Long distance Investment property as first home purchase
Rental Property Investor · Denver, CO · Member since 2024 · 28 posts · 27 votes
Long distance Investment property as first home purchase
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Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
2yQuote from @Trace Adams:
Quote from @David Ramirez:
Hey @Trace Adams,
Finding a property that cash flows with today's interest rates in Tampa is tough. Tampa Bay is an appreciating market rather than a cash-flowing market. Prices in relation to rents are out of control, so shooting for a 1% rule just won't cut it.
With that being said, you can still find cash-flowing properties in the surrounding areas of Tampa. Pasco and Polk counties would be your best options for that. We still find cash-flowing properties in Central Florida but through seller financing. We have done three of those so far.
I would love to connect! Good luck
Appreciate the info on locations! I will be in Tampa in a couple weeks and plan to explore neighborhoods a bit more.
Trace
No, I'm not assuming it's already rented out, just in general. The short-term rental market is saturated here in Tampa. Even if you can cashflow as a short term you have to have an exit strategy in case things go south. I would at least have it break even as a long-term rental before thinking about STR.
16 Replies
- 2yKo KashiwagiPro MemberLender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
Hi Trace,
When you say priced out of the market, is this assuming a 20% down payment or a lower down payment? If it's owner occupied, you could buy at as low as 3.5-5% down, which would qualify you for a higher value home. House-hacking is one of the best ways to get into real estate, so this could be a viable options. You could also move into the Tampa property later on - although I would say this is a rare practice because people usually like to take advantage of the primary home loans if they are going to live in it (people usually live in, and then rent).
- Rental Property Investor · Denver, CO · Member since 2024 · 28 posts · 27 votes2yAll good points and considerations I have thought about. I could probably do a 3-5% down payment for a property here but the mortgage payment would still be higher than I want to pay as the loan size would be bigger because I’d be buying a $500-600K+ house.
Quote from @Ko Kashiwagi:
Hi Trace,
When you say priced out of the market, is this assuming a 20% down payment or a lower down payment? If it's owner occupied, you could buy at as low as 3.5-5% down, which would qualify you for a higher value home. House-hacking is one of the best ways to get into real estate, so this could be a viable options. You could also move into the Tampa property later on - although I would say this is a rare practice because people usually like to take advantage of the primary home loans if they are going to live in it (people usually live in, and then rent).
My main reasons for buying an investment property in Tampa:
-Not ready to leave Denver right now, but want to move in the next 3-5 years so want to remain flexible via renting my personal house
-Rental investment property would give me some passive income on the side while I save up renting and decide if/where I want to move
-Tampa property is just cheaper overall so even if I have to put more down, mortgage payment will be lower
-Honestly, part of it is also just “manifesting” moving to Tampa eventually
Trace - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes2y
I just took a quick look at homes for sale and for rent. If you bought something for $300,000 and put $75,000 down, your mortgage would be around $1,800 a month. Add taxes and insurance and your monthly expenses are over $2,000. The home would likely rent for around $2,000 - $2,200.
These are pretend numbers and you may find something that works, but I would be very careful with the math and ensure you account for all expenses, including vacancy, maintenance, property management, etc.
The DIY Landlord Book4.7247 Reviews - Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2y
Hey @Trace Adams,
Finding a property that cash flows with today's interest rates in Tampa is tough. Tampa Bay is an appreciating market rather than a cash-flowing market. Prices in relation to rents are out of control, so shooting for a 1% rule just won't cut it.
With that being said, you can still find cash-flowing properties in the surrounding areas of Tampa. Pasco and Polk counties would be your best options for that. We still find cash-flowing properties in Central Florida but through seller financing. We have done three of those so far.
I would love to connect! Good luck
- Rental Property Investor · Denver, CO · Member since 2024 · 28 posts · 27 votes2yThanks David, I may connect with you on the side in the coming weeks. When you say it is tough to find a cash flowing property, are you assuming it’s rented out long-term or just in general? Based on my research it seems like with a little rehab and managing a short term rental effectively, short term would likely cash flow more in a market like Tampa.
Quote from @David Ramirez:
Hey @Trace Adams,
Finding a property that cash flows with today's interest rates in Tampa is tough. Tampa Bay is an appreciating market rather than a cash-flowing market. Prices in relation to rents are out of control, so shooting for a 1% rule just won't cut it.
With that being said, you can still find cash-flowing properties in the surrounding areas of Tampa. Pasco and Polk counties would be your best options for that. We still find cash-flowing properties in Central Florida but through seller financing. We have done three of those so far.
I would love to connect! Good luck
Appreciate the info on locations! I will be in Tampa in a couple weeks and plan to explore neighborhoods a bit more.
Trace - Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2y
Quote from @Trace Adams:
Thanks David, I may connect with you on the side in the coming weeks. When you say it is tough to find a cash flowing property, are you assuming it’s rented out long-term or just in general? Based on my research it seems like with a little rehab and managing a short term rental effectively, short term would likely cash flow more in a market like Tampa.Quote from @David Ramirez:
Hey @Trace Adams,
Finding a property that cash flows with today's interest rates in Tampa is tough. Tampa Bay is an appreciating market rather than a cash-flowing market. Prices in relation to rents are out of control, so shooting for a 1% rule just won't cut it.
With that being said, you can still find cash-flowing properties in the surrounding areas of Tampa. Pasco and Polk counties would be your best options for that. We still find cash-flowing properties in Central Florida but through seller financing. We have done three of those so far.
I would love to connect! Good luck
Appreciate the info on locations! I will be in Tampa in a couple weeks and plan to explore neighborhoods a bit more.
TraceNo, I'm not assuming it's already rented out, just in general. The short-term rental market is saturated here in Tampa. Even if you can cashflow as a short term you have to have an exit strategy in case things go south. I would at least have it break even as a long-term rental before thinking about STR.
- Member since 2024 · 23 posts · 8 votes2y
Quote from @Trace Adams:
Hi all! I am new to this site/forum but have been listening to the podcast and am learning so much. I want to run something by you all and get your thoughts. I am 27 years old and currently live in Denver, CO where I am pretty much priced out of the market. I currently rent with my girlfriend. I do have enough money saved up for a down payment on a house in a cheaper city, just not Denver. We love Tampa and could definitely see ourselves living there in 3-5 years, but right now is not a good time for us to move. I am thinking about buying a rental investment property in Tampa in the $300K range that I can cash flow from and build equity in, while still saving money by renting here. Then the idea would be for us to move there in 3-5 years into that property. I know I would have to put down 20% which will be tough but I can probably do. Any other things I should think about?
Hello Trace,
My name is Luis; I am not a direct lender but a mortgage broker so I work with mortgage lenders. There are a couple of options here, one would be to purchase the property that you mentioned as a second home, where you and your girlfriend would have to fully qualify with a 10% downpayment. The other option would be to purchase the property strictly as a rental unit; nowadays, lenders are willing to go with 15% down; no income verification, and perhaps the rate be favorable in the high 7% to low 8% interest rate. If you were paying attention the "FEDS" did not raise nor lower the interest rates which has made a positive impact in the industry for the time being. Let me know when will it be a good time to chat and go over your real estate needs.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Trace Adams:
Hi all! I am new to this site/forum but have been listening to the podcast and am learning so much. I want to run something by you all and get your thoughts. I am 27 years old and currently live in Denver, CO where I am pretty much priced out of the market. I currently rent with my girlfriend. I do have enough money saved up for a down payment on a house in a cheaper city, just not Denver. We love Tampa and could definitely see ourselves living there in 3-5 years, but right now is not a good time for us to move. I am thinking about buying a rental investment property in Tampa in the $300K range that I can cash flow from and build equity in, while still saving money by renting here. Then the idea would be for us to move there in 3-5 years into that property. I know I would have to put down 20% which will be tough but I can probably do. Any other things I should think about?
The bubble in Fl is going to burst, its already starting, HANG TIGHT, cash will be king in 12 months,
- Investor · Tampa, FL · Member since 2020 · 287 posts · 152 votes2y
Hey Trace, with your current status you could definitely get what you're looking for in Tampa. I'll shoot you a DM, I can discuss some of my experiences investing in Tampa.
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Trace Adams are you using the BP Calculators to evaluate rentals?
Logical Property Management4.9454 Reviews - Rental Property Investor · St Petersburg FL · Member since 2012 · 22 posts · 18 votes2y
Quote from @Trace Adams:
Thanks David, I may connect with you on the side in the coming weeks. When you say it is tough to find a cash flowing property, are you assuming it’s rented out long-term or just in general? Based on my research it seems like with a little rehab and managing a short term rental effectively, short term would likely cash flow more in a market like Tampa.Quote from @David Ramirez:
Hey @Trace Adams,
Finding a property that cash flows with today's interest rates in Tampa is tough. Tampa Bay is an appreciating market rather than a cash-flowing market. Prices in relation to rents are out of control, so shooting for a 1% rule just won't cut it.
With that being said, you can still find cash-flowing properties in the surrounding areas of Tampa. Pasco and Polk counties would be your best options for that. We still find cash-flowing properties in Central Florida but through seller financing. We have done three of those so far.
I would love to connect! Good luck
Appreciate the info on locations! I will be in Tampa in a couple weeks and plan to explore neighborhoods a bit more.
TraceDays of “managing str effectively” from afar is gone. I’d get a partner. Go buy a duplex and have them live in one. Pay you rent and manage your other unit as str. You both learn and you’ll have less of a likelihood of taking a bath on your first deal. (Which I might add- isn’t really all that bad. At least you’d be on your way and that much closer to the goal. )
- 2yPreston DeanBusiness MemberRealtor · Fort Worth, TX · Member since 2021 · 779 posts · 368 votes
Quote from @Trace Adams:
Hi all! I am new to this site/forum but have been listening to the podcast and am learning so much. I want to run something by you all and get your thoughts. I am 27 years old and currently live in Denver, CO where I am pretty much priced out of the market. I currently rent with my girlfriend. I do have enough money saved up for a down payment on a house in a cheaper city, just not Denver. We love Tampa and could definitely see ourselves living there in 3-5 years, but right now is not a good time for us to move. I am thinking about buying a rental investment property in Tampa in the $300K range that I can cash flow from and build equity in, while still saving money by renting here. Then the idea would be for us to move there in 3-5 years into that property. I know I would have to put down 20% which will be tough but I can probably do. Any other things I should think about?
If you work remotely you should consider buying this as a primary home and using 5% down.
Not sure if that is an option
I would really weigh the pros and cons of this. It might sound like it will cashflow but in reality it might not
having a PM will be about 8-10% of the rent + landlord insurance + $60K down + 2-4% for closing costs
I am on board with appreciation and buying now and waiting instead of waiting to buy but I would just be extra conservative when number crunching
United Real Estate DFW Properties 565 Reviews - Investor · Tampa, FL · Member since 2016 · 681 posts · 288 votes2y
Hello Trace Adams in Denver. Your idea is a formula for disaster. The Markets are are at the highs, selling off. Go watch Reventure Consulting youtube video, "Colorado Market Forecast for 2024." I had Rentals for 30 years in South Tampa and now live outside of the mess in Valrico, Florida. You need to learn how to Buy your First Home before you do anything else. Historically, Single Family Homes to Rent, never made any Money. You need to learn the IRS Publication 523, on Selling a Residence. You can live in your Home for 2 out of 5 years and when you Sell it is Tax-free up to $250,000. During that time you find another fixer-upper to Rent. When you sell your Home you move into your Rental and just do it again. Got it?
- Real Estate Agent · Member since 2024 · 7 posts · 3 votes2y
What David said is spot on. I was also thinking how hard it is to invest from out of state.. looking at enticing properties in your price range without knowing the area feels scary to me. There are a lot of sketchy areas in Tampa Bay and/or areas that flood that out of staters just wouldn't be aware of.
Short term rentals in Tampa are saturated and unless you have a pool you'll have a low occupancy rate. Which is impossible to find under $300k.
If you want better insight on the area, I know Tampa Bay like the back of my hand and I'm happy to help! I've assisted multiple out of state investors and site unseen deals.
- 2yJorge VazquezBusiness MemberReal Estate Broker · Tampa, FL · Member since 2017 · 1k+ posts · 690 votes
Hello Trace! It's great to hear you're considering an investment property in Tampa as a stepping stone to eventually relocating there. Given your situation and the market dynamics, buying a rental property to cash flow and build equity sounds like a strategic move. It's crucial, however, to consider managing a long-distance property, especially regarding selecting reliable tenants and handling maintenance issues. With over 20 years of experience in real estate and having navigated various transaction types, I'd be happy to provide more personalized advice on managing such investments effectively. Feel free to schedule a chat with me through my calendar if you'd like to dive deeper into this topic. Happy investing!
Graystone Investment Group517 Reviews - Real Estate Consultant · Tampa, FL · Member since 2018 · 31 posts · 35 votes2y
Hi Trace,
if you are looking to invest in the Tampa area, you definitely want to reach out to @Jorge Vazquez
He has a wealth of knowledge and is a seasoned investor here in the Tampa area. He would be happy to answer any questions you may have. Good luck to you.
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