Single-family Rental Properties Still a Sound Choice for Investors
By Robert Greenberg, VP Marketing, B2R Finance
Real estate investors buying residential properties as rentals still have the opportunity to make strong returns in many markets, according to a report from the housing data firm RealtyTrac.
RealtyTrac’s 2015 Residential Property Rental Report ranks the best and worst markets for buying residential rental properties in the first quarter of 2015. It also takes a look at emerging markets that show future promise.
“As the broader real estate market continues to stabilize, investors are looking to tertiary markets and markets with high barriers to entry to find attractive yields,” said Fred Lewis, founder & CEO of The Dominion Group. “The period of ‘trading’ is over. Going forward, strong operations are going to be how investors drive attractive risk-adjusted returns.”
Markets with the highest potential annual gross rental yields for properties purchased in February 2015 were Baltimore City, Md. (25 percent); Clayton County, Ga., in the Atlanta metro area (24 percent); Wayne County, Mich., in the Detroit metro area (21 percent); Pasco County, Fla., in the Tampa-St. Petersburg metro area (19 percent); and Trumbull County, Ohio, in the Youngstown metro area (18 percent).
Markets with the lowest potential annual gross rental yields for homes purchased in February 2015 were New York County/Manhattan, New York, (2 percent), San Francisco County, Calif., (3 percent), Kings County/Brooklyn, New York, (4 percent), Marin County, Calif., in the San Francisco metro area (4 percent), and Williamson County, Tenn., in the Nashville metro area (4 percent).
Among the 461 counties analyzed nationwide, the average potential annual gross rental yield was down 42 basis points for properties purchased in February 2015 compared to properties purchased a year ago.
EMERGING RENTAL MARKETS
There were still 115 counties where potential annual gross rental yields increased compared to a year ago, and among those there were 58 counties that also saw rising rental rates, rising home prices and rising average weekly wages.
Among these 58 counties, those with the biggest increase in rental returns were Douglas County, Ore., in the Roseburg metro area where potential rental returns increased 119 basis points from a year ago.
The following counties also had big rental returns and showed promise as emerging markets: Linn County, Iowa, in the Cedar Rapids metro area, (109 basis point increase); Henderson County, N.C., in the Asheville metro area (109 basis point increase); Kendall County, Ill., in the Chicago metro area (89 basis point increase); and Sussex County, Del., in the Seaford metro area (80 basis point increase).
Other markets among the 58 counties included Cook County, Ill., in the Chicago metro area (43 basis points increase); King County, Wash., in the Seattle metro area (12 basis point increase); the Long Island, New York counties of Suffolk (49 basis point increase) and Nassau (24 basis point increase); and Wake County, N. C., in the Raleigh metro area (30 basis point increase).
For more information about how B2R can help you obtain rental property financing to grow your business, just call 800-227-8107 or visit www.b2rfinance.com/borrowers and follow us on Twitter @B2RFinance.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.