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Report Identifies Hot Spots for Single-Family Rental Investing

Single-Family Rental Investing [1]

Real Estate Investors Discus Buying "Hot Spots" [2]


RealtyTrac [3] named 16 U.S. counties as high-risk, high-yield hot spots for single-family rental investing in its Q3 2014 Residential Property Rental Report [4] released on Thursday.

All of the 16 counties had a 14 percent or higher annual gross rental yield; an employment rate above 6.2 percent, which was the national average in July 2014; and a rental vacancy rate above the national average, which was 8.7 percent as of the end of 2012.

Edegcombe County in North Carolina, part of the Rocky Mount, North Carolina, metro area, was at the top of the list for investment hot spots with a 41.57 percent annual gross yield. Two counties in the Atlanta metro area, Clayton and Spalding, ranked second and third on the list with 26.88 percent and 20.35 percent, respectively. Rounding out the top five were Duplin County, North Carolina (24.40 percent) and Wayne County, Michigan, in the Detroit metro area with 19.88 percent, according to RealtyTrac.

"In the high-risk, high-yield markets, where unemployment and vacancy rates are higher than national averages, the average return was a whopping 19 percent, actually up from a year ago thanks to a strong increase in rental rates," RealtyTrac vice president Daren Blomquist said. "Home prices, meanwhile, were more volatile in the high-risk, high-yield markets, with three out of the 16 posting double-digit percentage decreases in median home prices from a year ago."

The remainder of the high-risk, high-yield list is as follows: sixth, Lake City, Florida; seventh, Tampa, Florida; eighth, Sebring, Florida; ninth, Baltimore, Maryland; 10th, Syracuse, New York; 11th, Vineland, New Jersey; 12th, Lancaster, South Carolina; 13th, Hickory, North Carolina; 14th, Gaffney, South Carolina; 15th, Mobile, Alabama; and 16th, Macon, Georgia, RealtyTrac reported.

RealtyTrac analyzed data in 586 U.S. counties with a combined population of about 218 million, roughly 71 percent of the country's population. Data analyzed were median sales prices for residential homes and the average fair market rents for three-bedroom houses. The average fair market rent divided by the median sales price of residential properties for Q3 comprised the annual gross rental yield, which was used to calculate rental returns.