The single-family rental market has gained significant popularity as an asset class in the last two years or so. Investors who are looking to increase their footprint in the SFR market should consider looking in one of the top 10 U.S. markets with the highest cap rate, according to data released by HomeUnion on Tuesday. The cap rate on an SFR property is calculated by dividing the net annual income on a property by the home’s market value.
Using cap rate to rank the hottest and coldest markets in which to invest in SFR properties, HomeUnion determined that the market with the highest cap rate was Memphis, Tennessee, with a cap rate of 7 point 3 percent. Conversely, San Jose and San Francisco tied for the lowest cap rate with 2 point 7 percent, hence making those market the least attractive for SFR investors.
The pace of existing-home sales rose by only zero point 4 percent in January but still reached their highest level in six months, according to the National Association of Realtors January 2016 Existing-Home Sales report released Tuesday. The combination of persistent tight inventory and rapid price appreciation in the housing market may mean a tough homebuying season in the spring, however. Inventory was down by 2 point 2 percent over-the-year down to 1 point 82 million while the median existing-home sales price rose by more than 8 percent up to nearly 214 thousand dollars.