Tuesday
October 21, 2014

Top Markets for Buying a Rental Property

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Top Markets for Buying a Rental Property

As rental prices continue to rise, investors are still hunting for the best buys for single-family rentals. RealtyTrac found the top markets for buying residential property to use as rentals by factoring in unemployment rates as well as annual gross rental yields. The following were the top seven markets on its list (including the annual gross rental yield):

  1. Anderson County, S.C.: 15.33%
  2. Woodbury County, La.: 13.02%
  3. Pickens County, S.C.: 13%
  4. Alachua County, Fla.: 12.02%
  5. Spotsylvania County, Va.: 11.86%
  6. Lexington County, S.C.: 11.26%
  7. Allegheny County, Pa.: 11.25%

Other metros with counties in the top markets for buying single-family rentals were Gainesville, Fla.; Washington, D.C.; Columbia, S.C.; Pittsburgh; Columbus, Ohio; Charleston, S.C.; and Omaha, Neb., according to RealtyTrac.

The counties listed in RealtyTrac's top 25 list all had unemployment rates of 4.5 percent or lower in April, well below the national average of 6.3 percent. The counties also all had an annual gross rental yield of 9 percent or higher.

On average, investors buying residential rental properties in the second quarter earned about a 9.97 percent average annual return, according to RealtyTrac's report. That is down from an average annual return of 10.60 percent a year ago.

"Home prices have increased at a faster pace than fair market rents in most counties over the past year, eroding the average returns available to investors buying rental properties," says Daren Blomquist, RealtyTrac's vice president. "Even so, an average annual return of nearly 10 percent across all the counties we analyzed nationwide is still solid, and investors holding on to rental property for the long-term will also typically benefit from home-price appreciation on top of the annual returns from rental income."

Source: RealtyTrac