Does this investment make sense for our family to do?

[Michael Stowers]

Hey Team,

i'm in escrow on a 3/2 home in South Tampa brand new remodel. We are in escrow at $390k and we are putting 25% down. We are only cash flowing about $125-$250 a month. Our cash on cash return is 2-3%. Lord willing, this home would be a long term investment and it's a flip so we wouldn't have to rehab just the general maintenance. We are from San Diego and I still like the Tampa market long term. Is this still a good investment considering the capital we are putting in to get a little return at first?

[Darius Ogloza]

Ha!  I would buy every property I could get my hands on with that rent to purchase price ratio in my primary market (Marin County - San Francisco).  That said, I would be naturally skeptical about buying a flip for investment, as you will almost certainly be paying an amount that includes the flipper's profit margin and likely, as a result, be invested in a property that sits at or near the top of the neighborhood in terms of price (thereby violating the maxim that you want to buy the least expensive property in the most expensive neighborhood). These are not deal killers - just flags that should be processed.  Every investment should be evaluated in its particulars.  In general, keep in mind that Florida has no income tax and so they take it out of property owners' hides through higher taxes than you will be used to in SD.  We are paying almost 50% of the tax we pay on our principal residence in Marin on a waterfront property we own in Charlotte Count, Florida - just down the coast from Tampa.   The Florida property is worth about 20%-25% of the California property.