Buying single family homes for rental properties is an excellent way to generate income. Before you buy houses, finding the right market to either get started or branch into is important as not all rental markets are equal. When you factor in metrics such as the demand for rental property, employment growth, and property prices, some markets are more likely to ensure a better return on your investment, especially over a long period of time.
Overall, metropolitan areas in the Midwest and Southeast are the most attractive for purchasing homes for rental property. The low house prices compared to national average, employment growth, and the increase in Millennial population in these areas are making rental property investment a safer, less-expensive venture than in other regions. If you are looking for the best markets to start or expand your rental property holdings, these five locations are excellent options.
After years of struggling with a slow economy, Memphis is finally starting to turn around and experience positive job and population growth. Home prices are still lower than national average, which, coupled with average rents on the upswing, creates an average return on investment of nearly 15 percent. Home values are expected to rise in addition to the demand for single family rental homes, making Memphis a financially sound area for property investment.
Cleveland offers the best return on single family rental property in the country due to the combination of low housing prices and high average rents. The median home price in Cleveland is just under $50,000, while the average rent is over $1,200 per month. This, in addition to a slow but steady employment increase, particularly in the medical industry, makes Cleveland an attractive option to people wanting to purchase single family investment property.
Austin is one of the fastest growing cities in America due to the tech industry boom that helped create a 3.6 percent job growth. With no signs of slowing down, rental property in Austin is in demand and rates are projected to raise by approximately 11 percent by 2020. There are numerous up-and-coming neighborhoods in Austin where homes can be purchased inexpensively and are perfect for a single family income property that will increase in value over the next several years.
Known for its tourism industry, Orlando's employment growth is the fastest in the nation at an amazing 4.5 percent, leading to a population increase and a high demand for single family homes for rent. Rental vacancies are very low, and the average rent has increased to almost $1,500 dollars a month in 2017 - a nearly 4 percent increase over 2016. Orlando is also an excellent city for purchasing single family homes for vacation rentals due to the high rate of tourism.
Home prices in and around Seattle are considerably higher than the national average, and that makes entry into the rental investment market expensive, but the long-term returns are excellent. Seattle's 3.5 percent job growth is bringing in young professionals by the thousands, which is driving up home values and a demand for rental housing. The demand for single family homes is especially high, with the average rent topping $2,300 for a single family rental property.
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