Sunbelt States Perform Well in Latest RentRange Analysis of Single-family Rentals
By Kerry Curry, B2R Finance Contributor
Rising residential property values in Florida and California appear to be pushing more investors toward single-family rentals in those states.
The Sunshine State and the Golden State are driving some of the strongest rent increases on three-bedroom single-family properties in the country, according to data from RentRange, a provider of rental data, analytics and rent-based valuations.
Florida and California each have five metropolitan statistical areas in the top 25 markets for the largest rental rate increases during the second quarter of 2016 compared to the year-ago period, according to RentRange.
Cape Coral-Fort Myers, Florida, ranked first for rental increases with a 26.1 percent increase in rent in Q2 over the same quarter a year ago. Other Florida MSAs on the list were Deltona-Daytona Beach-Ormond Beach (15.7 percent); Port St. Lucie (15.2 percent); Naples-Marco Island (11.5 percent); and Palm Bay-Melbourne-Titusville (11.3 percent).
Santa Barbara-Santa Maria-Goleta received the highest ranking in California for year-over-year rental rate increases at 13.1 percent. Other California metros making the top 25 list include San Francisco-Oakland-Fremont (12 percent); San Jose-Sunnyvale-Santa Clara (11.5 percent); Salinas (10.8 percent); and Santa Rosa-Petaluma (10.7 percent).
The MSA of New Orleans-Metairie-Kenner ranked second behind Cape Coral with a 20.6 percent year-over-year rental rate increase, and Seattle-Tacoma-Bellevue, Washington topped off the top three metros on the list with a 16.6 percent rental increase.
While southern states dominated the list, a few northern states made a good showing.
Grand Rapids-Wyoming, Michigan made its first appearance on the list at No. 24 with a 10.3 percent year-over-year rental rate increase.
Grand Rapids earned an impressive distinction when examined against the other 25 markets based on average gross yield, coming in at No. 1. The metro had an average gross yield of 15.62 percent. Gross yield is the total annual income an investor receives from an investment property divided by the price or value for the property. It does not account for operating expenses, including property taxes.
Shreveport-Bossier City, Louisiana, was second on gross yield (15.29 percent) and Pittsburgh, Pennsylvania and Syracuse, New York tied for third (15.14 percent).
RentRange produced the rankings using rental data it gathers on approximately 250,000 single-family houses per month from a variety of contractual sources, including multiple listing services, property managers, landlords and listing websites. Yields were derived from RentRange’s proprietary automated valuation model.
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