The Pros & Cons Of Buying A Rental Property In Tampa

Being a landlord may seem enticing. You can buy a home and have a tenant pay the mortgage while you build equity. You may even earn some profit beyond your mortgage and other expenses.

While this can be a landlord's experience, it isn’t always the case. There are pros and cons associated with owning rental property in Tampa. While you will likely have a passive income stream, you will have to deal with problem tenants and pay for maintenance and repairs.

Eaton Realty knows that owning rental properties can be a financially savvy move - but it isn’t right for everyone. We help clients throughout West Central Florida buy and sell real estate - and can help landlords manage their investment properties. If you are contemplating buying a rental property in Tampa, reach out to talk to one of our Tampa property managers about how we can help.

Considering Buying A Rental Property? Our Property Managers Can Help You Determine If The Move Makes Sense For You › 813-672-8022

Advantages of Buying Rental Property in Tampa

There is a reason so many people dream of owning rental properties. They are often a great way to earn passive income while building equity in real estate. Below, we have listed some of the biggest reasons to buy a rental property in Tampa, Florida.

Monthly Rental Income

One of the biggest reasons many people purchase an investment property is for passive income. If everything goes right, you will receive a check each month from your tenants. This money can cover your mortgage and other expenses - and there may even be enough left over for a tidy profit.

Appreciating Home Value

Tampa is a hot real estate market, with home values increasing significantly in recent years. Purchasing a rental property can help you take advantage of this trend, with an initial investment growing in value over the years. If you put work into the property, the house's value could grow exponentially, leaving you in a much better position than if you had invested your money elsewhere.

Building Equity

Most property investors take out a loan to buy real estate. When they receive a rent check from a tenant, it goes directly to the mortgage. Over time, they can pay off the loan - and own the property free and clear. Having someone else pay your mortgage increases your net worth significantly since you’re not paying the mortgage yourself.

Tax Benefits

There are certain tax benefits to owning a rental property. While you must report rental income, you can deduct expenses such as property taxes, operating expenses, mortgage interest, repairs, and depreciation. The result is that you may owe less in federal income taxes - which puts more money in your pocket each year.

Great Rental Market

Tampa is a great place to own rental property for a few reasons. Lots of people want to live in Florida, particularly in a city like Tampa that is close to the beach and a relatively short drive away from major amusement parks like Disney World and Universal Studios. More importantly, MacDill Air Force Base is in the Tampa region - which means there is a steady supply of potential tenants moving into the area as they are stationed here.

Disadvantages of Buying Rental Property in Tampa

Of course, being a landlord isn’t all unicorns and rainbows. Yes, you can turn a profit and build equity - but there are some downsides to owning rental properties. Many of these disadvantages apply to being a landlord anywhere - not just in Tampa.

Paying for Property Insurance

In Florida, weather events like hurricanes and tropical storms occur annually. Combined with insurance fraud, this has brought the insurance market to the brink of collapse. There is no doubt about it—getting a policy on a rental property in Tampa will be expensive and difficult. Prospective landlords should factor this cost into the equation when deciding if buying a rental property in Tampa makes sense.

Maintenance and Repair Expenses

One of the downsides of owning your own home is that you are required to do all of the upkeep on it - and the same goes for rental properties. As a landlord, you will be the one footing the bill if the HVAC system fails or if the roof develops a leak. While you will get a monthly rent check, these expenses may be more than the rent for some months. If you want to be a landlord, you should have some funds set aside to pay for routine maintenance and repairs.

Dealing with Problem Tenants

In an ideal world, your tenants will be quiet, pay the rent on time each month, and never damage any property. In reality, good tenants can sometimes be hard to find - particularly if you’re seeking out and screening tenants on your own (instead of with the help of a property management company). You can expect calls on the weekend for repairs, going through the eviction process if a tenant breaks the lease, and responding to issues like noise complaints.

Having to Carry the Mortgage

If a tenant fails to pay rent or you can’t find a new tenant for a vacant unit right away, you won’t get any income from the property - but you’ll still have the same expenses. While rental income can be consistent if you have good tenants, there will usually be some time when your property is empty. Consider vacancy when you are deciding whether or not to purchase a rental property.

Limits on Rentals

In Hillsborough County, there are restrictions on short-term rentals. If you want to buy a property and turn it into an Airbnb for tourists, you will have to purchase a house in a designated zone and obtain the appropriate licenses from the state. In addition, some condo associations set percentages of owner-occupied versus rental units - which means that you might not be able to purchase a condo in a particular development. If you plan to buy a condo or another property within an association, check the rules on rentals first. Homeowners' associations may also require a minimum number of years of ownership before a home can be rented and limit the number of homes one owner may rent at a time.

Should I Buy a Rental Property in Tampa?

There is no single answer as to whether or not it makes sense for any person to purchase an investment property in Hillsborough County. Like any other investment, there are some risks involved in buying rental property. If you can financially tolerate the risk, it may be a smart move and a way to build financial stability over time.

Buying a rental will largely depend on your current financial situation. A good rule of thumb is that you should be able to cover the expenses associated with the property if you don’t have tenants. If you can’t, then you run the risk of losing your property to foreclosure.

You can’t always count on having your property fully rented—or even that all your tenants will pay on time each month. Your calculations should include this reality to build a bit of a cushion. This may mean purchasing a property that costs less so that the mortgage is lower and you are paying less out of pocket for a down payment.

Being a landlord can be stressful, especially when dealing with tenants. One way to address these issues is by working with an experienced Tampa property management company (like Eaton Realty). Our team belongs to the National Association of Residential Property Managers (NARPM), and our director of property management has achieved the designation of Master Property Manager, which demonstrates our expertise in the field.

A property manager can handle most or all of the headaches of owning a rental property for you, including:

• Marketing and listing (including premium, paid listings)
• Tenant screening, including credit check, rental history, and employment verification;
• Having a Florida lease drafted by a skilled attorney;
• Showing rental properties;
• Collecting rent;
• Coordinating services such as lawn care;
• Performing property inspections;
• Coordinating maintenance requests;
• Handling evictions; and
• Analyzing and preparing financial reports.

As Tampa real estate agents, we can also help you find the ideal property for your purposes - within your budget and desired financial goals. Our experience also helps us set an appropriate rental price to ensure you get the most out of your rental property - without pricing yourself out of the market.

For most people, the upsides of owning a rental property in the Tampa region far outweigh the drawbacks. While you will need to carefully evaluate your financial situation before deciding, owning rental properties can be a fantastic investment in your financial future. It can also be a great way to build generational wealth, setting your children up for the future.

Looking to Buy a Rental Property in Tampa? Give Us a Call!

Buying a house is a huge decision, whether you are purchasing a primary residence or a rental property. Before doing so, you should carefully analyze your finances and the pros and cons of buying a rental property in Tampa. A seasoned real estate agent can help you understand the benefits and drawbacks of each option so that you can make an informed choice.

At Eaton Realty, we have experience helping clients in all aspects of Florida real estate - from buying to selling to renting to managing properties. As a full-service real estate firm, we have the know-how to walk you through each step of the process of buying an investment property and managing it appropriately. To learn more about our real estate services, fill out our online contact form or give us a call at 813-672-8022 to talk to a team member.

The information disclosed above does not constitute legal or financial advice. Use this information at your discretion and consult a legal or financial professional for further guidance.

More Information For Your Consideration

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• Is Real Estate An Inflation Hedge?
• How To Prepare A House For Rental