The Tampa Bay rental market is undergoing a notable correction after years of pandemic-driven growth, with rents declining 7-8% in some areas as the region adjusts to new realities. This shift is presenting both challenges and opportunities for investors, property managers, and tenants.
Lei Cheng, founder and broker at Service Near Realty, has seen this transition firsthand while building one of Tampa Bay’s largest property management operations. Managing over 700 rental properties with a team of 10, his company ranks in the top 2% of property management firms nationwide by volume, according to the franchise network PMI, which he recently joined.
Pandemic Growth and Its Aftermath
During 2021 and 2022, the Tampa Bay rental market saw rapid growth as remote workers left high-cost cities for Florida’s lifestyle and tax benefits. “So many residents are coming from other states, like Boston, New York, or California. They moved to Tampa temporarily and rented our properties,” Cheng says. “No matter how much you asked, people just rented because they wanted to stay away from their hometown.”
These transplants brought higher salaries from California and the Northeast to a lower Florida cost of living, fueling an artificial rental surge. Properties in desirable communities reached $4,000-5,000 a month for four-bedroom homes, with tenants still considering these rates affordable compared to their previous markets.
The market began to correct in 2023 as companies required employees to return to the office. “Many people even purchased homes as second homes in Florida. They lived there for one year, and then they needed to move back to their hometown and turn that home into a rental property,” Cheng notes. This sudden influx of rental inventory, combined with fewer out-of-state tenants, shifted supply and demand.
Current Market Conditions
Today, Tampa Bay’s rental market looks very different. Cheng’s data shows rents falling across key submarkets such as Wesley Chapel, Riverview, and Ruskin. “The rent is going down 7-8% in some areas,” he reports, with vacancy periods now much longer than in previous years.
This transition has created tension between property owners and the market. “Sometimes the homeowner in California doesn’t believe it. In California, the rent is still going up. They say, ‘This year we rented for $2,400. Can you still rent for $2,500?’ We say no,” Cheng explains. His team spends considerable time educating out-of-state owners about the realities of the Tampa Bay market.
Home prices have also softened, declining 5-7% year-over-year in key markets. Major builders such as Lennar and D.R. Horton are selling new homes at lower prices, despite higher construction costs, reflecting broader market pressures.
Insurance Costs and Investment Challenges
Florida’s ongoing insurance issues are adding to investment challenges. Tampa Bay was impacted by three hurricanes in 2024, resulting in widespread claims and higher premiums. “Some of the properties we managed got damaged by hurricanes, like the roof got blown away,” Cheng reports. “All these repairs will trigger the insurance to go up.”
With interest rates now at 6-7%, compared to below 4% before 2022, many investors are facing negative cash flow. “Quite some investors are holding properties where the investment return is negative. Every month the rent cannot even cover their holding costs,” Cheng observes.
Technology-Driven Property Management
Cheng’s background as an IT professional for 16 years at University of South Florida and Moffitt Cancer Center has influenced his approach to property management. His company uses technology to achieve faster response times and lower costs than traditional firms.
“Most companies say their response time is within 24-48 hours, but most people, especially in Florida, when AC stops working or there’s a drainage issue, nobody can bear 24-48 hours,” he explains. His team typically responds within one to two hours, often arranging same-day service through established contractor relationships.
The company requires tenants to submit maintenance requests with photos, videos, or audio descriptions. Contractors can then diagnose problems before they arrive, reducing delays and unnecessary visits. This approach allows each staff member to manage 120-150 properties, compared to the industry average of 70-80 units per employee.
These efficiencies lead to competitive pricing: 5% management fees for properties under three years old, scaling to 8% for properties over 10 years old, compared to industry standards of 8-10% across all properties.
Financial Stress on Tenants and Owners
Current market conditions are increasing financial stress across the rental ecosystem. Cheng reports that about 10% of his 700 tenants—70-80 households—struggle to pay rent on time each month. “More tenants cannot afford the rent, or they can only pay $500 at the beginning, another $500 on the 15th,” he notes.
The company requires tenant household income of three times the monthly rent, so tenants need $80,000-90,000 annual income for the average $2,400 rental. Job loss or illness can quickly lead to payment difficulties, increasing eviction rates and administrative burdens.
Cheng’s team works with tenants in financial distress, setting up payment plans when possible, but the strain on both renters and owners is growing. Extended vacancies and late payments are becoming more frequent, and property owners who depend on rental income are feeling the impact.
Market Outlook and Opportunities for Investors
Cheng expects these conditions to remain until interest rates fall significantly. “I see this trend will stay stabilized for quite a few years in Florida, unless the interest rate is reduced significantly,” he predicts. “Only when the interest rate goes down at least 1% will it give people confidence to buy.”
However, he sees opportunities for investors who can act quickly. Owners who bought before 2020 and benefited from Tampa Bay’s 50% price appreciation may be willing to sell below current market value to lock in their gains. “Some homeowners want to secure this big capital gain. They’re willing to sell lower than market price,” Cheng explains.
For investors with capital and patience, the current environment could offer entry points that were not available during the pandemic boom. The key is identifying motivated sellers who value certainty and are willing to accept lower prices rather than holding out for maximum returns.
Adapting to a New Rental Landscape
As Tampa Bay’s rental market continues to adjust to post-pandemic conditions, property managers like Cheng are adapting their operations for a more challenging environment. Efficiency, technology adoption, and realistic expectations are becoming essential for success.
Cheng’s team relies on workflow automation and centralized data management to track maintenance, leases, and payments. Digital communication tools allow for faster tenant and contractor interactions, reducing administrative overhead. This streamlined approach helps his firm remain competitive as margins tighten.
The company’s ability to manage a large portfolio with a small team is a result of these technological investments. By reducing manual processes and improving response times, Service Near Realty can keep management fees low while maintaining service quality.
Looking Ahead
The Tampa Bay rental market is in a period of adjustment, facing headwinds from falling rents, insurance costs, and higher interest rates. Property managers and investors must stay agile, using technology and data to navigate a more complex landscape.
Cheng remains optimistic that the region’s long-term fundamentals—population growth, economic expansion, and lifestyle appeal—will continue to support rental demand. However, he cautions that the days of rapid appreciation and easy profits are over, and a more disciplined, technology-driven approach is now required.
For both investors and tenants, understanding these new dynamics is crucial. The market is no longer defined by pandemic-era surges, but by a more balanced relationship between supply and demand. Those who adapt to this reality, leveraging technology and focusing on operational efficiency, will be best positioned to succeed as Tampa Bay’s rental market continues to evolve.
