@Roland Jean Charles

Thank you very much for the response, that is great advice. I think we are ok with the risk here just because there hasn't been another property that has come up on the market with the potential of this one in the whole Tampa area. With current rates it will make money as long as tenants are in, and that's the big variable. Thanks for your help!

Roland Charles · Answer

Hi Eric,

I personally have mixed feelings about Ybor City. As a property manager, I don't have any rentals in Ybor because I don't really think that's where I would like manage. However, I don't fault any investor who wants to explore that area. From my perspective, I look at it from several angles. 1. As an investor, you have to determine your risk tolerance and evaluate whether that property and neighborhood fits. I know plenty of investors who focus only on low income communities and "war zones' that are very profitable. Is that you? Others, like high end properties. Is that you? Personally, I like properties valued from $100k - $300k because I can use the 1% rule because I like tenants in that price range. I also like areas with great Anchors like malls, universities, hospitals, and iconic places people like to be close too. In terms of Ybor, that is a HISTORIC neighborhood all by itself so while it is a risk, I can see great reward if the neighborhood turns around. It would have been even better if the Ray's actually moved to Ybor. That would have made that area super hot!

Having said all of that, my advice to you would be to evaluate it from a risk tolerance perspective and identify the anchors that will make it a good long term rental. If the numbers work, and you have those other aspects in alignment, you should be fine. If you want to talk further, DM me.

Cory Carlson · Answer

Without some details on the financials its is hard to help you. It looks like a clean property, I would like to see your numbers.

Tampa Triplex yay or nay??

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