Since July 2011, HomeVestors of America and Local Market Monitor, a leading forecaster of real estate markets, have been informing real estate investors around the country with their “HomeVestors®-Local Market Monitor Best Markets to Invest in Rental Property” report. Updated quarterly, this ranking helps real estate investors keep current on rental investment opportunities throughout the country.
Houses maintained for renters make up 14% of all single-family homes. For this particular niche of the housing market—which HomeVestors specializes in—there is no other regularly produced, reliable national ranking of the expected future performance of rental markets. This makes HomeVestors’ and Local Market Monitor’s ranking particularly useful to prospective investors looking to purchase rental or convertible properties.
“Until today, there’s never been a reliable national performance indicator for this growing segment of the investment market,” said David Hicks, co-president of HomeVestors of America, Inc.
“We’re pleased to have developed this ranking system with Local Market Monitor to help investors in single-family rental property identify opportunities and gauge potential local market investment performance relative to the national average and other markets.”
While you can find investment opportunities in virtually any market, the following regions were found to be amongst the best for investors who are seeking to acquire homes that can be fixed up and sold. Many markets are great for investors who opt to maintain properties as rental holdings.
1. Cape Coral-Fort Myers, Florida (tied for first)
1. Nashville-Davidson-Murfreesboro, Tennessee (tied for first)
2. Ogden-Clearfield, Utah
3. Boise City-Nampa, Idaho
4. West Palm Beach-Boca Raton-Boynton Beach, Florida
5. Charleston-North Charleston, South Carolina
6. Orlando, Florida
7. Austin-Round Rock, Texas
8. Jacksonville, Florida
9. Raleigh-Cary, North Carolina
HomeVestors ranks rental markets based on two indices. The first is three-year forecasts of home prices, which reflect underlying home-price appreciation potential. We combine this with our second index, forecasted gross rents (as a proxy for potential investor cash flow) to show investors the extra return, or risk-return premium, that they must demand from rental property in a local market. When added to the regular capitalization rate, this premium produces a risk-adjusted cap rate at full occupancy for a local market. Armed with this knowledge, investors can weigh the different returns on similar investments that potential markets may provide.
When deliberating whether to move into a new market or not, this ranking can help provide investors with a clearer idea of what success may mean. However, the ranking in no way should be considered a guarantee of future investment performance, and should instead be used as a tool and resource to help make informed business decisions.
Each franchise office is independently owned and operated, and if you’d like to work to accrue wealth by building a portfolio of rental properties, and you’ve found an area market you want to explore, take a look through our franchise consideration page to see how HomeVestors can help you turn your passion into a viable business opportunity. You can also learn more by calling 888-223-9332.