Best rental property prospects in Florida?

Question

Hi all,

Just a quick background about me:

My name is Shawn and I am 26 years of age with about 100K saved up in investments (stocks/mutual funds). I recently purchased a brand new townhouse to "house hack" with my girlfriend using a 30-year fixed VA loan (no funding fee) in South Florida. We live in the master bedroom and rent out the other two rooms to paying tenants. I am looking to expand my portfolio by purchasing a property in Florida, preferably something that needs work. I have been researching in an attempt to identify the county/region in Florida that is ideal for an investment property purchase. Ideally, I am seeking a post 1970s property that needs some work before it is livable for tenants. I feel that I have narrowed my search down to two regions:

Melbourne, FL: It appears millennials are moving here with Space X, NASA and other STEM jobs growing aplenty. Seems to be a good prospect area for appreciation. Mortgage payment to rent ratio seems suffient.

Tampa, FL: Similar to Melbourne, it seems many millennials are also migrating here. There is a large military presence, which could be beneficial as well.

So there could certainly be better areas in Florida to rent out, but based on research using Niche and Zillow, these seem to check most of the boxes. Does anyone have any experience in either or these markets, or have recommendations for a different Florida region? I live in South Florida, so if I needed to inspect anything in-person, this would make it more suitable for me. I would say assuming a 15-20% down payment, my price range is about 150k, not including all the costs for contractors that would need to come in to fix up the property. I have already identified some niche properties, but wanted to know what to look for as far as newer roofing, plumbing, HVAC etc. Any general advice (ideally from Florida real-estate investors) would be greatly appreciated!

Kerry Baird · Answer

To be clear, the links that I shared above compare livability, cost of living, crime rates, real estate prices, numbers of people, percentage of families, school ratings, etc. and it is for that purpose that I share the links.

My thoughts have been like this, being military:  There is one General or Colonel on a base or post.  There are a bunch of brand new youngsters, right out of high school.  I have catered my rentals to the lower third of my market, not the very top, expensive properties and not the very cheap scraper properties.  Both of those are for more experienced investors (which I am, at this time).

Early on, I set myself parameters to cater to the top portion of the lower third, because in the military, that tier is forming families, have figured out their credit, have begun to be responsible with their work and their property.

With an idea of the numbers of people available in a locality, and their rough ages & stages of life, one can pinpoint the "sweet spot" in their own investing strategy.

Kerry Baird · Answer

Hiya @Sharoon Bhatti, I have property in Texas, the Tampa area and Melbourne.  My Texas properties provide cash flow in a rolling type of military and oil market, but don't appreciate very much.  The Clearwater rental has appreciated more in value and in rent than my Brevard rentals, though they are similar.  The markets have a lot in common actually: they both are  a bit land-locked, have military and defense presence, have strong medical, are on major connecting interstates, are water-adjacent.

The East coast was hit harder in values during the last downturn, due to the loss of the Space Shuttle program. We have attended the Cocoa Chamber of Commerce meetings, and the members had dedicated themselves to diversification of industry so that they wouldn't have the same problem going forward.

Please check your demographics of both areas with these links (or city-data). When I started investing in Brevard, I got a report from ESRI or Tapestry, which helped me figure out who my optimal tenant was, so I could determine the optimal kind of property to buy. My DH and I were military, and stationed in England when we bought our properties, and did not have boots on the ground. To find a good agent and lender, we started at a title agency and asked for referrals. Compare the two areas, side by side, and I think you will make some interesting observations, which may help you make your decision.

Tampa Demographics

Melbourne Demographics

Colin Reid · Answer

Welcome Shawn!I recently moved to the Tampa Bay area, and ended up in St Pete. I was staying with family in South Tampa, right near MacDill AFB, before I started looking across the bay. I was mostly focused on South Tampa, but found it to be a tough, expensive market. The places that need work are being snatched up by developers, who are scraping lots and building luxury new construction. There's very little zoned for small multifamily, which is what I was looking for. Even the abandoned, half-renovated SFR across the street was too high for me to make a profit as a rental.Admittedly, my search was very limited north of Gandy Blvd, and nonexistent north of I-275. I'm familiar with a few streets up in Seminole Heights (I-275 & Sligh), and according to a realtor friend who lives there, that area has already "come up."

Shawn Bhatti · Answer

Kenny,

This is extremely valuable and useful information. I like the approach of identifying the consumers (tenants) and buying and building based on their price range. Thanks for sharing!

Shawn Bhatti · Answer

Thank you all for the replies! It sounds like there’s a general consensus that Tampa is indeed a solid up-and-coming market. Does anyone have any perspectives or reports on Melbourne? It is generally less expensive and seems to be within the budget of what I want to accomplish.

Chris Higgins · Answer

Hey Sharoon!

I live up in Rochester, New York but know multiple early to mid twenties people who have made the move to Tampa. I myself am actually moving there at the end of the year because I believe strongly in that market. From research a lot of corporations are headquartering there, the lower taxes, affordable housing, plus the beaches and professional sports teams has a lot of draw for millennials.

Roland Charles · Answer

Hi Sharoon,

Tampa is a great market and there are certainly some opportunities in areas that are up and coming. I will private message you with my contact information so that I can give you some background on the opportunities.

Best rental property prospects in Florida?

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