Tampa Short-term Rentals: An Investment You Should Be Making This Year

Many real estate investors think Tampa short-term rentals are a great investment. Should you be considering them, too?

Tampa Real Estate Market 2022 and Beyond

Over the past 2 years, the Tampa Bay housing market has been the least vulnerable to the effects of the Covid-19 pandemic.

In fact, the Tampa Bay metro area will be the No. 1 hottest housing market for this year. That’s based on the January 2022 predictions by Zillow, the online real estate marketplace giant. It said Tampa tops the list due to a combination of various factors:

strong home value growth;
a thriving job market;
a scarce and fast-moving inventory; and
demographics that indicate a good number of potential buyers.

Zillow expects the city to rise from the fourth-fastest in home value growth in 2021 to the fastest in 2022. The typical home value in the metro right now is $347,697, going up 31.5% over the past year.

Currently, the Tampa real estate inventory is very low. In fact, the housing supply shrunk 25% the past year.

Because of this, along with low mortgage rates, home prices are rising. But they’re still low compared to many markets across the United States. Tampa properties actually have a good chance for a strong appreciation in the coming years.

The Tampa market is a seller’s market right now – which means there are more people looking to buy than there are homes available. The sale-to-list price ratio is 100%, meaning houses are sold for approximately the asking price on average.

Realtor.com says home sales in the city are expected to surge by 9.6% while prices are projected to rise by 6.8% year-over-year.

What’s happening now, as reported by the Tampa Bay Times, is that Tampa is experiencing a meteoric rise”in desirability – especially for people flocking from around the country. Despite skyrocketing real estate prices, Tampa Bay is still relatively cheap for folks coming in from high-cost cities in New York and California.

Let’s take a look at the different forces driving the bullish Tampa real estate market.

1. Population growth

Located in western Florida along Tampa Bay and the Gulf of Mexico, the Tampa Bay metro area, which includes the cities of St. Petersburg, Clearwater and Tampa, is the 18th largest metropolitan area in the U.S.

These 3 cities are scattered across 2 distinct counties, Hillsborough and Pinellas. The Tampa Metro, with a population of over 3.1 million, is the 3rd most populous metro in Florida after Miami and Jacksonville.

The city of Tampa alone, which consists of 94 neighborhoods, has close to 388,000 residents.

Population growth was pegged at 1.17% last year and is projected to rise annually at 3.3% over the next few years. By 2024, the metro area’s population is projected to increase by 126,300 residents.

2. Job growth

Tampa’s economy has a diverse base of finance, technology, tourism, healthcare, manufacturing, defense, and construction industries.

The GDP of Tampa is more than $169 billion, having grown by 14% over the last decade.

As of September 2021, the Tampa area gained the most number of private-sector jobs of all metro areas in Florida. Some 84,600 jobs were added last year, amounting to a 7.2% increase. The city’s unemployment rate dropped to 3.9% in September, down from 6% reported a year before.

Along with the above industries, high-paying professional business services are also driving a steady increase in job growth. The metro is home to 20 corporate headquarters with over $1 billion in annual revenue, 8 of which are Fortune 1000 companies. Almost 500 foreign-owned companies from more than 40 different countries are established in the area.

The Port of Tampa, the largest in Florida, is also keeping the logistics and distribution industries robust.

Furthermore, Bill Gates has partnered with businessman Jeff Vinik (owner of the Tampa Bay Lightning hockey team) to develop Water Street Tampa, a $3 billion development project that is transforming the downtown waterfront into a 9 million-square-foot complex. It’ll consist of a mix of modern commercial, residential, educational, and entertainment spaces.

3. Tourism

Tampa’s mild winters and subtropical weather throughout the year make it a magnet for Americans trying to escape the cold northern states. The average temperature is 99F, which is comparably warm and comfortable.

Retirees, millennials and young families flock to this snowbird city because of its pristine beaches, unspoiled nature and a plethora of leisure, entertainment, art, sports and dining attractions. (As we all know, an influx in tourism means a huge demand for Tampa short-term furnished rentals.)

The popular tourist attractions in Tampa are the Florida Aquarium, the Tampa Museum of Art, Busch Gardens Florida, Tampa Bay History Center, Zoo Tampa at Lowry Park, Big Cat Rescue, Hillsborough River State Par,. and Adventure Island, among others.

It’s important to note that Tampa International Airport, St. Petersburg-Clearwater International and Sarasota-Bradenton International are all located within the metro area and provide non-stop service to more than 90 domestic and foreign destinations.

4. Desirability

Livability.com says Tampa has completely transformed itself into a completely desirable and competitive city. Ever since the Great Recession, the metro area has managed to get back up and reinvent itself. From the development of the downtown and waterfront areas to its year-round festivities, the fabulous weather to affordable cost of living, there are plenty of reasons why “everyone is moving to Tampa right now”.

US News and World Report ranked Tampa #6 in Best Places to Retire, #6 in Best Places to Live in Florida, and #9 in Safest Places to Live among 150 metro areas in the country.

Additionally, the cost of living in the city is 5% lower than the national average. Niche.com gave it top marks for diversity, nightlife, and livability for families. Tampa’s numerous bars, restaurants, coffee shops, and parks are a great draw, as is the city’s above-average public schools.

Most of Tampa’s residents are migrants from other areas of the U.S., lured by the area’s favorable climate, better quality of life, job opportunities, and recreational activities.

5. Low tax burden

The state of Florida is one of only seven states that don’t collect individual taxes. While you would still have to pay the state and local taxes, no personal income tax will be required of you.

Check out this Florida Tax Guide to get a quick look at various taxes levied by the state.

6. Legality

Short-term renting is legal – both in Tampa and much of Florida. In fact, when it comes to short-term rental laws, the state of Florida is one of the most Airbnb-friendly in the US. It has banned local governments from passing laws that prohibit short-term renting.

However, there are various state, county and city regulations that you have to follow. Check with both the Florida and Tampa official websites to be aware of any changes in short-term rental regulations.

Tampa short-term rentals

If you don’t already know by now, Florida is an Airbnb hotspot. Before the Covid-19 pandemic, over 6.6 million people visited the state through the company’s online travel booking platform. Airbnb’s Floridian hosts collectively received $1.2 billion in supplemental income in 2019.

Pinellas County received 331,000 visitors, generating $67.2 million. Hillsborough Country saw 247,000 visitors and made $33.7 million.

And despite the pandemic, Florida and Tampa have continued welcoming visitors. And they’ll likely continue hosting business and leisure travelers in the next few years.

As a result, the booming tourism has made Tampa a hotspot for real estate investors, as well. Hillsborough and Pinellas offer a variety of opportunities for residential and commercial rentals, both in suburban and high-density downtown areas.

In fact, Tampa is one of the best cities for rental arbitrage in the country, according to short-term rental data analytics website AirDNA. The company tracks the daily performance of over 10 million properties in 120,000 global markets. For 2021, it reported the following figures:

Average daily rate (ADR): $188 (February 2021)
Occupancy rate: 88% (March 2021)
Average monthly revenue $2,775 (July 2021)

The Bottom Line

Because real estate in Tampa Bay is expected to appreciate in 2022 and in the coming years, now is a great time to invest in Tampa short-term rentals. Consider holding on to them for several years so when selling prices go up much higher in the future, you can sell them off and get a good return. Get properties at lower rates now, then rent them out to short-term guests to improve your cash flow.

And when it comes to property management, we can help you with the in’s and out’s. Not just in Tampa, but also in some of the hottest real estate markets in the United States.

Cohostit provides turnkey management services – from marketing to optimization to issue resolution – and everything in between. We’ll help you succeed by minimizing the risks and optimizing your efficiency and, ultimately, your revenues. Click here to see if you qualify.