BYTHE NUMBERS
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Investors’ Choice SINGLE-FAMILY RENTAL MARKET REPORT FOR Q3 2016 PROVIDES FIVE INVESTING OPTIONS, DEPENDING ON PREFERENCES AND RISK TOLERANCE.
19 High Yield-Wage Growth SFR Markets
rental yield (annualized rental income divided by median sales price) of at least 10 percent for homes purchased in 2016, and at least 33 percent of all single-family homes in these 18 markets are non-owner-occupied. The five most populous counties making the list are Balti-
Ocean New Jersey 2%
Newton Georgia 2%
Woodbury Iowa 12%
Muscogee Georgia 3%
Whitfield Georgia 5%
Clayton Georgia 17%
Clark Ohio 3%
18 Best Low Owner-Occupant SFR Markets
Pct Non-Owner Occupied
by Daren Blomquist
33.1%
45.7%
Macomb Michigan 3%
Saint Lawrence New York 4%
Bartow Georgia 4%
Bell Texas 4%
Cochise Arizona 3%
Sumter South Carolina 42.3%
hen crunching the data for our Q3 2016 Single-Family Rental Market Report, ATTOM Data Solutions iden- tified five sets of local markets representing different types of opportunity in the single-family rental space based on investor preferences and appetite for risk. Let’s look at each of those in some detail. W
median sales price) of 10 percent or higher. The five most-populous counties making the list were El Paso County, Texas; Orange County, New York, outside of New York City; Westmoreland County, Pennsylvania, in the Pittsburgh metro; Lehigh County, Pennsylvania, in the Allentown metro area; and Marion County, Florida, in the Ocala metro area. Counties with the highest rental yields on this list were Monroe County, Pennsylvania, in the East Stroudsburg metro area (16.0 percent); Hernando County, Florida, in the Tampa metro area (14.3 percent); Lackawanna County, Pennsylvania, in the Scranton metro area (12.1 percent); Westmoreland County, Pennsylvania, in the Pittsburgh metro area (11.8 percent); and Davidson County, North Carolina, in the Win- ston-Salem metro area (11.8 percent). So it is possible to have your cake and eat it too when it comes to single-family rentals. But of course, you’ll notice that many of these counties are a bit off the beaten path and not in the major markets where institutional investors and other single-family investors have swarmed over the past few years. That lack of competition helps these markets maintain the sweet combination of solid returns and low vacancy rates. HIGH RENTAL RETURNSANDWAGE GROWTH For our list of 19 best markets with a combination of high rental returns and wage growth, we narrowed down the list of all 473 counties analyzed in the report to just those with a potential gross annual rental yield (annualized rental income divided by median sales price) of at least 10 percent for homes purchased in 2016 and also with annual growth in average weekly wages in Q1 2016—the most recent average weekly wage data available at that time from the Bureau of Labor Statistics. The five most populous counties making the list were Macomb County, Michigan, in the Detroit metro area; Polk County, Florida, in the Lakeland-Winter Haven metro area; Ocean County, New Jersey, and Orange County, New York, both in the greater New York metro area; and Bell County, Texas, in the Killeen-Temple metro area.
Wicomico Maryland 41.9%
Spotsylvania Virginia 36.9%
Jackson Michigan 3%
Carroll Georgia 6%
Polk Florida 3%
Yuma Arizona 41.8%
Davidson North Carolina 3%
Richmond City Virginia
Clayton Georgia 34.8%
Cochise Arizona 39.1%
Peoria Illinois 5%
Paulding Georgia 4%
Davidson North Carolina 42.1%
Orange New York 3%
Carroll Georgia 38.9%
Aiken South Carolina
Baltimore City Maryland 34.0%
YoY Pct Change in Average Wages
Grayson Texas 35.4%
2%
17%
LOWVACANCYRATESAND HIGH POTENTIALYIELDS
Bibb Georgia 45.7%
Bartow Georgia 35.6%
Monroe Pennsylvania 43.5%
Counties with the highest annual gross rental yields on the list were Clayton County, Georgia, in the Atlanta metro area (24.3 percent); Saint Lawrence County, New York, in the Og- densburg-Massena metro area (16.9 percent); Jackson Coun- ty, Michigan, in the Jackson metro area (13.9 percent); along with Carroll County, Georgia (13.3 percent), and Newton County, Georgia (13.1 percent), both in the Atlanta metro. Counties with the strongest annual weekly wage growth on this list were once again led by Clayton County, Georgia (17.4 percent); followed by Woodbury County, Iowa, in the Sioux City metro area (12.2 percent); Carroll County, Georgia, in the Atlanta metro area (6.0 percent); Whitfield County, Georgia, in the Dalton metro area (4.8 percent); and Peoria County, Illinois, in the Peoria metro area (4.8 percent). HIGH POTENTIALYIELDSAND LOWOWNER- OCCUPANCYRATE We identified the 18 best markets for buying single-family rentals with the potential for both high gross annual rental yields and low owner-occupancy rates—a sign of strong de- mand from prospective renters. These markets provide strong potential rental yields for properties purchased in 2016 along with low owner-occupan- cy rates for single-family homes, meaning that a high per- centage of folks living in a home don’t own the home, but are renters. That is good news for single-family rental investors as it shows a broad base of demand from renters in that market. All 18 markets on the list have a potential gross annual
We identified 22 local markets with the sweet combination of low vacancy rates and high potential rental yields on prop- erties purchased in 2016. We identified these markets out of the 473 U.S. counties analyzed in the report by limiting the list to only counties with an investment property vacancy rate below 3 percent (the average across all 473 counties was 4 percent) and a gross annual rental yield (annualized rental income divided by
Onslow North Carolina
Paulding Georgia 33.1%
Richmond Georgia 37.6%
more City, Maryland; Clayton County, Georgia, in the Atlanta metro area; Richmond City, Virginia; Yuma County, Arizona, in the Yuma metro area; and Richmond County, Georgia, in the Augusta-Richmond metro area. Counties on the list with the highest share of non-owner occupants were Bibb County, Georgia, in the Macon metro area (45.7 percent); Monroe County, Pennsylvania, in the East Stroudsburg metro area (43.5 percent); Sumter County, South Carolina, in the Sumter metro area (42.3 percent); Davidson County, North Carolina, in the Winston-Salem metro area (42.1 percent); and Wicomico County, Maryland, in the Salis- bury metro area (41.9 percent). A growing population of Millennials should translate into growing demand for single-family rentals as those Millennials reach life milestones such as marriage and kids that may war- rant a move from an apartment to a single-family home. And eventually, those Millennials may provide single-family rental investors a convenient exit strategy for selling their homes. We identified the 17 best markets we consider Millennial meccas that also boast high potential gross rental yields. MILLENNIAL MECCASWITH HIGH POTENTIAL YIELDS
22 High Yield-Low Vacancy SFR Markets
Investment Property Vacancy Rate
Westmoreland Pennsylvania 2.8%
0.3%
2.8%
Monroe Pennsylvania 0.4%
Ulster New York 2.1%
Onslow North Carolina 2.7%
Wicomico Maryland 2.1%
Hernando Florida 2.1%
Spotsylvania Virginia 0.3%
Kendall Illinois 2.1%
Kenosha Wisconsin 2.0%
Woodbury Iowa 2.3%
El Paso Texas 1.9%
Aiken South Carolina 2.7%
Citrus Florida 1.2%
Lackawanna Pennsylvania 2.1%
Randolph North Carolina 2.7%
De Kalb Illinois 2.8%
Davidson North Carolina 2.6%
Lehigh Pennsylvania 2.1%
Yuma Arizona 2.3%
Orange New York 2.6%
Marion Florida 1.9%
Lexington South Carolina 2.2%
88 | think realty magazine january :: february 2017
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