Looking for the best return on a rental property investment? Two leading data analysts are saying it’s time to move away from investor-saturated markets like Atlanta, Las Vegas or Seattle, and check out other hidden gems.
RealtyTrac®, the nation’s leading source for comprehensive housing data, and RentRange the top provider of residential Rental Market Intelligence„¢ to the financial services and real estate industries, released a list of the Top 25 Hidden Gem Single Family Rental Markets nationwide.
The numbers are based on gross rental yield, the expected return on investment before accounting for taxes, maintenance fees and other costs.
At the top of the list is Wichita Falls, Texas, followed by Lubbock and Austin-Round Rock. Oklahoma City, Rochester, New York and Nashville also scored high. Waukesha, Wisconsin, Pittsburgh, and St. Louis fell within the top 25.
The Top 25 Hidden Gem Single Family Markets are:
Wichita Fall, TX,
Oklahoma City, OK
Austin-Round Rock, TX
New Orleans-Metairie, LA
Allegheny County, PA
Grand Rapids-Wyoming, MI
Pensacola-Ferry Pass-Brent, FL
Escambia County, FL
Washington County, PA
St. Louis, MO
Virginia Beach-Norfolk-Newport News, VA-NC
Milwaukee-Waukesha-West Allis, WI
The Top 25 Hidden Gem Single Family Markets were determined by evaluating gross rental yield data provided by RentRange, institutional investor sales data provided by RealtyTrac, and unemployment data for more than 450 nationwide counties with populations of 100,000 or more. The analysis was limited to single family homes with three bedrooms.
The top 25 markets had the highest gross rental yields in counties where institutional investor purchases accounted for 5 percent or less of all residential sales in the three- month period ending in July, and the unemployment rate was 7.5 percent or lower.
Gross rental yield is a commonly used method of comparing properties. It is determined by dividing the gross annual rental income by the purchase price or market value of the property, and offers an apples-to-apples way to compare rental properties and geographies.
“Buying single family homes as rentals still yields solid returns in many markets across the nation, but it is difficult for individual investors and even small-to medium-sized institutional investors to find reasonably priced inventory in markets dominated by the 800-pound gorillas in the single family rental space,” said Daren Blomquist, vice president at RealtyTrac. “With this analysis we’ve identified the top overlooked markets where single family rentals still make good financial sense but where there is little to no competition from the big players.”
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