South Tampa: Teardown vs Rental

[Joey Mitchell]

I own a home in South Tampa (Port Tampa Neighborhood). I bought the home for $220k in 2014. It is 5 bed\2 bath 2700 sq ft on 100 x 100 double lot but it is ugly; built in the 60s, low ceilings, poor layout, etc. I owe $160k ($55k of that is a HELOC). I just evicted the tenants and it's now vacant. Would like to hear your opinions and feedback. Here some options I'm considering:

OPTION 1: Tear it down and then build 2 homes on the lot. I have the capital to pay off the current mortgage but would then need financing to build the two homes. New construction homes on the street have been selling between $680k - $750k (looks like $290 - $350 sq ft). I don't have construction experience

OPTION 2: Sell the house to an investor. Based on conversations I've had I think I can get between $385k - $400k

OPTION 3: Put about $10k into the house and rent it out again. It's a large house but I don't see me being able to get top rent for it. Probably $2k a month tops. I was considering this option just to buy me additional time and let the market improve before I pursued option 1 or 2.

[Stephen Dispensa]

Hey Joey,

I manage properties in Port Tampa City and we are getting above $2k per month for 2br / 1 bath apartments so I think you can do better than the numbers you are suggesting on a rental. 

Personally, my strategy would be to do a light rehab to make it presentable and maximize rents. Put new tenants in place with maximum cash flow, and then begin planning for the two new homes. Once you get planning approved, you could sell off the land and development package to a developer, OR build it yourself. I have solid experience in all of these areas if you want to shoot me a PM for more specifics.

Steve