IRVINE, Calif.–A list of the 10 best and worst markets for returns on single-family rental (SFR) properties has been released by HomeUnion, an online residential real estate investment management firm.
The lists analyze first-year SFR returns, or cap rates, in each market. The cap rate is the relationship between an investment property’s net operating income (rents minus expenses) and the market value of the property.
“Through midyear, owners of SFR investment properties benefited from healthy returns in many markets nationwide, but especially in markets located in the Midwest and Southeast,” said Steve Hovland, director of research services at HomeUnion, in a statement. “SFRs are outperforming many other investment vehicles, including bonds and gold. As interest rates remain low after the June Brexit vote placed downward pressure on U.S. treasuries, bonds and other investments will continue to be low yielding assets. Investment real estate has proven to be a successful part of a diversified portfolio, and these markets offer the largest returns.”
The top 10 highest-yielding markets to invest in SFRs: