How is investing in Tallahassee FL

Question

I am evaluating a deal there. New to Florida market in general. How is Tallahassee to invest in from cashflow's perspective? Any specific zip codes to be avoided? Currently I am looking zip 32304. Looks pretty close to the Florida State University. Any experience in or around that area?

Charles Kennedy · Answer

@Mike Conner No doubt about the risk vs. reward. I think part of it is perception not 100% aligning with reality. Would love to discuss other areas of Tallahassee. Going to shoot you a PM!

Charles Kennedy · Answer

@Mike Conner I own 3 properties (under contract on a 4th) all around FSU. I even have one on West Georgia Street! College town is obviously the best area to be in, but being north of W Tennessee is far from a "war zone". I've never once had a break in or any complaints about the area from the students that lived there. My property have LVP floors, but is still a more affordable option. Frenchtown is obviously not a good area, but when you are very close to to W Tennessee the better it is, and the area is certainly much better than in years past. With that being said I wouldn't by north of W Georgia st. Everything on W Georgia street and south is student housing so it's really not a bad area.

The other ones I have bought have been older homes, but I've invested some $ up front and been able to make them nice for not too much money (fresh paint, flooring, etc.). Here is one I renovated in early 2020 near the stadium (https://www.zillow.com/homedet...).

I get phenomenal cash flow (many 20% Cash-on-Cash returns), but have been uber selective about those that I have bought (one foreclosure, 1 FSBO, 2 through the sellers agent that I put under contact shortly after going on the market) and all are well above the 1% rule.

I will have to look at 32303 and 32301 as the turnover is biggest negative to student housing.

Mike Conner · Answer

@Charles Kennedy I'm glad to hear those properties in Frenchtown are working out for you and you haven't had any break ins. To be honest I'm quiet surprised there hasn't been any crime. I think you're right it's a little better South of Georgia St but literally one street over is where most of the major crimes (murder, etc) occur. I believe with no evidence to back it up that a lot of the major crimes are between drug dealers and other criminal types. I don't think it's normally a criminal breaking into a college students house. Those properties N of Tennessee are right behind many of the best college bars and walking distance to avoid driving is appealing to many college kids. I think if you drove the streets around your rentals on a Friday night it though, it may change your opinion on the quality of the area.

The reason you are getting high returns is due to the area having high risk and other investors aren't that interested in the area so the prices of the houses are low. Not to say it's not the right investment for you, just something many choose to pass over.  I just want anybody on Biggerpockets that reads this to get a good understanding of what they are buying in this area.

Personally I prefer to buy in other areas where I can 1.1-1.5% rule properties with low crime, high quality tenants that don't make a lot of money, and in locations where blue collar families tend to stay for longer periods of time.

Mike Conner · Answer

FSU has had an explosion of student housing. There are so many apartments constructed or under construction I'm not sure how they could ever find enough renters without turning to section 8 or some other government program. With that being said the 32304 area is probably class C close to campus as you get further West it gets worse. If you go North of Tennessee St/Hwy 90 it is a war zone (pretty much all the streets named after states). I know an investor/realtor in town that does very well in close to campus renting by the room. As long as you are good with no occupancy over the summer and putting up with students in general. Most of the houses are older and haven't been renovated. And I would say the closer to campus the better as students like to be in walking distance to football games. Take note that there are a lot of these older properties being torn down and developers are putting up new properties in their place. Not sure how easy it will be to rent these older properties. I personally stay away from this area even though on paper the houses look good.

Imran Ahmed · Answer

@Mike Conner couldn't agree more on 1% and market situation and thanks for your input on the location gives me more clarity now. I've been waiting year and half just to find a right property for a 1% where I could possible live for sometime too but as we know those don't exist in this market and if any pops up here and there are completely dedicated as rental property that I am not possibly ready to occupy as well. I am not married and don't have kids, with that respect was thinking if it would be right move to go for it, live there sometime do some upgrade and eventually leave renting the main house too but still that wouldn't even bring close to 1% unless make some good use of that land

Mike Conner · Answer

@Imran Ahmed I wouldn't live there just b/c the school zones aren't the greatest and it's mostly older homes, but that doesn't mean it couldn't be a good investment if you can get it at the right price. I own a duplex down the street from there. For reference I bought it in 2014 for $109k, rehab of $15k, All in for $124k and it currently rents for $900 and $885 (which are going up in July) for a total $1785. Above the 1% rule. This property on Talpeco is below the 1% and I wouldn't expect much more appreciation as that area is pretty stagnant, and with the current shortage of homes I don't see prices going up much longer till the fed raises interest rates, forbearance ends, and the eviction moratorium is over causing a wave of foreclosures/evictions possibly creating opportunities to pickup properties at good prices. I'm personally waiting to see if I can pick up some properties as the market shifts lower. If you are going to analyze this property be sure to check insurance rates as this property is older and there have been some recent increases in insurance and reductions of coverage for water damage and you may need to do a wind mitigation study which is cheap to get insurance rates reduced.

Imran Ahmed · Answer

well @Mike Conner I was looking at this multi on 1913 Talpeco Rd it got 2 acres to it seems like could be something owner occupied multi generational property? I don't know nothing about Tallahasse market even more importantly was wondering if thats a good area and appreciating part of the town to settle with that long term vision like that or rather going downhill? Would you live there if not why?

Mike Conner · Answer

@Imran Ahmed I wouldn't call that area rural, but it's definitely a working class area. This area is mostly older 1980 era homes but there are a lot of homes going in at Lake Jackson and more down on Tower Rd both in 32303 zip code.  If you are talking specifically about Camellia Gardens Condos just watch the condo/HOA fees as those are usually high. One more thing we are getting an Amazon warehouse soon which is going to add 2,400 jobs. It's going to be built by I-10 and Mahan Dr.

Imran Ahmed · Answer

@Mike Conner what you think about N Tallahassee below Lake Jackson Camellia Gardens area specifically N Monroe st? Is that too rural or decently growing neighborhood ?

Mike Conner · Answer

@Natasha Dillon The portion of 32310 within the City limits are bad, nothing I would ever consider. I'm sure some sections of it are opportunity zones. The portion outside the City limits in the County, I couldn't tell you about since I don't look at rural properties.

How is investing in Tallahassee FL

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