All Forum Posts by: Josh Green

Personally, I think the conventional loan route is much better. With a 5% down conventional loan, you're able to get out of paying MI without an appraisal or refinance once you hit the 20% equity mark with just a broker's opinion of value (~$400). FHA, you have to hold onto that for 11 yrs or refinance, which will cost a few thousand. Next, this market is highly competitive. Buyer demand is actually up 60% right now YoY and supply is down 20% according to NAR (and last year, Tampa was considered 2022's hottest market in the US). The only real reason I see FHA being viable, is to be able to put down less on a multi-family property. However, there are a few issues with that:

1) MFRs here are extremely low in inventory and thus the competition is fierce. Any duplex that potentially makes sense with minimum down is going to need to be under $350k. Duplexes priced this low I see go in typically 48 hours or less and often times cash or over asking price. An FHA offer is just not going to come close to competing.

2) MFRs again are priced 9.9/10 times too high to make the numbers make sense + 9.9/10 times there are leases in place that make it non-financeable for an owner-occupant like yourself.

3) MFRs that do come close to break-even or slightly positive are typically in C class or worse areas. For house-hackers, I've found this to be a major barrier for them as they simply won't put themselves into an ugly, somewhat distressed MFR in a ghetto neighborhood surrounded by other MFRs/renters.

Now, there are occasionally unicorns but in the past 12 months I've been looking I've seen fewer and fewer.  They also go super fast and expect to have a bidding war on them so make sure you're pre-qualified and have the best loan terms you can get.  @Ray (above) is a lender i've done a lot of deals with and he can close extremely fast.  Recently we beat out a cash offer for a house-hacker because we can close faster than they can.

I remember when I first moved here, my wife and I were so determined to continue rinse/repeating the house-hack method by buying MFRs. We quickly realized how poor that market is here and pivoted. In my opinion, there are 2 other house-hacking options that are more lucrative and less competitive. One of those requires a little more cash on hand and the other does not, but both can utilize a minimum down conventional offering and work well. In this market, you have to be more creative than ever to make a profit. Real Estate margins will always trend toward decreasing margins as the herd mentality brings saturation to the old-school methods (FHA house-hack a MFR for example). Luckily, this market has it's strengths still and I much rather be in a high growth, high appreciation market where deals are harder to find than a stagnant one with "good" cash flow percentages left and right. Long-term investors know appreciation will make way more money for an investor than cashflow ever will and Tampa Bay is arguably top market for investors wanting appreciation over the next 10-15 years.

@Roy Gottesdiener

1) Get a STR here in the Tampa Bay area. Arguably the top market to invest in for the next 5-15 yrs. I can get you a STR and Co-Host it to make it quite passive for you to own. With $300k, we can get you a great property at 45% down that will not only appreciate well, but cash flow you $30k+/yr after all expenses.

@Joseph M Limpert

Good on you and you're right. Tampa Bay is now an appreciation market. Gone are the days you can find deals left and right that cash flow with minimum down and little to no rehab on a long term lease.

There's a few options truly, other than unicorns, that make sense:

1) House-Hack (ideally utilize 2 of the 3 options: a) short term rental, b) BRRRR/rehab, c) Build/add ADU)

2) Short term rentals

3) Buy offmarket, distressed. Even here most deals are going to still be single family and most deals from wholesalers still don't do well numbers-wise. Finally, and a lot of people don't understand this that are new to offmarket deals, you need a healthy dose of cash and/or hard money to buy. Most are going to be flips, some a decent BRRRR (don't expect to pull more than 50-75% of your money out though), and ideally a BRRRSTR.

A fourth could be considered a unicorn within #3 which will be creative finance or seller finance deals. Expect to put down at least 20% though on these unless you personally go and source the deal offmarket by calling prospective sellers.

Don't be discouraged though! Sometimes you just got to be more creative and more willing to flex with what the market can give. I remember first moving here I was so adamant that I'd continue to buy and hold MFRs as LTRs. Per and over was the plan as it often is taught to early investors on BP. Ended up realizing the strengths this market does have so I pivoted and I am so glad I was open minded and did so. What would have taken me 10 yrs+ and 10+ properties to make in profit, I think I can do in 3 yrs and less than 5 properties (short term rentals). Do I think that will still be the case in 5 yrs? No way - I feel a great urgency to buy as much as I can as fast as I can - I fully expect the profit margins to continue to decline over time as this market fully migrates to an appreciation market (which is much better overall for investors and long term but and hold, just harder to scale for newer investors).

@Calvin Pringles

Mid-Term rentals definitely are an untapped market basically all over Pinellas county and even Hillsborough county. There's definitely a cost/benefit reason to this when comparing to a short term rental. For example, the gap in revenue produced is much smaller the smaller the subject unit is. A studio, 1bd, and 2bd unit for example could present a strong case to do a mid term rental rather than a short term.

On the other hand, a house typically will make more as a STR. In both cases, furnishing and utilities paid by owner are expected and if you're hiring a PM, it makes more sense to maximize revenue.

Now, some of my clients may be house hacking or self managing. This is when it could be worth a mid term route vs short term route for the time savings. I personally have a house hack that I've been doing this in and I do mixed occupancy of short and mid term to maximize the revenue + occupancy.

I think this is why there aren't a ton of midterm rentals out there compared to short term because in many cases the short term benefits outweigh the mid term.

 Hey Matt,

I've done 3 house-hacks myself and several for in-state and out of state relocation clients in the Tampa Bay area in the recent months.  For a house-hack it comes down to a few things:

1) profitability to comfortability index you want

2) your current cash and financing situation

3) your short and long term goals

I think house-hacking is an excellent way to invest in real estate and luckily, here in the Tampa bay area, there are a ton of different avenues you can take.  Examples:

-House-hack a house and rent by the room

-House-hack a Multi-family 

-House-hack a Single-family that has an ADU or Guest house

-Buy a Single-family house, have the garage converted to a studio and house-hack

-You can do a mixture of the above with: short-term, mid-term, or just long-term renting strategies to make more or less from your investment

There's a lot of considerations with each strategy above from a financing standpoint, cash standpoint, sweat-equity standpoint, start-up time stand point, and management standpoint.  It really comes down to what your situation is and where you want to take things. 

@Ryan Gallagher

I'll dm you

@Dillon Currier

Any investor listening to any real estate podcasts has heard or will continue to hear, about Florida and within that a lot of Tampa/St Pete. There's incredible demand here and growth, yet most of Florida and this area included, has really only just begun on a national stage.

I took an investing aggressively here - I grew up in a top 10/top3 metro the past decade and what this place has in affordability, opportunity, amenities and population growth projections is unmatched. I personally think the greater Tampa bay area is going to be a top 5 metro in appreciation over the next 10-15 years, likely to end up averaging high 9s-low 12s in percent growth annually.

@Connor Benn

Connor,

I do a lot of investor work here and house hacks as well. Depending on your budget and cash position, getting into a duplex here is probably NOT a wise start for your house hack. There are definitely better routes.

As for lenders, dm me and I'll send over a great one.

@Josh Gregory

Hey Josh,

If you're looking to buy a SFR and rent it out for positive cashflow in areas like Dunedin or tarpon springs, either you're going to need to do some significant rehab, put a lot down, or rent it as a short term rental. With that kind of timeline, it would be wiser to invest here into a cashflow positive property, then, when you do decide to move, utilize a primary home loan to buy something you want to live in. If you need to, you can sell that property you bought 10+ years ago to wrap into the new one without the loss on appreciation. There's really no other way to hit the two birds with one stone.

@Jin Zhang

Define "very high". Yes, insurance prices are higher than they used to be with the supply of vendors suddenly decreased. Due to insurance fraud and losses, many vendors pulled out of Florida. There are still insurance options obviously and the cheapest is typically the state discounted one citizens. I would connect with a good insurance broker (I got one) when looking for insurance here. You aren't going to be using online quote finders and find anything useful or reasonable (think Geico, allstate, etc).

At the end of the day it is just a part of the cost of doing business here - insurance is higher in Florida than most states. Property taxes are a little above the national average so for some they are high and others they are low. What really matters is if the deal is profitable or not.