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Takeaways:

  • Single-family rentals are expected to remain in high demand.
  • Median rent in San Francisco rose by 20 percent between April 2014 and April 2015.
  • Rents in some markets were stagnant or declined, as demand could not keep up with new supply.

Accounting for roughly 40 percent of all rental stock, single-family rentals are expected to remain in high demand — especially among millennials who begin to form their own families.

This is good news for owners of single-family rentals, especially those who own homes in markets that have recently seen a bump in rent.

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According to CoreLogic, median rent in San Francisco rose by 20 percent spanning April 2014 to April 2015. In Los Angeles, Seattle and Phoenix, single-family rents rose by 9 to 10 percent during the same period.

In comparison, the median rent for a three-bedroom home rose 4 percent nationally.

Additional markets that outperformed the national median included Washington, D.C., Dallas, Houston and New York. These markets saw rents rise anywhere from 5 to 7 percent.

On the flip side, rents in some markets were stagnant or declined, as demand could not keep up with new supply. In Detroit, the median rent dropped by 4 percent for a three-bedroom home.

Median rents also dropped in Chicago by nearly 2 percent. Atlanta saw modest gains of roughly 2 percent.

According to Local Market Monitor and homebuying franchise HomeVestors, the top markets for single-family rental investment moving forward are Denver, Dallas, Houston, Austin and Seattle.

Other markets primed for investment include Orlando, Florida; San Antonio; Charleston, South Carolina; Nashville, Tennessee; and Raleigh, North Carolina.

A recent Auction.com report pointed to the return of the “mom and pop” investor in the single-family rental space. These buyers are willing to purchase properties that deliver long-term returns based on monthly cash flow.

Of buyers looking to make a one-time purchase, 72 percent prefer a hold-to-rent strategy, according to Auction.com findings.

Email Erik Pisor.

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