Knowledge = Worry-Free Investing
Perhaps we are oversimplifying, but the truth is, if you want to feel comfortable with investing in rental properties, educating yourself and putting your investment in the context of the big picture is valuable. One of the quickest and easiest ways to do so is by looking at current reports on rental properties.
RealtyTrac publishes the quarterly Residential Property Rental Report, which ranks the best markets (using 586 U.S. counties) for buying residential rental properties. This doesn’t mean that you can get data specific to your region of investment, but it absolutely sheds light on nationwide trends and where your property investments may fit. Here are a few highlights from the 2014 third-quarter report:
- Investors buying U.S. residential rental property in the third quarter of 2014 are getting an average annual return of 9.06%.
- In the high-risk, high-yield markets, where unemployment and vacancy rates are higher than national averages, the average return was 19%, up from one year ago, thanks to a strong increase in rental rates.
- Of the counties analyzed, the top ten markets for rental returns (annual gross rental yield) included:
- Edgecombe County, North Carolina, 41.57%
- Clayton County, Georgia, 26.88%
- Duplin County, North Carolina, 24.40%
- Howard County, Indiana, 24.00%
- Putnam, Columbia, Pasco and Hernando Counties, Florida.
- The ten markets for the lowest rental returns included:
- New York County, New York (Manhattan), 2.40%
- San Francisco County, California, 3.16 %
- Kings County, New York (Brooklyn), 3.64%
- Williamson County, Tennessee, 3.73%
- Marin County, California, 3.75%
- Single family rental investing is safest in these five counties:
- Clark County, Ohio
- Pottawatomie County, Oklahoma
Broward County, Florida
- Creek County, Oklahoma
- Belmont County, Ohio
Keep in mind that you are looking at these numbers to provide context—just because your region isn’t listed, doesn’t mean it’s not wise to invest there i.e. no counties in Arizona fall into the high-risk category for single family rental investing.
Don’t hesitate to bring these numbers to the attention of your investment team, for gain greater understanding and insight. And remember, the landscape is always changing, find reports you understand and trust and view the most current data, regularly.