For two years, a single-family home rental boom has been sweeping through the Tampa, FL area. Investors are buying up hundreds of single-family homes in attractive neighborhoods and counting on renting them to both the thousands of local residents affected by foreclosures and short sales, and new residents arriving from across Florida or from the north.
Demand Keeps Pace with Supply
Property management firm Home Encounter reports an increase in leased homes between early 2011 and this past September from about 120 to more than 500 in Hillsborough County. But rather than reducing rents, as some renters wish, average rents have remained fairly flat across three years, running $1300-$1500 in Hillsborough and Pinellas counties.
The biggest buyer of Tampa-area rental homes is Dallas-based Invitation Homes, a division of giant investment firm Blackstone Group. Property records reveal the purchase of 1,801 homes in Hillsborough and Pinellas counties for at least $247 million through the end of September. Such buying sprees are affecting Hillsborough County’s mix of homesteaded and non-homesteaded homes, which has risen to 28 percent from 16 percent in 1999. The Hillsborough County Property Appraiser assumes the sharp rise in rented homes is fueling this increase.
Renters Have It Tough
But all is not cozy for renters. They complain about having no point of contact, being unaware of who actually owns the home, and having the schedule repairs through an impersonal online portal. Additionally, large investment firms make blanket decisions on rent and rent increases, leaving no room for negotiation as might occur between a renter and a landlord. Renters feel frustrated and, in many cases, pushed out when rents increase beyond what is affordable. Given that so many renters have suffered foreclosures, short sales and bankruptcies, security deposits of $3,000 to $4,500 are the norm. These amounts are two or three times more than the deposit normally required of a renter with excellent credit.
Landlords and Financiers Get Creative
As well, some neighborhoods are oversupplied with rental homes, forcing landlords to cut rents or offer rent concessions to fill their homes. Often rent concessions are higher in the Tampa area than elsewhere, although why remains unclear.
Of course, with new housing opportunities comes creative financing. According to a Morningstar report, Blackstone Group sold bonds to investors and is paying off the bondholders with the monthly payments from 3,207 Invitation Homes rentals around the country. Of those, 257 homes included in the “securitization” are in the Tampa area.
It is assumed that the market will slow as builders begin overbuilding once again and vacancies rise but, for now, landlords remain on the winning end.