With the crunch in supply of entry-level homes for sale, the single-family rental market is attracting the attention of investors. CNBC's Diana Olick examines this phenomenon and reports that the most interest may not be in the places most would expect.

Millennials are finally moving into their homebuying years, but with precious few starter houses available for sale, a growing number of these buyers are choosing to rent single-family homes. That is a big opportunity for investors overall, especially in markets seeing the greatest rent growth — and some of those markets are surprising.

Knoxville, Tennessee, for example, saw a nearly 20 percent jump in single-family rent rates in the first quarter of this year, compared to a year ago, according to RentRange, a provider of market data and analytics for the single-family rental industry. Its average gross yield for investors was just more than 8 percent. Syracuse, New York, also ranks in RentRange's top 10 list of the most lucrative rental markets, with rent gains of more than 17 percent annually and an average gross yield of nearly 11.27 percent. Milwaukee, New Orleans and Charleston, South Carolina, round out the top 10 list.

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