ATTOM Data Solutions recently released its Single Family Rental Market Report. In it, ATTOM pointed to what it considers to be the best US markets for buying single-family rental (SFR) properties based upon rental data from HUD and home prices from publicly recorded sales in 449 counties with populations of at least 100,000 people.
ATTOM found the average gross rental yield for 2018 to be +8.9%, down from an average of 9.2% in 2017. “Despite declining returns in many areas,” according to Daren Blomquist, senior vice president of ATTOM, “the single family rental market continues to grow thanks to more activity by smaller and moderate tiered investors.”
An increasing pool of smaller investors owning 6-10 properties and moderate investors owning 11-100 properties are now “…benefitting from newfound efficiencies in acquisition, financing and property management that allow (these investors) to buy outside their backyard in areas with higher potential returns and to leverage their money to buy more properties.”
Additionally, the renter population is changing, according to Tiffany Li, co-founder of DivvyHomes, a tech startup that provides lease options with an equity-building component. “We’re seeing a significant y/y increase in the percentage of highly qualified single family renters who are often less than two years away from mortgage qualification…This population seeks SFR in neighborhoods that are largely owner-occupied and with family-friendly amenities and good schools.”
Here is a snapshot of ATTOM’s SFR data:
The counties of Baltimore, Macon, Montgomery, Detroit, and Atlanta posted the highest returns.
- Baltimore City, MY – +28.6%
- Bibb County, GA – +22.8%
- Montgomery, AL – +21.7%
- Wayne Co (Detroit) – +21.7%
- Clayton Co (Atlanta) – +20.3%
Along with Wayne County, MI, the highest potential annual gross rental yields among counties with populations of at least 1M people, Cuyahoga County (Cleveland) came in at +11.6%, Philadelphia County at +10.0%. Cook County (Chicago) at 9.5% and Harris County (Houston) at 9.5%.
Counties with populations of at least 1M people with the biggest increase in potential annual gross rental yields for 2018 compared to 2017 include
-Harris County (Houston) – +7%
– King County (Seattle) – +7%
– Queens County (NY) – +5%
– Contra Costa County (Bay Area) – +4%
– Cook County (Chicago) – +3%
Rents are rising faster than wages in 84% of the counties ATTOM studied. In 74 of the 449 counties included in this report, wages rose faster than rents.
According to ATTOM, the best SFR growth market with 10% or higher annual gross rental yields include Cleveland, Columbia, Pittsburg, Rockfort and Atlanta.
ATTOM’s best low risk/high return SFR markets include Greensboro, Joplin, Atlanta and Charlotte.