Buying metro tampa rental condo/house for 5 yrs make sense?

Question

Ok. I'm new here and have never bought/owned an investment property. We live in Georgia. We will retire in about 5 years. We'd like to retire to west/central florida in a community like Dunedin. The price of housing all around metro Tampa has and is continuing to rise quickly. We'd prefer to live close to the gulf beaches. Like within a 10 min drive. We've been in the area, but aren't super familiar with it and aren't exactly sure where we'd like to buy our forever home.

Here are our thoughts....find a decent $200k condo or smaller/older home that we can buy now. We would rent it out and use it as our base when we go down there a few times a year to get more familiar with the metro Tampa area on our forever home search. Since we're already paying a mortgage on our current home and have all the other expenses people typically have, we'd be making regular payments on the rental property hopefully with the rental income. We were hoping that those 5 yrs of regular payments plus the property appreciation would allow us to sell the property in roughly 5 yrs and make a sizable down payment on our forever home. Yes/no? I realize there's the updating/maintenance costs of a home versus condo, but with an older home we were hoping we could avoid HOA's and also avoid renting "rules". The other option would be if we got super lucky and found our forever home now, which would likely be in the $400k range, we're looking at a $2500/month mortgage payment. We would rent it out until we retired and moved down there. The problem is that if we failed to rent it for any period of time, that $2500 a month payment would hit us very hard. Much more so than say $1200 a month on the condo/small/older home. What are ya'll's thoughts? By the way, I'm 50 and still capable of most home repairs/renovations. I've done flooring, tiling, demo, installed cabinets, drywall, minor electrical, minor plumbing. Etc. I don't do roofs. Lol.
Thanks in advance :)

Sunny Alexander · Answer

This is helpful for Pinellas County https://pinellasrealtor.org/sh... https://pinellasrealtor.org/sh...Tampa and the incorporated towns are all a little different. Good luck!

Michael Haynes · Answer

Hello Jim Banville, In Tampa City limit there is the same rule for STR of 7 day rentals only. In the County it is different and every little city or town or County etc. had their own rules which you have to go online to discover. You can short cut by getting in contact with an STR Rental Management Agency...right? I talked with my friend Bob and he said he was told by VRBO last year to start out with a discounted price of $85 per night with a 7 day minimum in order to get good reviews. He still rents just to older couples without dogs or kids in Safety Harbor, but, has had so much success that he charges $200 a night now. He lives next door in the other million dollar, two story home with his wife and father-in-law. He is now thinking to raise that daily rent to $250 which is minimum $1750 and some are staying for multiple weeks. Safety Harbor is a quiet, artsy, village with a few festivals and a big Resort and Spa downtown on Tampa Bay. There is a low class section away from the Center and a single story 2/1, 3/2 normal type houses close aroung the main street. People used to like to rent there as it is close to Clearwater Beach and less expensive. Ten years ago one young couple started the whole thing by buying up all the apartments around the Center as they could to STR. After 30 years with rentals in South Tampa, I am not interested in STR as I have 7 paid off, Efficiency Apartments and my beach house on a hill behind the surf beach and three kilometer lake in Macae, Rio de Janeiro. I am on my way down on Friday to rehab everything including the farm and get it all rented again to start selling when the Real Estate Cycle runs back up in value later on. Be sure to use Google Map and Streetview to take a look at the houses and neighborhood of any target properties.

Dan Maciejewski · Answer

Some own, and some rent. It does seem like a waste to leave your house(s) empty for most of the year, but that's life in a vacation market! Some even have cars that they leave here so they can fly in/out with little stress. Not everybody wants to be a landlord or deal with the hassle of renting out their vacation homes, and not everybody wants to bother buying.

Jim Banville · Answer

Thanks for the reply. Can you clear up this question about snowbirds. I was under the assumption that they own the houses/condos down south, where the live during winter, and they rent them out during the summer when they go back up north. Or do they simply rent when down south? Seems like a waste since their northern home/permanent residence is sitting empty for months. Or are they renting their northern home out during the winter? Thanks!

Jim Banville · Answer

Thanks! We have been using Zillow, but there's nothing like driving around a neighborhood to get the "feel" of the place. I looked at Zillow. Not too many places listed right now, and most are "mobile homes". Can you explain that specific STR thing again? Is it only a Safety Harbor policy? I was under the assumption you could only rent out for half the year. Thanks!

Michael Haynes · Answer

Hello Jim Banville from Georgia, You should learn how to use Zillow.com to do Searches in all the areas along the coast if that is where you want to be eventually. Learn how to use Google Map and look at the target properties from above and then zoom in on Streetview to see what the neighborhood looks like. I would suggest the single story, older part of Safety Harbor which can still be affordable. I have friends there and they moved the father-in-law into their two story with a pool and rent his home next door with a view of Tampa Bay for $85 a night. Only older couples, no pets, one weeks rent to qualify for the 7 day Rule and if they leave after a few days, who knows. They paid for the week. So far very happy with VRBO and not Airbnb which started to charge a fee for repairs and cleaning etc. My friend fixed up a 4/3 near his home for a lady a few years ago. She made so much at that time with STR that she bought a second one closer to the Village Center and she stays in the one that is empty for that week without having a permanent residence and quit her JOB. Different strokes for different folks.

Dan Maciejewski · Answer

Dunedin limits short term rentals to 90 days or 3 calendar months except in a very small zone near downtown. Properties in that zone are selling very high compared to out of it. Some people do well there renting to snowbirds, but a lot of people like you want to stay in the snowbird season -- usually Thanksgiving-ish through Easter-ish.Yes, most vacationers do want to be near the beaches. The costal areas that allow STR / vacation rentals can have a very high ADR and occupancy. The occupancy drop in Hillsborough isn't that much, though and people do seem to be doing fine there.For your original question, I have a client in the sub-200k condo market, and I can tell you that not only are there slim pickings in both Hillsborough and Tampa, but finding one that allows STR is not easy. There are 2 in Clearwater that allow it (grandfathered in) that are around 200k and below, and a few all over the area -- not many that are really desirable for STR location-wise, though. The Clearwater ones don't have anyone selling, for obvious reasons! Everyone I've talked to in there wants to buy more!As for a house in the sub-400 range, you should be grossing at least 65-75k per year in the right area, at least in Pinellas. Hillsborough looks similar, but you'd have to talk to a PM to see about the ADR and occupancy.

David C. · Answer

@Kristina Kuba - where are these no short-term restrictions properties in Tampa?

Jim Banville · Answer

Thanks for the reply!Ultimately we are fairly certain we want our forever home somewhere like Dunedin. We'd like to be within a biking, walking, or golf cart ride to the water. We just thought since we were planning on living there, that's where we should get our 5 year investment rental place as well. So you're saying regardless of where we finally want to wind up, we should get our rental in some other location in the metro area where the top priorities are little no no HOA and no restrictions on short term rentals? That makes sense. We just thought more vacationers were looking at staying in the coastal towns. Was that incorrect? of course we'd like it to be occupied as a much as possible to cover the mortgage. Isn't there a lot more money to be made in short term rental (3 day minimum) versus renting by the month? Many of the places we've stayed on the gulf coast seem to be "managed" by the owner through AirBnB, who contract with a local cleaning service. Is that common or am I mistaken? Where we live is about a 6-7 hr drive to metro Tampa. I am handy. We'd (and likely other members of our extended family) would probably wind up going down there every few months.

Kristina Kuba · Answer

@Jim Banville I would thoroughly vet the HOA as many HOAs have a seasoning period before you can put a renter in there. Plus, Dunedin and nearly all of the coastal cities in Pinellas County have restrictions for short term rentals handicapping your prospective appreciation. If you are handy, why not consider a 300k to 400k house in Tampa where there are no short term restrictions. A SFR will always appreciate faster than a condo, plus you will cash flow nicely and have no hassles with an outsourced STR vacation rental company managing it.