These 25 housing markets are the best to invest

by Steve Randall19 Oct 2017
Real estate investors looking to maximize rental yields from single-family homes should head to Atlanta, Houston, Central Florida and Dallas.

They are among the top housing markets for strong returns for investors in single-family homes according to an analysis from ATTOM Data Solutions.

Its third quarter Single Family Rental Market report identifies the 25 best zip codes for returns based on potential rental yields and cash flow, vacancy rates, home price appreciation, population growth, neighborhood quality, and average property age.

Top zips for the highest potential annual gross rental yield were 30238 in the Atlanta metro area (17.7%); 77373 in the Houston metro area (13.5%); 34472 in the Ocala, Florida metro area (13.1%); 76140 in the Dallas-Fort Worth metro area (12.7%); and 30228 in the Atlanta metro area (12.6%).

"I can buy lots in areas that I can't sell homes, but I can rent," said Adam Whitmire, director of acquisitions for Atlanta-based Whitmire Group, explaining his company has shifted from buying existing homes as rentals to primarily buying lots and building new homes as rentals.

Rental homes in coastal markets had the lowest potential rental property returns and included Miami, Los Angeles, Santa Barbara, New York and San Jose.

The top performing zip code areas all had vacancy rates of 5% or lower for non-owner-occupied homes, and at least 25% of all single family homes were non-owner occupied in these zip codes.

"This top 25 list includes zip codes that not only have solid rental returns and positive cash flow opportunities, but are also located in neighborhoods with relatively low vacancy rates and with home price growth and population growth — which should continue to put upward pressure on rental rates," said Daren Blomquist, senior vice president at ATTOM Data Solutions.

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