IRVINE, Calif.—A new analysis has ranked the top 10 markets in the U.S. where investors can affordably and prudently buy rental properties.
Released by HomeUnion, the online real-estate investment management firm, the analysis focused exclusively on non-owner occupied properties and used a combination of median prices of investment properties, year-over-year job growth, gross rental yield, and housing affordability.
Based on HomeUnion’s analysis, the top 10 SFR investment markets are:
- Charlotte/Concord/Gastonia, NC/SC
- Orlando/Kissimmee/Sanford, Fla.
- Baltimore/Columbia/Towson, Md.
- Cincinnati Ohio/Kentucky/Indiana
- Jacksonville, Fla.
- Birmingham/Hoover, Ala.
- Tampa/St. Petersburg/Clearwater, Fla.
- Indianapolis/Carmel/Anderson, Ind.
- Milwaukee/Waukesha/West Allis, Wis.
- Nashville/Davidson/Murfreesboro/Franklin, Tenn.
Highlights from the Top 10 Markets:
- Charlotte topped the ranking because of its strong job growth. It had the highest job growth rate of any of the top-10 cities and had the third best job growth rate of the top 55 MSAs. It was also ranked 21st in investment home price and 27th in gross rental yield.
- Nashville rounded out the top 10 list, ranking 14th in job growth, 23rd in investment home price and 21st in gross yield rank.
- Among the top 10, Nashville had the highest median investment sales price at $125,000.
- Birmingham and Cincinnati had the lowest median investment sales price at $70,000, which were the 4th and 5th markets of the 55 markets examined.
- Milwaukee had the highest gross rental yield on the list at 20.7%.
“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,” explained Don Ganguly, CEO of HomeUnion. “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.”