The Challenge with Long Term Rentals in Tampa

[Dillon Cook]

In the Tampa Bay real estate market, achieving positive cash flow from long-term rentals is quite the puzzle this year. With rising interest rates and property insurance costs outpacing rent and wage increases, investors are feeling the pinch. Making hefty down payments (30-40%) to get a trickle of cash flow works. But is this sustainable, especially with the potential of a recession? And what about the long game, banking on good deals now and then cash out refinancing when interest rates dip?  Anyone seeing something different in a nearby market?

It does seem Tampa's market remains attractive to investors, with around 26% of closings coming from investors.

[Jorge Vazquez]

Hi Dilon,

Having worked in this field for 20 years and having gone through the financial crisis of 2007, I find the current economic situation less challenging.

At present, there are few people with adjustable-rate mortgages. Several homeowners have low-interest loans and are only willing to sell if forced. Moreover, the unemployment rate is relatively low. We are currently in a Gig Economy where one can take up a second job if required. Based on my experience, I believe that we are going to start seeing the "1% rule" type of properties back. This is because when most of us (especially property managers, see what tenants demand) know that the rental market will be good if anything, it will get better as more people will opt to rent now.

It looks promising to find cash-flow properties in 2024 due to panicked sellers and fewer buyers, resulting in more tenants. Intelligent, seasoned investors are already used to the 7-8% interest rate since this has been the norm for two decades until recently, and that will not stop them. Keep investing. Do not stop to time the market. Just make sure you have the liquidity and stress test your properties. I am super busy....