Knowing where opportunities exist is a key strategy for real estate agents in competitive markets. Having your finger on the latest trend is just as important, and a key trend is rentals, with more Americans are renting homes today than at any time in more than 50 years.
According to a CNBC report, clients who are investors may be able to cash in on the trend by purchasing single-family homes for rental property. Knowing the best ZIP Code to target is like having an inside lead.
According to HomeUnion, one of several companies that help investors find, purchase, renovate, manage and sell single-family rental homes, 33434 is a key ZIP Code for investment. Steve Hovland, the company’s director of research, said it is offering a list of projections for investors looking to hold and rent properties over the next five years.
“We’re looking at the supply-and-demand factors in each market and all of the neighborhoods within those markets. As we get new information, we apply that to our methodology.”
The Top 5 ZIP Codes for rental properties, based on annualized total returns, according to HomeUnion, include 33434 – Hamptons at Boca Raton, Fla. (West Palm Beach metro area) with an 8.1 percent annualized total return; 19035 – Gladwyne, Pa. (Philadelphia metro area): 6.9 percent; 48322 – West Bloomfield Township, Mich. (Detroit metro): 6.9 percent; 33158 – Palmetto Bay, Fla. (Miami metro): 6.8 percent; and 33327 – Weston, Fla. (Fort Lauderdale metro): 6.6 percent.
HomeUnion’s Data Science team has created sophisticated predictive models and algorithms to not only identify where strong investment opportunities are today but also where they are likely to occur in the future.
However, there are areas where investors can get the most bang for their dollar. According to a recent report by ATTOM Data Solutions, the median sales price in the first quarter hit $410,684. The company’s Neighborhood Housing Index, which measures more than 1,000 U.S. ZIP Codes with an A rating, there are 382 ZIP Codes where the median sales price came in under $250,000. There are 27 ZIP Codes held median sales prices under $100,000, offering affordable opportunities for investing clients.
The consensus is that all real estate is local and many landlords prefer to invest in their own neighborhoods. Hoyland noted it is easier to manage the properties.
“They know real estate is a good investment, and they want to invest, but to do all the due diligence takes a lot of work, and most of our investors are already busy with other jobs.”
While there is no such thing as a sure thing, many investors are ready to expand their reach and invest in a wider area. It is easier with rental management companies handling the oversight. HomeUnion offers a list that can serve as a guide for clients looking to invest.