When you’re ready to invest in a Tampa rental property, the most important decision you’ll make is which property to buy.
Buying the right investment property will set you up for a profitable and positive experience. You’ll have no trouble attracting the right tenants, and your maintenance and vacancy costs will be right around what you had budgeted. No surprises.
Buying the wrong investment property, however, will leave you feeling frustrated and depleted. It will be expensive, and the mistake will be difficult to recover from.
Before we talk about the property you should buy versus the property you should avoid, remember a couple of important things:
- Real estate investing is a long term project that requires a conservative financial plan. You need to be able to handle the losses in the early years. You need to know your own financial situation and have enough money to cover unexpected costs such as emergency maintenance and vacancies.
- You need to know your true numbers. Understand how much rent you’ll be earning and what your expenses are likely to be. Rarely do those proforma income and cash flow statements reflect the real costs associated with an investment property. Don’t shy away from the truth.
If you understand those two key points and you’re ready to look for the right investment property, let’s talk about how you know you’re investing in a profitable rental home.
Avoiding Inexpensive Investment Properties
When you come across a home with a price tag that seems too good to be true, trust that instinct. It probably is too good to be true.
Those inexpensive properties often need a lot of work. Or, they’re located in neighborhoods that make placing high quality tenants difficult. When you run the numbers on an investment property that’s cheap, they might look good. But, you’re going to have less reliable renters.
Under-qualified renters are ultimately more expensive than well-qualified renters. There’s more turnover. There’s the potential for property damage that exceeds the security deposit.
Investment Properties in Condos and HOA Associations
When you’re looking for an investment property, be careful about condos and powerful HOAs that hold a lot of authority and make it difficult for properties to be rented. We’ve seen condo and homeowner associations that restrict the number of homes in the community that can be rentals at a given time. It’s going to cost you a lot of money if you invest in a property but then you’re unable to rent it out for two years. Don’t buy in an association that discourages renters.
Older Investment Homes Come with Higher Costs
Tampa has a lot of older neighborhoods that are charming and historic. They’re fun and they make great investment locations. The properties themselves, however, can be expensive to maintain. You’ll find that older homes come with higher insurance costs and more complex maintenance needs. There’s no guarantee that you’ll recover what you have to invest to make these homes rent-ready and to keep them in habitable condition.
Avoid flood zones as well. That’s an additional insurance expense, a risk to your investment, and rising waters will not do anything to help with your investment’s appreciation.
When you’re ready to buy a Tampa investment property, work with professionals who know the market. We know how to identify profitable rental homes, and we know what to avoid. Contact us at Hoffman Realty.
