Single family home rentals are the most popular type of properties for making money with real estate investing. Not only that, but beginners are frequently advised to start their careers with these investment properties as they are a perfect entry point into the real estate market. This, of course, is for good reason as there are so many attractive characteristics to single family rentals. They’re easy to find, easy to manage and provide high returns – if you’re investing in the right location. So, if you’re on the lookout for the best single family rental markets, keep reading to find what you’re looking for!
Why Should You Invest in Single Family Home Rentals?
Before exploring the best places to invest in real estate for single family homes, let’s break down why they make for profitable investment properties in the first place. First off, according to MarketWatch, more than one-third of all rental properties in the US housing market are single family home rentals. Currently, there are about 16 million, but another 13 million new rental households are expected to be built by the year 2030.
This supply of housing, however, is not keeping up with the strong demand. Property prices have been rising since 2015, and it doesn’t seem like they’re stopping any time soon. Combine that with the fact that property prices are outpacing wages in 80% of the US housing market, and you’ll understand why the demand for single family rentals is at an all-time high and showing no signs of slowing down.
Simply, it’s more affordable for residents to rent than to buy a house in almost every state in the nation. As a result, these supply/demand and affordability trends are creating opportunities for property investors in single family rental markets! Because the demand is high and supply is limited, real estate investors can expect to see an increase in rental rates. Furthermore, low unemployment and job growth are leaving positive effects on the housing market as well.
These current housing market trends indicate that the outlook for single family home rentals is strong. Todd Teta, Chief Product Officer at ATTOM Data Solutions, supports this saying that:
“Buying single family homes to rent them out is a better deal for investors so far this year, than it was at the same time in 2018, as profit margins are rising in a majority of counties across the United States.”
Want to look for affordable and profitable single family homes for sale to buy as investment properties? Use Mashvisor’s investment tools to start searching for the perfect one that meets your criteria in a matter of minutes!
Where to Invest in Single Family Home Rentals
Despite the generally rosier picture, profits from investing in single family rental properties vary widely depending on where you are investing in real estate. As a real estate investor, you might find yourself in a housing market where the demand for rental properties is low. On the other hand, you could also find yourself over-paying for a single family home for sale in a booming market. This is why you need to do your research to make sure you’re buying in the best places to invest in real estate.
To give you the best chance for finding a profitable investment property, real estate research firm, ATTOM Data Solutions, recently released a report detailing some of the best single family rental markets. The firm looked at 432 counties in the US housing market with a population of 100,000 or more that had sufficient home prices and rental rates data available. Using Mashvisor’s predictive analytics and investment tools, we further analyzed each county and dug deeper to find the best places to buy property in each one.
After utilizing a range of real estate metrics, we narrowed down the list to come up with the following top 10 single family rental markets. You’ll notice that these aren’t the hottest real estate markets in the US. For example, you won’t find Miami, Seattle, or San Francisco on the list. Why? Because in these and other hot markets, home prices are skyrocketing. In turn, this means there’s a good chance you’d buy an investment property at inflated prices. It’s best to invest in multifamily home rentals or apartments in these real estate markets. But if you’re looking to invest in single family homes, you’ll have the best odds for success in these housing markets:
Note: These single family rental markets are ranked in no particular order.
#1 Baltimore, Anne Arundel County, Maryland
- Median Property Price: $240,386
- Price/Square Foot: $242
- Monthly Rental Income: $1,533
- Price-to-Rent Ratio: 13
- Cash on Cash Return: 3%
#2 San Martin, Santa Clara County, California
- Median Property Price: $967,222
- Price/Square Foot: $588
- Monthly Rental Income: $3,703
- Price-to-Rent Ratio: 22
- Cash on Cash Return: 2%
#3 Philadelphia, Philadelphia County, Pennsylvania
- Median Property Price: $302,335
- Price/Square Foot: $455
- Monthly Rental Income: $1,453
- Price-to-Rent Ratio: 17
- Cash on Cash Return: 3%
#4 Detroit, Wayne County, Michigan
- Median Property Price: $156,535
- Price/Square Foot: $112
- Monthly Rental Income: $965
- Price-to-Rent Ratio: 13
- Cash on Cash Return: 2%
#5 Livonia, Wayne County, Michigan
- Median Property Price: $245,723
- Price/Square Foot: $147
- Monthly Rental Income: $1,511
- Price-to-Rent Ratio: 14
- Cash on Cash Return: 2%
#6 Maple Heights, Cuyahoga County, Ohio
- Median Property Price: $76,798
- Price/Square Foot: $64
- Monthly Rental Income: $827
- Price-to-Rent Ratio: 8
- Cash on Cash Return: 3%
#7 Westlake, Cuyahoga County, Ohio
- Median Property Price: $332,979
- Price/Square Foot: $134
- Monthly Rental Income: $3,136
- Price-to-Rent Ratio: 9
- Cash on Cash Return: 5%
#8 Pittsburgh, Allegheny County, Pennsylvania
- Median Property Price: $252,959
- Price/Square Foot: $93
- Monthly Rental Income: $1,254
- Price-to-Rent Ratio: 17
- Cash on Cash Return: 3%
#9 Dolton, Cook County, Illinois
- Median Property Price: $113,848
- Price/Square Foot: $94
- Monthly Rental Income: $1,315
- Price-to-Rent Ratio: 7
- Cash on Cash Return: 4%
#10 Streamwood, Cook County, Illinois
- Median Property Price: $224,931
- Price/Square Foot: $146
- Monthly Rental Income: $1,940
- Price-to-Rent Ratio: 10
- Cash on Cash Return: 3
Finding the Perfect Single Family Home for Sale
Are you interested in buying an investment property in one of the best single family rental markets for 2019 but you’re not familiar with the area? Don’t let that stop you! Thanks to advanced investment tools, any real estate investor (even a beginner) can find the best rental properties out of state with ease. Take Mashvisor’s tools for example.
Mashvisor provides investors with a number of tools that make finding and analyzing properties quick and easy. The one you most definitely need is the Property Finder. This tool uses filters to customize your search criteria and then immediately provides you with a list of the best properties for sale right now that match what you’re looking for. So, in a matter of minutes, you’ll have a list of investment properties to choose from.
But how can you identify which income property has the highest rental yield or ROI? Easy, just use the Airbnb Calculator along with the website’s Airbnb data. This is the second tool that Mashvisor provides and it shows you how profitable your rental property is compared to similar ones in the same area (real estate comps). Using this tool, you can actually see what monthly rental income, cash on cash return, cash flow, cap rate, and occupancy rate the property is expected to generate. This way, not only will you ensure investing in the best single family rental markets, but you’ll be sure that you’re buying profitable properties that are worth your money as well.
The Bottom Line
Now is a good time to invest in single family home rental properties. But to improve your odds for success, make sure to buy an investment property only in the best single family rental markets. If you think you’re ready to get started in real estate investing, use Mashvisor’s tools to analyze and compare investment opportunities anywhere in the US housing market. To get your hands on the above, and more investment tools, start out your 7-day free trial with Mashvisor now!