To stimulate the economy the Federal Reserve, the United States’ central bank, has kept interest rates hovering around zero for months. This has led to record-low mortgage rates. Homeowners have been clamoring to refinance thanks to low rates and homebuyers have been on the hunt for the perfect properties to purchase.
Because of the pandemic and the uncertainty surrounding it, there were fewer homes on the market than last year. This number is the “housing inventory.” And according to Realtor.com, housing inventory is down 38.3% from last year. With fewer homes available, homebuyers have had to compete for available homes, resulting in higher prices for sellers. Home prices are up approximately 12.2% from last year.
With so much going on, is Tampa real estate investment a smart move?
Imagine if you’d bought that dream property you saw last year. At this point, it could be worth 12.2% more than what you paid. That is an amazing return on investment. In 2019, Freddie Mac estimated that housing prices would go up 2.6% in 2020. Of course, they couldn’t have predicted the impacts of a pandemic on the real estate market.
Purchasing Tampa Investment Properties
If you are looking to build a real estate portfolio to generate passive income, Tampa is a wonderful place to invest. Tampa is the 9th fastest growing city in the US, according to WalletHub. BizJournal notes that Tampa is the third fastest-growing city in Florida. And with that growth comes plenty of opportunities.
Tampa is a bustling metropolis that serves a diverse population looking to work, start families, and enjoy everything that the Tampa Bay area offers.
If you are interested in purchasing properties to rent out, you will want to focus on how much revenue a potential property can generate for you. You want to make sure that there is a pool of people who are able and willing to rent from you. Right now, that may mean avoiding neighborhoods that have been severely impacted by the current recession and pandemic.
Millionaires Say Real Estate is the Way to Go
An interesting CNBC article shared insights from millionaire real estate investors. There were some common pieces of advice in the article for those interested in getting into the game. The individuals quoted in the article, including Barbara Corcoran from the Shark Tank, credit owning real estate for their wealth.
So why do people who have made fortunes off of real estate continue to sing the market’s praises and further invest?
It’s Real
Real estate is a tangible asset. It is something that can be owned. While you can purchase stock and invest in companies, those assets are not tangible, like real estate. This concreteness helps real estate better maintain its value over time and means that it is not as susceptible to large swings as the stock market. While value can decrease in some instances, that is generally less likely to happen as long as you do your research and find the right properties for your goals.
It Increases in Value
Many things, like our cars and even money itself, depreciates over time. Meaning, they are worth less the longer we have them. A dollar today will not get you as much in ten years as it can today. As long as you maintain any properties you purchase, your real estate is likely to be worth more as the year’s pass. This means that you can make a small investment today and have it worth a lot more in a decade.
Even if you are only looking to purchase a home or condo for yourself, that investment will grow over time. When you are ready for a larger home, you can use the equity you built up in your smaller property to purchase a larger place or rent out your starter property to generate passive income.
Tax Breaks
One thing that has helped real estate investors grow their portfolios is their ability to write off certain expenses. Speak to an accountant to learn more about the current tax landscape, and what gains or interest payments you may be able to write off on your state or federal taxes.
Options
When you invest money in a startup or stocks, that’s it. The money is out of your hands, and you are left with no control of the situation. When you invest in real estate, the control is all yours. You can flip a home, rent it out, or live in it. You can change your mind at any time and switch up what you do. Plus, you can sell your property whenever you wish or use it as collateral for further real estate purchases or renovations.
And a word of advice: One respondent mentioned being in it for the long term. Ultimately, if you focus on generating passive income over time rather than flipping homes for profit, you can capitalize on the appreciation of your properties.
While financial predictions are always subject to change, there is one area in which a Tampa real estate purchase will always be a good investment.
Purchasing a Home in Tampa
When you purchase a home in the Tampa area, you invest in your family and your community. A beautiful home to raise your family doesn’t just provide shelter, it creates a space to grow, love, and prosper.
Tampa is growing quickly, which means that home prices will likely continue to rise as more people call the area home. With world-class cuisine, amazing beaches, beautiful natural spaces, good schools, and an assortment of leisure activities, Tampa has something for everyone.If you are interested in purchasing a property in the Tampa area, whether as an investment or as your home, let’s talk! As a Tampa native, I have a deep understanding and appreciation for this unique area and would love to share my expertise with you. Together, we can find your next property.