Need help deciding between a 3 bedroom Townhome and 5 or 6 bedroom SFR

Need help deciding between a 3 bedroom Townhome and 5 or 6 bedroom SFR

Lutz, FL · Member since 2013 · 1 post · 0 votes

Hi all, I'm buying a new construction via a 1031 exchange as a long term investment property. There are some non-financial reasons for having to buy a new construction that are out of my control, but I'm looking for advice in helping me decide the best route between 3 options (purchase will be all cash): 

Option 1: 3 bed/ 2.5 bath townhome in Wesley Chapel (near the lagoon). It's 1566 sq ft and the cost is about $300K . I believe I can get about $2100 in rent.

Option 2: 5 bed 2.5 bath SFR in Land O Lakes (Connerton). It's not huge at 2200 sq ft for a 5 bedroom house, but they are usable bedrooms. Cost is about $430K. I believe I can get $3000 in rent.

Option 3: 6 bed 3 bath SFR in Land O Lakes (Connerton, same community as option 2). It's about 2500 Sq ft and like the above, the rooms are all usable. Cost is about $460K and I think I can get a $3200 in rent hopefully.

 I've calculated the cap rates and they are all generally similar (~4.5%). I understand that with SFRs, my rent, maintenance, and taxes will be more but that is all factored in.
My reservations with the SFRs are rising insurance and property taxes. However, there are not a lot of homes with that many bedrooms for rent in the area so demand should be better. With the townhome, my reservations is the rental competition as the area has many townhomes communities with units bought by investors, but I like the lower taxes and insurance rates. 

Thank you in advance for any guidance you can provide. 

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    2y

    @Riz N., Given the current environment here in FL I'd be more worried about the escalation of insurance in MF town homes and condos.  Several new carriers have been approved for FL for insurance which should (emphasis on should) alleviate some of the insurance shenanigans going on with SFRs here.  

    But you are looking in good areas.

    The 1031 Investor5137 Reviews
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