A recent report from HomeUnion compares the investment property values in 10 of the most sought-after markets for investors to best determine what a total of $400,000 will buy a single-family rental (SFR) investor in these popular markets: Jacksonville, Dallas, Atlanta, Charlotte and Austin; versus what a real estate investor can acquire for the same price in the markets of Denver, Washington, D.C., Seattle, New York and Oakland, which are frequently coveted by investors.
The report uses leverage at 25 percent, which shows that the markets of Jacksonville, Dallas, Atlanta, Charlotte, and Austin are more affordable, offer renters and investors significantly more square footage, and provide investors with the ability to earn much higher monthly rental returns.
"Our study confirms that investors' dollars go much further in the South and one of the biggest metros in Texas than they do in Oakland, New York, Seattle, Washington, D.C., and Denver," says Steve Hovland, director of research for HomeUnion. "Not only do investors get more for their money; they can buy a larger home or homes in a nicer neighborhood, allowing for the potential to capture higher rental income in the Austin, Charlotte, Atlanta, Jacksonville, and Dallas markets."
Comparing the data side by side, a $400,000 investment in the metro areas of Jacksonville, Dallas, Atlanta, Charlotte, and Austin allowed for a purchase of two rental assets compared to the same investment in Denver, Washington, D.C., Seattle, New York and Oakland which only was sufficient for one investment property.
Looking at the monthly rent collected from an investment property in the 10 metro areas, there is an average of $2,996 received in the metros of Jacksonville, Dallas, Atlanta, Charlotte, and Austin. This is almost $1,000 more than the monthly rent average for Denver, Washington, D.C., Seattle, New York and Oakland, $2,020.
HomeUnion does, however, note that in August, leveraged investment home prices rose 12 percent on a year-over-year basis, reaching a median price of $261,900. "As prices continue to soar for investment housing, and inventory remains low in many major metro areas, it has become increasingly difficult to find sound, profitable investments," adds Hovland. "To assist our clients, we've done a deep dive into our data on more than 110 million homes nationwide to reveal just how far $100,000 down will go across the United States."
While the single-family rental market continues to redefine its borders, the investment landscape offers opportunity for many in a volatile marketplace that has often been misunderstood and sometimes fragmented. The Single-Family Rental Summit provides an important conduit for SFR leaders to have the pivotal conversations that will push this industry forward. Top subject matter experts and skilled SFR practitioners will lead discussion panels and training sessions that will answer questions and offer viable solutions related to property acquisition and management, financing, strategies for small, mid-cap, and large investors, and new developments related to technology and professional services.
For more information on the 2016 Single Family Rental Summit and for registration, click HERE.
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