HomeUnion, a real estate investment management firm which specializes in remote investment in single-family rentals, has just released its first “Investment Housing Market Power Rankings”, which lists 31 metros by the strength of their single-family rental markets.
“Investment markets, like football teams, can be viewed as having an offense, defense and special teams that are paramount to success,” HomeUnion says. Its study has determined the strength of a particular market by grouping market conditions into three categories: offense, or demand drivers such as employment, rent growth, and short turnover time; defense, or factors that limit renter loss such as rent-to-income ratio, apartment construction, and single-family permits; and special teams, or cap rates.
The top “team” on HomeUnion’s list was Tampa, Fla, which sported a median investment home sale price of $126,700, a median investment home rent of $1,285, and a median cap rate of 6.7%. According to HomeUnion, Tampa is “supported by a league-leading offense”, with the second-highest employment rate among the 31 metros and the fifth-best turnover time. They do point out that Tampa’s defense, or loss prevention, was ranked 25th, but its cap rates are very strong.
Jacksonville, San Diego, and Dallas are also top-ranked metros on HomeUnion’s list. Jacksonville also has strong demand drivers, but only average defenses and cap rates. San Diego has low cap rates, but strong demand and low renter loss. Dallas is “well-balanced”, but its heavy construction pipeline could be an issue for investors.
The full list of metros, median investment home sale prices, median investment home rents and median cap rates can be found in the full study here.