Tampa continues to rank as one of the best cities in the U.S. for real estate investing, with a booming economy and strong job growth, along with affordable investment properties featuring generous cash flow and equity growth.
In this article, you’ll learn the 5 top reasons why Metro Tampa Bay is one of the strongest real estate markets for real estate investing in the country. They include:
- Growing Economy
- Job Growth
- Population Growth
- Investment Property Affordability
- Cash Flow and Equity Growth
Growing Economy
Tampa’s growing economy is largely a result of a city government that advocates for economic development that has furthered a real estate investment boom, making Tampa one of the most popular destinations for millennial entrepreneurs. So much so, these entrepreneurs are called “Tampreneurs.”
Tampa has the diversified economy millennials seek, led by financial services, STEM-related occupations, health care, research, education, tourism, retirement, and military bases all making significant contributions to jobs and growth. The local economy is worth about 130 billion dollars, putting Tampa Bay among the fastest growing metros in the country.
Furthermore, businessmen Jeff Vinik, owner of the Tampa Bay Lightning hockey team, and Bill Gates have partnered to invest in Tampa. Together, they formed Strategic Property Partners, the driving force behind downtown Tampa’s most ambitious redevelopment project, Water Street Tampa. This nine million square foot multi-use project on the Tampa waterfront will consist of commercial, residential, educational, entertainment, cultural, and retail space. The total investment will exceed three billion dollars.
Job Growth
Because of its growing economy, Tampa is consistently creating jobs. In 2016, Metro Tampa added 40,000 new jobs, making it the fastest growing area in the state, and one of the fastest in the country. As evidence of this, more than 19 firms with annual revenues of over 1 billion dollars are headquartered in Tampa.
With a growing economy and job growth, Tampa was the number-one city people moved to in 2016, according to Realtor.com. As a result, the strong real estate investing marketing in Metro Tampa Bay continues to this day, with businesses growing in practically all sectors.
For these reasons and more, Fortune magazine ranked Tampa as the hottest city for start-ups. And Money magazine ranked Tampa as the best overall city in the Southeast.
Job growth in Tampa has grown by more than 2%. Although slightly below the national average, future growth seems likely for many reasons: corporate expansion, the low cost of doing business, and the high demand for STEM-related occupations.
Population Growth
So, with a growing economy and strong job growth, Metro Tampa Bay is experiencing healthy population growth.
A convergence of activity that includes a visionary government, an accessible airport, and a diverse community has transformed Tampa into one of the most highly desirable and popular metros in America. Since 2010, Tampa’s population has increased by almost 9 percent – more than double the national average of 4 percent, with metro Tampa experiencing the nation’s 4th highest gain from people moving here in 2016.
Investment Property Affordability
While experiencing economic, job, and population growth, Metro Tampa Bay is ranked as one of the best places to invest in real estate because prices for investment properties have remained low.
In Tampa neighborhoods where Graystone Investment Group’s clients invest, the median price for 3-bedroom homes in Tampa was $116,000 in January 2017 – 38% lower than the national average of $187,000. This shows Tampa investment properties are much more affordable than in many other cities across the nation.
Cash Flow and Equity Growth
Besides affordability of investment properties, Metro Tampa Bay features cash flowing properties with strong equity growth.
The average gross cap rate for properties Graystone Investment Group buys is 10%, with the best properties having a gross cap rate of 12% in 2018. This is possible because rents are higher in Tampa than the national average, especially in the neighborhoods Graystone Investment Group buys properties. And, Graystone finds properties with exceptional value that retain more equity upon being rehabbed.
Because of a booming economy, and long-term investments in Tampa by investors like Jeff Vinik and Bill Gates, equity growth for investment properties in Tampa Bay remains strong with the Zillow Home Value Index at $213,800 for the Tampa-St. Petersburg-Clearwater Metro as of June 2019, which is more than 8% below the state’s median home value and nearly 6% lower than the U.S. median home value according to Zillow.
And, though home values are lower in Tampa Bay than all of Florida and the overall U.S., they increased more rapidly. Zillow estimates they will continue to increase at a faster pace than both the state and U.S. overall.
What does this mean for real estate investors? Investment properties in Tampa Bay are generating very good cash flow profits, while growing equity more quickly than the state and the U.S. overall, providing the potential for investors to generate higher profits.
