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These Are Your 10 Best SFR Investment Markets

For Rent Three BHWhich housing markets are the hottest amongst single-family rental investors? Online real estate investment and management firm HomeUnion pored over two years of sales data to answer that very question, compiling a list of the top 10 most sought-after housing markets of 2017. Topping the charts: Chicago, Illinois.

In HomeUnion’s report, Steve Hovland, Director of Research for HomeUnion, explained, “To remain ahead of the market and meet investor demand, we analyzed investor migration patterns and preferences since the beginning of 2016.” The result is a list that shows reveals a single-family rental investment boom occurring in the Midwest, with cities like Columbus, Detroit, Cincinnati, and Philadelphia all making the top 10 as well.

Holvand continued, “Rental properties in these metros are trading at a faster rate than before as their local economies continue to grow, the cost of living is lower than it is in most coastal metros, and median local incomes are keeping pace with home values."

Here is HomeUnion’s full list of the top 10 most sought-after real estate investment markets. Each entry also includes the percentage increase in investment home sales between 2016 and 2017 for that metro, as defined as "single-family homes that transacted above $30,000 and with absentee tax records."

  1. Chicago, Illinois: 30.4 percent
  2. Columbus, Ohio: 18.1 percent
  3. Atlanta, Georgia: 6.9 percent
  4. Detroit, Michigan: 2.6 percent
  5. New York, New York: 2.5 percent
  6. Cincinnati, Ohio: 2.1 percent
  7. Philadelphia, Pennsylvania: 1.6 percent
  8. Orange County, California: 1.5 percent
  9. Indianapolis, Indiana: 1.3 percent
  10. Milwaukee, Michigan: 1.0 percent

On the other end of the spectrum, a trio of Florida metros landed at the bottom of HomeUnion’s list. Hovland explained, "Higher prices are pushing some vacation home buyers to the sidelines in many popular Florida markets. Investors are also becoming more selective when choosing assets in these booming Florida markets.”

Here are the 10 least sought-after rental markets, along with their 2016-2017 decrease in investment home sales:

  1. Tampa, Florida: -6.4 percent
  2. Jacksonville, Florida: -6.0 percent
  3. Fort Lauderdale, Florida: -4.5 percent
  4. Baltimore, Maryland: -4.1 percent
  5. Miami, Florida: -4.1 percent
  6. Washington, D.C.: -3.9 percent
  7. Boston, Massachusetts: -3.2 percent
  8. Buffalo, New York: -2.7 percent
  9. Orlando, Florida: -2.7 percent
  10. Salt Lake City, Utah: -1.9 percent

With the rents rising and lease retention rates on single-borrower, single-family rental securitizations climbing to 76.3 percent in September 2017, the rental market looks to have a lot of potential in 2018. Assuming, that is, that you know where to invest. For more insights on the future of the rental market, make sure to register for the 2018 Five Star Single-Family Rental Summit, happening March 19-21, 2018, at the Renaissance Nashville Hotel in Nashville, Tennessee. Click here to register.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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