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Hidden gems in the single-family rental market

Big Data Download

Homeowners can enjoy solid returns on single-family rental properties nationwide, but finding a property to buy is proving more difficult after institutional investors scooped up much of the inventory during the housing downturn.

Housing data companies RealtyTrac and RentRange dug into the numbers and compiled a list of the Top 25 Single Family Rental Markets that have not been pilfered by institutional investors, yet still produce nice yields.

The analysis was limited to single-family homes with three bedrooms. The top 25 markets were in counties where institutional investor purchases accounted for 5 percent or less of all residential sales in the three-month period ending in July, and the unemployment rate was 7.5 percent or lower.

“Heavy buying from large institutional investors in some markets contributes to price appreciation and scarcity of listings, leaving small investors and owner-occupiers feeling left out in the cold. These levels of institutional investor buying will ultimately drive prices up and rental yields down,” said Jake Adger, chief economist of RealtyTrac.

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Witchita and Lubbock Counties in Texas top the list. Those two counties saw gross rental yields of more than ten percent, with investors owning less than five percent of inventory. Counties in New York, Tennessee, Oklahoma and Florida join Texas, making them the top five states in the country with rental opportunities.

The most saturated single-family rental markets are dominated by Atlanta-area counties.

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