Tampa multifamily investment guide

Median gross rent in Hillsborough County is $1,667 a month. Median household income is $79,540. On our arithmetic that is about 25.1 percent of gross household income going to the median rent, which is the heaviest burden of any Sun Belt market we have researched and close to Los Angeles at about 26.0 percent.²

The comparison across our coverage makes the point sharply. The same calculation gives roughly 24.5 percent in Dallas, 24.4 percent in Nashville, 22.4 percent in Charlotte, 22.0 percent in Charleston, 21.8 percent in Fulton County, 19.7 percent in Greenville, 18.4 percent in Wake County and 16.8 percent in Huntsville. Tampa rents like a coastal market on Sun Belt wages.²

Note what is unusual here. In most of our Southeast markets rent is low in absolute terms and incomes are decent, so the burden is light and the constraint on the owner is that tenants can buy instead. In Tampa the absolute rent is high, higher than Charlotte, Nashville, Dallas or Wake County, while the income is close to the bottom of the set. The constraint is not that tenants will buy. It is that they are already close to what they can pay.

That matters for the only thing that drives a value-add return: the renovated rent. A plan that assumes a two hundred dollar premium on a renovated unit is assuming a household already at 25 percent of gross income moves toward 28 or 29. Some will. The question an underwriting has to answer honestly is how many, and how quickly the rest of the rent roll follows, and the answer is more constrained here than the headline Sun Belt growth story suggests.²

• Median rent $1,667 against median household income $79,540, about 25.1 percent.²
• Higher absolute rent than Charlotte, Nashville, Dallas or Wake County.
• Median household income among the lowest in our Southeast coverage.

Tampa rents like a coastal market on Sun Belt wages. The constraint here is not that tenants can buy instead. It is that they are already close to what they can pay.

Florida is widely described as having a ten percent cap on assessment increases for investment property. That is true and it is also incomplete in two ways that matter a great deal to a syndication.

Section 193.1554 of the Florida Statutes provides that non-homestead residential property is reassessed each January 1 and that "any change resulting from such reassessment may not exceed 10 percent of the assessed value of the property for the prior year". The first hole is in the same statute: that limitation applies to "all levies other than school district levies". School district millage is a substantial component of a Florida property tax bill, and it is not capped. A pro forma that applies ten percent to the whole bill is capping something the statute does not.

The second hole is the trigger. The statute provides that property assessed under this section "shall be assessed at just value as of January 1 of the year following a change of ownership or control". Reassessment to full market value is not limited to a sale of the real estate: the statute defines change of ownership or control broadly, reaching transfers that affect more than 50 percent of the ownership of the entity holding the property, with specific exceptions for corrective, spousal and certain public company transactions.

For a sponsor that is a live consideration rather than a technicality. A recapitalization, a partner buyout, or a secondary transfer of limited partner interests that crosses fifty percent can reset the assessment even though the building never changed hands. That belongs in the operating agreement discussion and in the model, not discovered in year three.

The Florida Department of Revenue publishes the exemption and assessment framework, and the homestead comparison is instructive: an owner-occupier is capped at the lower of three percent or CPI under Save Our Homes, while a rental owner is capped at ten percent on part of the bill. As in Alabama and South Carolina, the favorable treatment attaches to the resident, not to the investor.

• The 10 percent cap excludes school district levies.
• Reassessment to just value follows a change of ownership or control.
• Change of control reaches transfers of more than 50 percent of the ownership entity.
• Homestead property is capped at the lower of 3 percent or CPI by comparison.

A transfer of more than fifty percent of the ownership entity can reset a Florida assessment even though the building never changed hands. That is a recapitalization risk, not just an acquisition one.

Tampa is a watch market for us rather than a buy market, and the reason is the combination rather than any single figure: the heaviest rent burden in our Sun Belt coverage, the slowest employment growth outside Atlanta, the highest Southeast unemployment rate, and an insurance line that has repriced faster than rents. Any one of those is manageable. Together they compress the room a value-add plan needs.

What would change our view is straightforward and measurable: employment growth returning above one and a half percent across more than one sector, unemployment moving back toward four percent, and evidence that insurance pricing has stabilized rather than merely paused. Our method is set out in how we evaluate a market, the fee structure is on the fee page, and the mechanics are in how to invest.

We have written the position out in full, including the conditions that would change it, in why we are not buying Tampa.

• What renovated rent does the plan assume, and what share of median household income does it represent?
• Is there a bound insurance quote at this asset, with the actual roof age and construction type?
• Is coverage admitted, surplus lines, or Citizens, and what does that imply?
• Does the model survive a materially higher premium at renewal?
• Is the tax model capping only the non-school portion of the bill, as the statute provides?
• Could any planned recapitalization transfer more than fifty percent of ownership and trigger reassessment?
• Which county assesses the parcel, Hillsborough or Pinellas, and what is the elevation and evacuation zone?

Any one of these is manageable. The heaviest rent burden in our Sun Belt coverage, the slowest job growth outside Atlanta, and the fastest-moving expense line together are why we watch rather than buy.