You can call off the search for the best areas for rental investing, thanks to a list of the top 25 U.S. rental markets for single family homes compiled by RealtyTrac and RentRange, based on housing data from 2013.
The top 25 rental markets were found in just 15 U.S. states, none further west than Texas. The study included only three bedroom, single family homes in counties with populations of 100,000 or more. Within the top 25 markets, investor purchases made up only 5% or less of residential sales. While these markets have proven to be lucrative for the single investor, they are largely ignored by institutional investors.
The majority of markets making the list were concentrated throughout the northeast and southeast corridors with some sprinkled throughout the midwest and Texas. There were none from the west coast, likely due to sky-high home prices in states like California and Washington. Some contenders on the list will undoubtedly come as a surprise, while others will make perfect sense. Here are the top 10 from the list.
Texas tops the list with two of its counties (Wichita Falls and Lubbock) taking over the numbers 1 and 2 spots. It’s no secret Texas has some of the most appealing homes on the map for comparatively low prices. Texas not only occupies the #1 and #2 spot on the list, but has a county (Williamson County), which made the #4 spot as well. Wichita and Lubbock county single family home prices came in at $84,000 and $111,000 respectively with respective rents of $938 and $1,089.
Canadian County, Oklahoma which includes Oklahoma City comes in third with a median home price of $131,000 and median rents of $1,176.
Another Texas county, Williamson which includes Austin-Round Rock ranks 4th on the list with a median home price of $158,000 and median rent of $1403. Williamson county completes the list of Texas homes and is considered slightly on the higher end of the homes expanding the list.
When most people think of New York, they think of the Big Apple with its inflated home prices among other things, but New York has two counties on the list. Monroe County comes in at number 5 on the list and boasts median home prices of $121,000 with a median price of $1,043 for rents. Schenectady county which includes Rochester, NY is number 8 on the list with median home prices at $153,000 and median rents of $1,278.
Davidson County, Tennessee makes number 6 on the list with median home prices at $149,000 and median rents at $1,263.
Florida comes in at number 7 on the list with Alachua County where median home prices are $139,900 and median rents are $1,175.
Louisiana, not surprisingly made the list, however what might surprise some is the median home prices in Jefferson County of $153,000 and median rents of $1260, almost identical to the median prices found in Rochester, NY.
Rounding out the top ten counties on the list is Allegheny County, Pennsylvania home to the city of Pittsburgh and other smaller cities. The median home prices in Allegheny County is $126,000 while median rents were at $1,034.
It should be noted that while many of these home prices remain relatively low in comparison to other areas of the country, the rents are directly in line with the estimated mortgage amounts, in most cases; unless of course the homes are purchased with cash or larger down payments. This certainly does not not leave much room for mishaps or lengthy vacancies. Also, the report referenced a 7.5% unemployment rate which is slightly above the national unemployment rate of 7.3%.
What are your thoughts on this list? Agree or disagree? Do you know of some great investment areas that aren’t on the list?