When crunching the data for our Q3 2016 Single Family Rental Market Report released last week, ATTOM Data Solutions identified five sets of local markets representing different types of opportunity in the single family rental space based on investor preferences and appetite for risk. We’ll be covering each of those market niches in a series of five posts this week, starting with the 22 local markets we identified as those with the sweet combination of low vacancy rates but still high rental potential rental yields on properties purchased in 2016.
We identified these 22 markets as best for high rental yields with low vacancy rates out of the 473 U.S. counties analyzed in the report by limiting the list to only counties with an investment property vacancy rate below 3.0 percent (the average across all 473 counties was 4.0 percent) and a gross annual rental yield (annualized rental income divided by median sales price) of 10 percent or higher.
The five most-populous counties making the list were El Paso County, Texas, Orange County, New York outside of New York City, Westmoreland County, Pennsylvania in the Pittsburgh metro, Lehigh County, Pennsylvania in the Allentown metro area, and Marion County, Florida in the Ocala metro area.
Counties with the highest rental yields on this list were Monroe County, Pennslyvania in the East Stroudsburg metro area (16.0 percent); Hernando County, Florida in the Tampa metro area (14.3 percent); Lackawanna County, Pennsylvania in the Scranton metro area (12.1 percent); Westmoreland County, Pennsylvania in the Pittsburgh metro area (11.8 percent); and Davidson County, North Carolina in the Winston-Salem metro area (11.8 percent).
So it is possible to have your cake and eat it too when it comes to single family rentals. But of course you’ll notice that many of these counties are a bit off the beaten path and not in the major markets where institutional investors and other single family investors have swarmed over the past few years. That lack of competition helps these markets maintain the sweet combination of solid returns and low vacancy rates.