Investment duplex in Gainesville Florida

[Allen Omar]

Hello BP friends,

Im looking at several properties in the Gainesville area but before I make a final decision, I wanted to reach out and see if there are any BP investors in this area who could recommend a specific zip code? I would prefer to buy a duplex under $75k close to UF. I would also be interested in a SFR under $30k. Ive found a couple but the area isn't the greatest. Any advice is appreciated.

Thanks in advance

Allen

[Jason Chen]

Originally posted by @Allen Omar:

@jason Chen, my sister is stationed in Gainesville currently. During my visit, I was impressed with the town and saw potential. I've been looking at several other markets but get drawn to Gainesville because of the low housing prices combined with the high rental demand. I'm looking for a long term rental property. I've seen some good numbers there so I was surprised to read your advice. What markets would you recommend?

 I look at real estate from a different lens than most people, and I believe it is an advantage that I have.

There's a small town with about 60,000 people called Ocala, about 40 miles south of Gainesville. Gainesville has been said to be like Ocala, but with a University (and a very popular and well-known one at that).

The thing is that both Gainesville and Ocala, have seen very little property appreciation over the last 4 years, which is NOT good, considering prices in Tampa have risen a huge amount. The thing about Ocala, is that you can purchase a reasonable duplex in a reasonable neighborhood in a reasonable location for $70,000 + $5,000 in renovations that will collect $625 a month in rent from both sides. This is not even an above average deal in Ocala for a multifamily duplex like that, for example. A much better deal wouldve been $55,000 + $5,000 in repairs, but those deals started to disappear in 2013 when the market began to command a higher price (but not substantially higher) for investment properties. 2 years from now, most likely those $75,000 duplex deals will still be available. The appreciation just isn't here for Ocala OR Gainesville because not only does the LAND not appreciate, but the market dictates STALE rent because supply seemingly doesn't decrease or increase.

The funny thing is that an equivalent duplex in Gainesville would run you exactly $85,000 + $5,000 in renovations (50th percentile average deal).

I always try to make sure that my deals are at least better than 80% of my competitors, so I am essentially looking for an 80th percentile deal in markets that FAVOR the investor.

The difference between Tampa and both of those cities is that the LAND in many of the more affluent parts of Tampa has appreciated a somewhat ridiculous amount over the last several years. People will pay $300,000 for a small lot in south Tampa that has a small old house on it, and bulldoze it, and spend an additional $325,000 constructing a BRAND NEW house.

A duplex in a great or even better, a PRIME location could've been purchased 15 years ago for $150,000, and is worth $500,000 MINIMUM today. How's that for a pretty solid return?

No such thing is going to happen in Gainesville or Ocala for a number of reasons. I believe those reasons include: lack of seriously big companies coming down there to employ people, mediocre night scene, lack of an urban presence, lack of water related commerce, lack of serious sports arenas, lack of water related activities such as boating where rich people buy huge yachts, etc. etc. etc. It is likely that the value of Ocala and Gainesville properties overall will only keep up with inflation, or beat it by 2-3% which is downright PITIFUL.

Go to Ocala for great cash flow properties, and Tampa for the appreciation, if you wish to stay around these central Florida towns. 

You seem young, and probably had a good time in Gainesville and could envision yourself living there. This has given you an altered and biased opinion despite the fact that if you truly took the time to run the math and evaluate the properties well, you'd see that this college town isn't really going anywhere just like it has been doing for the last 30 years when my uncle first attended UF.