RealtyTrac Identifies Safe Havens for Investors of Single-Family Housing
Not every property investor has an appetite for risk. Some would prefer to trade in higher rental yields for the security of investing in cities that boast strong economies and low vacancy rates.
These cities provide less risk to investors who can still get a strong gross annual rental yield of 10 percent or higher but without some of the risks associated with metro areas that command higher yields.
RealtyTrac, a national provider of housing data, identified 16 counties as safe havens for single–family rental investing.
The unemployment rate in these counties was below the national average of 6.2 percent in July and the rental vacancy rate was below the national average of 8.7 percent as of the end of 2012. All also had an annual gross rental yield of 10 percent or higher.
The top five safe haven markets were Clark County, Ohio, in the Springfield metro area (14.17 percent annual gross rental yield), Pottawatomie County, Okla., in the Shawnee metro area (13.5 percent), Broward County, Fla., in the Miami metro area (12.99 percent), Creek County, Okla., in the Tulsa metro area (12.93 percent) and Belmont County, Ohio in the Wheeling, WV-OH metro area (12.05 percent).
Other metros with counties in the safe haven list include Auburn, N.Y., Chicago, Ill., Lima, Ohio, Pittsburgh, Pa., Washington D.C., Albany, N.Y., Little Rock, Ark., Columbia S.C. and Elkhart, Ind.
Nationwide, investors in single-family residences are commanding respectable average annual gross rental returns of 9.06 percent, according to RealtyTrac. That is down from 9.65 percent a year ago.
For the report, RealtyTrac analyzed median sales prices for residential properties and average fair market rents for three–bedroom homes in 586 U.S. counties with a combined population of 218 million people — 71 percent of the total U.S. population.
Rental returns were calculated using annual gross rental yields: the average fair market rent of three-bedroom homes in each county, annualized, and divided by the median sales price of residential properties in the third quarter.
Median home prices in the 586 counties analyzed in the report increased more than 7 percent on average in the third quarter of 2014 compared to a year ago, while average fair market rents for three-bedroom homes increased an average of less than 1 percent.
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