A number of familiar former foreclosure hotbeds top RealtyTrac’s list of best markets to buy a rental property in the first quarter of 2015. They’ve got the right mix of employment, growth, prices and potential return.
The report also looks at which markets are seeing the biggest increases in rental rates in 2015 compared to 2014, and provides rankings of the best safe haven residential rental markets, along with the best markets for renting to Millennials, best markets for renting to Generation Xers, and best markets for renting to Baby Boomers.
“With homeownership rates at their lowest level in 20 years, historically low levels of housing starts and relatively low home prices in many parts of the country, there is still plenty of opportunity in the U.S. housing market for single family rental investors employing a variety of investing strategies,” said Daren Blomquist, vice president at RealtyTrac. “Whether focusing on markets where homeownership-shy Millennials are migrating, markets where recovering Gen X homeowners-turned-renters are prevalent, or markets Baby Boomers are testing for retirement, investors can find good options with solid potential rental returns.
“There are certainly markets where buying single family rentals no longer makes sense because of rapidly rising prices over the past few years,” Blomquist added. “Savvy single family rental investors will tread cautiously in such markets despite the siren song of strong home price appreciation.”
“Buying single family homes as rental properties in Southern California is reserved for those that have a very specific investment strategy,” said Chris Pollinger, senior vice president of sales with First Team Real Estate, covering the Southern California market, where annual gross yields on rentals range from less than 5 percent in Orange County to nearly 9 percent in the inland San Bernardino County.