This is the conclusion of CoreLogic economist, Sam Khater in his recently released report “What Markets Offer the Best Return for Single-Family Rental Investors?” According to Federal Reserve research, “The majority of recently foreclosed borrowers move to single-family rentals.” Perhaps for this reason, the single-family segment of the rental market has different performance patterns. Single family rents increased during the recession while multifamily rents decreased, reported Khater who estimates “The potential size of the rental market for REOs this year is over $100 billion dollars annually.”
The capitalization rates (cap rates) on rental purchases in many metros are over eight percent, which substantially out-performs other major investment options.
The report confirmed for investors that of the 26 metropolitan areas reviewed, “The best opportunities for single-family REO-to-rental investors are in Florida and the Midwest, which boast high cap rates and a large stock of REO properties.” Record affordability presents extraordinary opportunities for qualified home buyers and investors. Check BidSelect.com for thousands of residential properties not only in Florida and the Midwest but also across the country.
Top 5 Cap Rate Cities Among 26 Metros Reviewed:
- West Palm Beach, FL - (12.4 percent )
- Cleveland, OH – (12.3 percent)
- Fort Lauderdale, FL – (12 percent)
- Chicago, IL – (11.6 percent)
- Las Vegas, NV – (11.4 percent)