As the days of investors going door-to-door house hunting for properties to purchase and flip enter the rearview, it’s no longer outlandish for someone to purchase an investment property sight unseen, without stepping foot in the home or even visiting the state that it’s in. In fact, 90% of the buyers on our marketplace live more than 250 miles away from their investment properties.
When the world is truly an investor’s oyster, deciding where to invest can feel like a herculean task. But, the good news is, there is no shortage of attractive opportunities. Coupled with solid investment returns and rental income, single-family rentals are demonstrating strong interest nationwide from investors large and small. While different investors look for different qualities in markets, many single-family rental investors taking a long-term view are searching for metros with strong, sustainable growth prospects.
To evaluate properties’ long-term potential, our team recently identified the top 10 trending single-family rental markets where new renter demand is anticipated to be strongest. Based on an analysis of demand-side factors across 40 large markets, we ranked markets based on single-family home appreciation, population growth, rent growth, rental yields and household growth forecast.
Here are 10 trending single-family rental markets investors will be smart to watch throughout the second half of 2019 (Note: Figures below are based on our analysis of data from the U.S. Census Bureau and Zillow):
1. Las Vegas, Nevada
A record number of convention visitors is supporting the highest levels of tourism to Las Vegas on record and bolstering the city’s real estate market. In the last year, Las Vegas’ population has increased by 2.5%, and rent prices have grown by over 10%. The spike in rent is a strong indication that Las Vegas is primed for growth, earning Sin City the top spot on our ranking of cities for single-family rental growth.
2. Orlando, Florida
Thanks to the steady influx of Disney World and Universal Studios visitors, Orlando is expected to report another high watermark in tourism this year. Hailed as America’s most-visited city, this market tends to have a large share of renter households due to the outsized percentage of leisure and hospitality jobs, creating an opportunity for single-family rental investors. Key metrics to watch include annual population growth of 2.4% and a forecasted household growth of 3.4%.
3. Atlanta, Georgia
BlackRock, Google, Microsoft, Honeywell and Verizon are just a few of the major financial services and tech companies that have expanded their presence in Atlanta recently. Home to one of the largest tech hubs in America, Atlanta’s business-friendly climate and relatively affordable housing environment continue to attract startups and established companies alike. As new companies enter the market and create jobs, the region’s single-family rental market is expected to see steady growth. By the numbers, single-family home appreciation was very strong at 13.1% last year, and household growth is forecasted to hit 2.1% this year.
4. Charlotte, North Carolina
This metro is attracting businesses due to its high quality of life and business-friendly environment. The payment software company AvidXchange, for example, is expanding its headquarters and adding more than 1,200 new jobs. Key growth indicators include a 1.9% annual population growth and 2.4% forecasted household growth.
5. Phoenix, Arizona
Last year, Phoenix was one of the top job markets in the country, a trend that should continue in 2019. Investors considering single-family rental properties in Phoenix should factor in the city’s 9% rent growth and 2.1% population growth in the last year.
6. Dallas-Fort Worth, Texas
The Metroplex led the nation in job growth in 2018, adding over 116,000 new positions. Key metrics for investors evaluating the market include 2018 single-family home appreciation of 10.6% and population growth of 1.7%.
7. Jacksonville, Florida
An international trade seaport, Jacksonville's improvements to the city’s infrastructure bolstered overall economic growth. Drilling down into real estate metrics, Jacksonville experienced 3.7% rent growth in 2018, and household growth is forecasted at 2.1% in 2019.
8. San Antonio, Texas
The local economy in Alamo City remains healthy, supporting strong rental market fundamentals. Accenture Federal Services recently announced 500 new jobs coming to the metro. One key metric that evidences the strength of San Antonio’s rental market is its impressive 4.2% rent growth in 2018.
9. Indianapolis, Indiana
Dubbed the Crossroads of America, Indianapolis’s affordable housing prices make it popular with millennials. With sky-high prices in major metropolitan cities like New York and San Francisco, individuals entering the job market are increasingly choosing affordable “secondary” cities like Indianapolis as their homes. Indianapolis earned a spot in our ranking in part due to single-family rental home appreciation of 12.8% and rent growth of 4.1% last year.
10. Fort Lauderdale, Florida
Steady population growth in Fort Lauderdale, particularly from retirees who have discretionary income, propelled the market into the tenth spot in the ranking. Fort Lauderdale also had an attractive gross rental yield of 9.9% in 2018, and the city’s forecasted 2019 household growth is a healthy 2.1%.
You’ll notice large urban hotspots like New York, San Francisco and Chicago didn’t make the list. Those bustling metropolises will always attract a healthy share of tenants, but they’re no longer the only destination for recent graduates and other job seekers. A larger portion of renters now put down roots — albeit flexible roots with one-year leases — in secondary cities like Atlanta, Indianapolis, and Charlotte. Companies wooed by lower rents set up corporate parks and create new jobs for the talent pool of renters incentivized by good jobs, lower cost of living and larger apartments.
As these traditionally smaller cities expand and adapt to an emerging workforce, investors have an opportunity to purchase properties set for significant growth.
