Research from HomeUnion, an online real-estate investment management firm, enabling value investing in single-family rental properties, ranked the top 10 U.S. markets where investors can “affordably and prudently” buy rental properties.
The data, which examined 55 of the largest metro areas across the country to determine the best markets for single-family home investors looking at median price, average gross rental yields, year-over-year job growth, and home affordability, showed that the top investment market is Charlotte, North Carolina due to its strong job growth.
In addition to having the highest job growth rate of any of the top 10 cities, Charlotte had the third best job-growth rate of the top 55 MSAs and ranked 21st in investment home price and 27th in gross rental yield.
Orlando, Florida and Baltimore, Maryland held the second and third spots on the top 10 list, the report found.
“Like any other investment, the focus for SFR investors should be on long-term rate of return and each of the markets on this list has favorable rental yields, low-cost entry points and solid, long-term economic fundamentals,” said Don Ganguly, CEO of HomeUnion.
According to HomeUnion, Nashville, Tennessee ranked concluded the list, ranking 14th in job growth, 23rd in investment home price, and 21st in gross yield rank. Nashville had the highest median investment sales price at $125,000 among the top 10 metros.
The lowest median investment sales price were found in Birmingham, Alabama and Cincinnati, Ohio at $70,000, which were the 4th and 5th markets of the 55 markets examined, the data showed.
The highest gross rental yield was observed in Milwaukee, Wisconsin at 20.7 percent.
“Nationally, macro-economic factors, such as lower homeownership rates, are quite favorable for SFR investing, but real estate is still all about location and finding accessible markets that have low entry points, like Cincinnati and Birmingham, or high gross rental yields, like Milwaukee.”
“Places like San Francisco, Miami or Brooklyn are not on our list, because homeowners—who have different motivations than investors—have driven up prices in those markets to the point where cap rate and gross yield calculations simply don’t make sense for investors,” Ganguly noted. “Likewise, many of the sand state markets, like Las Vegas and Phoenix aren’t on the list because institutional investors have absorbed much of the distressed inventory and raised the barriers of entry for smaller, retail players.”
HomeUnion’s Top 10 SFR Investment Markets:
- Charlotte-Concord-Gastonia, North Carolina-South Carolina
- Orlando-Kissimmee-Sanford, Florida
- Baltimore-Columbia-Towson, Maryland
- Cincinnati, Ohio-Kentucky-Indiana
- Jacksonville, Florida
- Birmingham-Hoover, Alabama
- Tampa-St. Petersburg-Clearwater, Florida
- Indianapolis-Carmel-Anderson, Indiana
- Milwaukee-Waukesha-West Allis, Wisconsin
- Nashville-Davidson-Murfreesboro-Franklin, Tennessee