Tampa Bay is one of the nation's top 10 areas for real estate investors

Investing in real estate can be risky, but the Tampa Bay area is one of the best places to try it, a new study says.

Over the past year, investors have earned an average gross return of 16.7 percent on local residential properties they bought, according to the online real estate investment site BiggerPockets.com. That ranks the bay area sixth among the nation's top 50 metro areas.

"If you can afford to buy a home in your local market, then by definition you can afford to buy (residential) investment properties," said Scott Trench, author of the study.

Don't rush out just yet, though, to grab that foreclosed house down the street. The high returns cited by BiggerPockets don't factor in the many costs of investing, including closing costs, property taxes, insurance and — in the case of many properties — substantial sums for repairs and renovation.

As the housing market recovers, it's also getting harder to find good deals in sought-after areas.

"Carrollwood and South Tampa are almost impossible," Chris Smith, owner of Bay to Gulf Holdings, said Friday. "Those are probably the two hottest places — everybody wants to live there."

Smith's Tampa-based company, one of the largest local real estate investment firms, is a wholesaler that primarily sells to other investors. At any one time, its portfolio includes between 50 and 75 houses throughout the bay area. Among the current listings are a two-bedroom, one-bath house in Seminole for $74,900 and a three-bedroom, one-bath home in Gulfport for $189,900.

"I own so many properties I can sort of gauge the economy based on the call volume," Smith said. "We did have some slowdown for a few months, but it's been picking up in the last two, two-and-a-half weeks."

Volatility in the stock market over the summer deterred some would-be investors. "It's had a direct effect," Smith said, "because when the market goes down they won't spend as much."

Bay to Gulf Holdings buys an average of 20 houses a month, many in St. Petersburg, though "we have spread out a little more," Smith said. For resale purposes, he particularly likes three-bedroom, two-bath homes with two-car garages because they are in such high demand. And while they're getting harder to find, he also looks for older homes that have had a single owner.

"If you can purchase a foreclosure where a person has lived to the day of sale, that's good," he said.

Overall, Smith says, the bay area's reputation as a good place to invest is a mixed blessing.

"As this market becomes more publicized, there are more people coming here trying to purchase," he said. "Obviously, it becomes a little harder to buy discount. You have to make some money."

According to BiggerPockets.com, Dallas has produced the best results for real estate investors, with an average gross return of 19.5 percent. Miami ranked third at 18.6 percent and Orlando came in 10th at nearly 15 percent.

Rounding out the top 10 were Denver, Houston, Atlanta, Detroit, Austin and Las Vegas.