Downtown St Pete or Tampa Heights (Florida)

[Vera B.]

Looking at new construction townhomes in both downtown St Pete and in Tampa Heights (Florida). Where is the better buy?

St Pete - $650k purchase price with HOA fees of $400/mo and taxes of about $10k/year

Up and coming Tampa Hts - $600k purchase price with HOA of $100/mo and about $7k in taxes.

Plan is to live in it for 1-2 years and then rent it.

Which is the better buy? And does that change if market drops? I'm having a mortgage broker tell me I'm basically nuts for even thinking tampa hts.

Would love to hear your expert local market thoughts!!! Thx.

[Brian Goodling]

I personally wouldn't pick either with those price points and the type of asset you're pursuing. You'll have a very difficult time pulling positive on either of these. St. Pete (excluding along a beach or adjacent from a beach) will have rents of about $2500/mo for a pretty nice 3/2. Way under what you would need after you move out. In your St. Pete scenario you also claim an HOA of $400/mo. Thats insane. Absolutely insane. Sure, they might cover the roof and exterior maintenance but you're still paying for AC, water heater, etc. HOA's in my opinion are something that I like to stay away from unless they are much lower, almost like the Tampa example at $100/mo. Either way, townhomes typically dont appreciate as well as single family places. For 650k you could get a very nice house that will appreciate better and have the chance to rent for more due to property type. For 650k in Tampa you could easily get a 4+ BR or something similar.

I also agree with Elise above, St. Pete at this moment is a better play for what your described, as you have be to pretty careful where you buy in Tampa. Again, St. Pete has some worse off areas, but not to the extent Tampa does. In either scenario I dont think you'll be able to rent it out to even breakeven at either of these. For the most bang for your buck I would look at the outskirts of Tampa (Lutz, Wesley Chapel, Town & Country, out towards Plant City, or down on the peninsula by Macdill Air Force Base) as these places are often cheaper but still command decent rent. You could get 2 very nice 300k SFH if you wish or go towards the MF route if thats in the cards.

I'm not a fan of paying 600k+ for anything in Tampa or St. Pete unless its multifamily. Even a place thats a rundown 3/1 bought for 70k with 50k in renovations would rent for $1500+ in Tampa. Just because you're paying a higher price doesnt always mean more rent. Rents cap out for pristine long term rentals between $2800-3000/mo in this area.