RealtyTrac Ranks Best U.S. Markets for Buying Residential Rental Properties in First Quarter of 2015

IRVINE, CA--(Marketwired - Jan 29, 2015) - RealtyTrac^® (www.realtytrac.com), the nation's leading source for comprehensive housing data, today released its Q1 2015 Residential Property Rental Report, which ranks the best markets for buying residential rental properties in the first quarter of 2015.

The report also looks at which markets are seeing the biggest increases in rental rates in 2015 compared to 2014, and provides rankings of the best safe haven residential rental markets, along with the best markets for renting to Millennials, best markets for renting to Generation Xers, and best markets for renting to Baby Boomers.

"With homeownership rates at their lowest level in 20 years, historically low levels of housing starts and relatively low home prices in many parts of the country, there is still plenty of opportunity in the U.S. housing market for single family rental investors employing a variety of investing strategies," said Daren Blomquist, vice president at RealtyTrac. "Whether focusing on markets where homeownership-shy Millennials are migrating, markets where recovering Gen X homeowners-turned-renters are prevalent, or markets Baby Boomers are testing for retirement, investors can find good options with solid potential rental returns.

"There are certainly markets where buying single family rentals no longer makes sense because of rapidly rising prices over the past few years," Blomquist added. "Savvy single family rental investors will tread cautiously in such markets despite the siren song of strong home price appreciation." 

"Buying single family homes as rental properties in Southern California is reserved for those that have a very specific investment strategy," said Chris Pollinger, senior vice president of sales with First Team Real Estate, covering the Southern California market, where annual gross yields on rentals range from less than 5 percent in Orange County to nearly 9 percent in the inland San Bernardino County.

For the report, RealtyTrac analyzed median sales prices for single family homes and condos and average fair market rents for three bedroom properties, along with unemployment rates and demographic trends in 516 U.S. counties with a combined population of 236 million people -- 76 percent of the total U.S. population. (See full methodology below.)

The 516-county analysis found an average potential return on residential rental properties of 9.04 percent in the first quarter of 2015, down slightly from an average potential annual return of 9.06 percent for residential rentals purchased in the third quarter of 2014 -- the most recent residential rental property report issued by RealtyTrac.

Best markets for buying residential rentals in Georgia, Maryland, Virginia and Michigan
Markets with the highest potential rental returns were Clayton County, Ga., in the Atlanta metro area (25.83 percent), Bibb County, Ga., in the Macon metro area (22.33 percent), Baltimore City, Md., (20.99 percent), Richmond City, Va., (20.42 percent), and Wayne County, Mich., in the Detroit metro area (19.34 percent).

Top 20 Markets for Residential Rental Returns

County Name		Metro Area	2015 3 Bedroom Fair Market Rent	November 2014 Median Home Price	Annual Cash Flow for Cash Investor (after tax and insurance)	Annual Gross Yield
Clayton		Atlanta-Sandy Springs-Marietta, GA	$1,213	$56,344	$13,773	25.83%
Bibb		Macon, GA	$960	$51,600	$10,803	22.33%
Baltimore City		Baltimore-Towson, MD	$1,574	$90,000	$17,637	20.99%
Richmond City		Richmond, VA	$1,306	$76,750	$14,605	20.42%
Wayne		Detroit-Warren-Livonia, MI	$1,128	$70,000	$12,563	19.34%
Philadelphia		Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	$1,440	$92,000	$16,001	18.78%
Pasco		Tampa-St. Petersburg-Clearwater, FL	$1,280	$86,000	$14,165	17.86%
Hernando		Tampa-St. Petersburg-Clearwater, FL	$1,280	$86,000	$14,165	17.86%
Oswego		Syracuse, NY	$1,039	$70,000	$11,495	17.81%
Wyandotte		Kansas City, MO-KS	$1,221	$83,250	$13,495	17.60%
Richmond		Augusta-Richmond County, GA-SC	$990	$70,000	$10,907	16.97%
Marion		Ocala, FL	$1,055	$75,000	$11,618	16.88%
Madison		Anderson, IN	$930	$68,000	$10,215	16.41%
Monroe		East Stroudsburg, PA	$1,322	$100,000	$14,474	15.86%
Mobile		Mobile, AL	$1,036	$78,550	$11,340	15.83%
Trumbull		Youngstown-Warren-Boardman, OH-PA	$866	$66,950	$9,461	15.52%
Muskegon		Muskegon-Norton Shores, MI	$961	$75,200	$10,487	15.34%
Niagara		Buffalo-Niagara Falls, NY	$982	$77,000	$10,714	15.30%
Citrus		Homosassa Springs, FL	$1,020	$80,000	$11,128	15.30%
Winnebago		Rockford, IL	$1,011	$80,000	$11,020	15.17%

Best markets for renting to Millennials
Among the 516 counties analyzed there were 50 where the millennial share of the population was above the national average of 22 percent, where the millennial population increased at least 5 percent between 2007 and 2013, and where potential annual rental returns on residential properties were 9 percent or higher.

"With the aggressive growth of companies like Amazon, and the arrival of several Silicon Valley newcomers like Facebook, Twitter, Google, and Apple, Seattle is becoming an increasingly popular spot for Millennials," said OB Jacobi, president of Windermere Real Estate, covering the Seattle market, where Pierce County ranked as one of the top 50 markets for renting to Millennials and King County saw a 34 percent jump in Millennials between 2007 and 2013 -- the 13^th biggest increase of the 516 counties analyzed in the report. "Not only do many of these Millennials have stable employment, but strong job prospects going forward, and a rosy forecast for future salary growth. All of this has turned Seattle into a sweet spot for those looking to buy rental properties. Vacancies are low, rents are on the rise, and growth in Seattle's tech sector is providing a built-in clientele for investors with no signs of slowing." 

Millennial magnet markets with the highest annual rental returns were Baltimore City, Md., (20.99 percent annual gross yield), Richmond City, Va., (20.42 percent), Philadelphia County, Pa., (18.78 percent), Wyandotte County, Kan., in the Kansas City metro area (17.60 percent), and Richmond County, Ga., in the Augusta-Richmond County metro area (16.97 percent).

Top 10 Millennial-Heavy Markets for Rental Returns

County Name		Metro Area		2015 3 Bedroom Fair Market Rent		November 2014 Median Home Price		Annual Cash Flow for Cash Investor (after tax and insurance)		Annual Gross Yield		% Millennials of Total in 2013		% Change in Millennials from 2007 to 2013
Baltimore City		Baltimore-Towson, MD		$1,574		$90,000		$17,637		20.99%		27.30%		11.28%
Richmond City		Richmond, VA		$1,306		$76,750		$14,605		20.42%		30.89%		31.62%
Philadelphia		Philadelphia-Camden-Wilmington, PA-NJ-DE-MD		$1,440		$92,000		$16,001		18.78%		27.21%		24.90%
Wyandotte		Kansas City, MO-KS		$1,221		$83,250		$13,495		17.60%		23.13%		8.47%
Richmond		Augusta-Richmond County, GA-SC		$990		$70,000		$10,907		16.97%		25.31%		6.91%
Yuma		Yuma, AZ		$1,258		$109,950		$13,568		13.73%		22.11%		8.76%
Jackson		Kansas City, MO-KS		$1,221		$109,450		$13,131		13.39%		22.87%		14.20%
Cumberland		Fayetteville, NC		$1,035		$94,000		$11,113		13.21%		27.11%		20.77%
Duval		Jacksonville, FL		$1,228		$112,000		$13,179		13.16%		24.19%		19.18%
Sumter		Sumter, SC		$812		$77,000		$8,674		12.65%		22.38%		9.24%

Best markets for renting to Gen Xers
There were 20 counties among those analyzed where the Generation X share of the population was above the national average of 16 percent, where the Generation X population increased at least 5 percent between 2007 and 2013, and where potential annual rental returns on residential properties were 9 percent or higher.

"Ohio housing is affordable, attracting many different income and age demographics to the state," said Michael Mahon, executive vice president at HER Realtors, covering the Ohio housing markets of Cincinnati, Dayton and Columbus, where Franklin County ranked among the 50 best for renting to Millennials, and Licking County ranked among the 20 best for renting to Gen Xers as well as among the 40 best for renting to Baby Boomers. "The stability of prices within the Ohio markets over recent years has contributed to an increasing demand for housing along with job and population growth throughout many of Ohio's local markets. With many developers still in recovery from our nation's economic crisis, new construction projects have been underwhelming in meeting Ohio's housing demand. As demand continues to increase and supply continues at conservative levels, anticipation for 2015 is for continued increases in rental returns throughout the state."

Generation X-heavy markets with the highest annual rental returns were counties in the Atlanta, Chicago, Jacksonville, Fla., Little Rock, Ark., and Orlando metro areas.

Top 10 Generation X-Heavy Markets for Rental Returns

County Name		Metro Area		2015 3 Bedroom Fair Market Rent		November 2014 Median Home Price		Annual Cash Flow for Cash Investor (after tax and insurance)		Annual Gross Yield		% Generation Xers of Total in 2013		% Change in Generation Xers from 2007 to 2013
Douglas		Atlanta-Sandy Springs-Marietta, GA		$1,213		$100,000		$13,166		14.56%		18.86%		10.28%
Kendall		Chicago-Naperville-Joliet, IL-IN-WI		$1,726		$163,000		$18,446		12.71%		19.49%		25.41%
Henry		Atlanta-Sandy Springs-Marietta, GA		$1,213		$118,000		$12,916		12.34%		19.05%		8.57%
Clay		Jacksonville, FL		$1,228		$124,000		$13,012		11.88%		16.78%		5.14%
Paulding		Atlanta-Sandy Springs-Marietta, GA		$1,213		$126,750		$12,794		11.48%		19.85%		7.55%
Saline		Little Rock-North Little Rock-Conway, AR		$1,040		$108,950		$10,966		11.45%		16.14%		11.49%
Osceola		Orlando-Kissimmee, FL		$1,330		$140,000		$14,014		11.40%		16.95%		8.35%
Johnston		Raleigh-Cary, NC		$1,189		$127,750		$12,492		11.17%		18.71%		8.17%
Cabarrus		Charlotte-Gastonia-Concord, NC-SC		$1,120		$127,750		$11,664		10.52%		18.45%		17.05%
Clay		Kansas City, MO-KS		$1,221		$140,000		$12,706		10.47%		16.76%		5.67%

Best markets for renting to Baby Boomers
There were 40 markets among those analyzed where the Baby Boomer share of the population was above the national average of 25 percent, where the Baby Boomer population increased at least 5 percent between 2007 and 2013, and where potential annual rental returns on residential properties were 9 percent or higher.

Baby Boomer bastions with the highest annual rental returns were counties in the Tampa, Ocala, Fla., East Stroudsburg, Penn., Homosassa Springs and Binghamton, N.Y. metro areas.

Top 10 Baby Boomer-Heavy Markets for Rental Returns

County Name		Metro Area		2015 3 Bedroom Fair Market Rent		November 2014 Median Home Price		Annual Cash Flow for Cash Investor (after tax and insurance)		Annual Gross Yield		% Baby  Boomers of Total in 2013		% Change in Baby Boomers from 2007 to 2013
Hernando		Tampa-St. Petersburg-Clearwater, FL		$1,280		$86,000		$14,165		17.86%		28.57%		31.45%
Pasco		Tampa-St. Petersburg-Clearwater, FL		$1,280		$86,000		$14,165		17.86%		27.01%		17.10%
Marion		Ocala, FL		$1,055		$75,000		$11,618		16.88%		28.22%		31.95%
Monroe		East Stroudsburg, PA		$1,322		$100,000		$14,474		15.86%		28.80%		7.89%
Citrus		Homosassa Springs, FL		$1,020		$80,000		$11,128		15.30%		32.14%		35.64%
Broome		Binghamton, NY		$1,058		$96,888		$11,349		13.10%		26.42%		5.75%
Lackawanna		Scranton--Wilkes-Barre, PA		$933		$86,920		$9,988		12.88%		27.02%		5.81%
Saint Lucie		Port St. Lucie, FL		$1,291		$125,000		$13,755		12.39%		26.58%		29.39%
Volusia		Deltona-Daytona Beach-Ormond Beach, FL		$1,229		$120,000		$13,080		12.29%		29.14%		17.25%
Grayson		Sherman-Denison, TX		$1,113		$109,950		$11,828		12.15%		26.46%		7.47%

Markets with biggest rent increases in Texas, Colorado and North Carolina
Among all counties analyzed with rental data available in both 2014 and 2015, the average fair market rent for a three-bedroom property was $1,255 for 2015, up 2 percent from an average of $1,230 for fair market rents in 2014.

Fair market rents on three-bedroom properties increased 10 percent or more from 2014 to 2015 in 35 counties with a combined population of 16.3 million. The biggest percentage increases were counties in Midland, Texas (up 24 percent), Denver, Colo., (up 20 percent), Asheville, N.C., (up 19 percent), Roseburg, Ore., (up 18 percent), and Seaford, Del., (up 18 percent). Other markets with rent increases of 10 percent or more included Chicago, Santa Barbara, Calif., Shreveport, La., Green Bay, Wis., and Milwaukee.

35 Markets with Rent Increases of 10 Percent or More

County Name		Metro Area		2014 3 Bedroom Fair Market Rent		2015 3 Bedroom Fair Market Rent		2014 to 2015 Pct Change in Rents
Midland		Midland, TX		$1,164		$1,445		24.14%
Adams		Denver-Aurora, CO		$1,409		$1,696		20.37%
Arapahoe		Denver-Aurora, CO		$1,409		$1,696		20.37%
Jefferson		Denver-Aurora, CO		$1,409		$1,696		20.37%
Denver		Denver-Aurora, CO		$1,409		$1,696		20.37%
Douglas		Denver-Aurora, CO		$1,409		$1,696		20.37%
Henderson		Asheville, NC		$922		$1,100		19.31%
Buncombe		Asheville, NC		$922		$1,100		19.31%
Douglas		Roseburg, OR		$964		$1,142		18.46%
Sussex		Seaford, DE		$1,138		$1,347		18.37%
Kendall		Chicago-Naperville-Joliet, IL-IN-WI		$1,472		$1,726		17.26%
Franklin		Chambersburg, PA		$992		$1,153		16.23%
Santa Barbara		Santa Barbara-Santa Maria-Goleta, CA		$1,700		$1,951		14.76%
Lebanon		Lebanon, PA		$916		$1,044		13.97%
Linn		Cedar Rapids, IA		$887		$1,009		13.75%
Washington		Johnson City, TN		$883		$997		12.91%
Tom Green		San Angelo, TX		$1,013		$1,139		12.44%
Madera		Madera, CA		$1,140		$1,280		12.28%
Mchenry		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Kane		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Will		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Cook		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Lake		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Du Page		Chicago-Naperville-Joliet, IL-IN-WI		$1,248		$1,393		11.62%
Caddo		Shreveport-Bossier City, LA		$943		$1,049		11.24%
Bossier		Shreveport-Bossier City, LA		$943		$1,049		11.24%
Taylor		Abilene, TX		$1,000		$1,111		11.10%
Montgomery		Montgomery, AL		$976		$1,084		11.07%
Weld		Greeley, CO		$1,040		$1,153		10.87%
Brown		Green Bay, WI		$973		$1,077		10.69%
Muskegon		Muskegon-Norton Shores, MI		$870		$961		10.46%
Milwaukee		Milwaukee-Waukesha-West Allis, WI		$1,036		$1,143		10.33%
Waukesha		Milwaukee-Waukesha-West Allis, WI		$1,036		$1,143		10.33%
Sumter		The Villages, FL		$1,051		$1,158		10.18%
Benton		Kennewick-Richland-Pasco, WA		$1,007		$1,108		10.03%

Safe haven rental markets in Virginia, Ohio, Michigan, Pennsylvania and North Carolina
Among the 516 counties, 70 matched the criteria for safe haven rental markets, with unemployment rates below the national average of 5.6 percent and with annual rental returns of 10 percent or higher. Markets with the highest rental returns among these safe haven residential rental markets were Richmond City, Va., (20.42 percent annual gross yield), Trumbull County, Ohio in the Youngstown-Warren-Boardman metro area (15.52 percent), Muskegon County, Mich., in the Muskegon-Norton Shores metro area (15.34 percent), Fayette County, Penn., in the Pittsburgh metro area (14.99 percent), and Bay County, Mich., in the Bay City metro area (14.78 percent).

Top 10 Safe Haven Residential Rental Markets

County Name		Metro Area	2015 3 Bedroom Fair Market Rent		November 2014 Median Home Price		Annual Cash Flow for Cash Investor (after tax and insurance)		Annual Gross Yield
Richmond City		Richmond, VA	$1,306		$76,750		$14,605		20.42%
Trumbull		Youngstown-Warren-Boardman, OH-PA	$866		$66,950		$9,461		15.52%
Muskegon		Muskegon-Norton Shores, MI	$961		$75,200		$10,487		15.34%
Fayette		Pittsburgh, PA	$987		$79,000		$10,746		14.99%
Bay		Bay City, MI	$936		$75,979		$10,176		14.78%
Saginaw		Saginaw-Saginaw Township North, MI	$931		$77,000		$10,102		14.51%
Clark		Springfield, OH	$896		$77,000		$9,682		13.96%
Gaston		Charlotte-Gastonia-Concord, NC-SC	$1,120		$97,000		$12,092		13.86%
Lucas		Toledo, OH	$916		$82,000		$9,852		13.40%
Broward		Miami-Fort Lauderdale-Pompano Beach, FL	$1,801		$165,000		$19,319		13.10%

Methodology
For this report, RealtyTrac looked at all U.S. counties with a population of 100,000 or more and with sufficient home price and rental rate data. Rental returns were calculated using annual gross rental yields: the 2015 average fair market rent of three-bedroom homes in each county from the U.S. Department of Housing and Urban Development (HUD), annualized, and divided by the median sales price of residential properties in each county.

RealtyTrac also incorporated unemployment rates from the Bureau of Labor Statistics and demographic data from the U.S. Census into the report.

The millennial generation was defined as someone who was born between the years 1977 to 1992. Generation X was defined as someone who was born between the years 1965 to 1976. The baby boomer generation was defined as someone who was born between the years 1945 to 1964.

Estimated home payment amount for leveraged investor was made assuming a 25 percent down payment, an interest rate of 4.0 percent on a 30-year fixed loan, and property tax and insurance totaling 1.39 percent of the total median sales price. Estimated home payment amount for cash investor was made assuming only 1.39 percent of the median sales price to be paid for both property tax and insurance.

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