Markets & Economy

Texas and the South represent best opportunities for single-family rental investment

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For investors eyeing the acquisition of single-family rentals, major Texas markets and locales in the South represent the best opportunities for future investments — despite a decrease in the inventory of foreclosed homes.

“For the last few years, investors have been able to find real estate bargains they could turn into rental properties. That period is pretty much over,” said Ingo Winzer, president and founder of Local Market Monitor. “You don’t need a bargain in order to make a good real estate investment.”

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.

Rounding out the top ten are the southern-located cities of Orlando, Florida; San Antonio; Charleston, South Carolina; Nashville; and Raleigh, North Carolina.

HomeVestor’s co-president Ken Channell points to Orlando, Nashville and Raleigh as the best cities for bargains, along with Charleston — a market that’s ideal for attracting vacation renters and retirees.

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The top ten markets have several market conditions in common: population growth that exceeds 4 percent coupled with current job growth of more than 2 percent and low unemployment.

“Job and population growth spurs great conditions for investing in single-family rental properties,” said David Hicks, co-president of HomeVestors, citing Austin — a market where population growth is triple the national average.

Four of the top ten markets for single-family rental buys — Charleston, Denver, Seattle and Orlando — are located in states with the highest recent home price appreciation. South Carolina saw a 10.3 percent rise during the past 12 months, according to CoreLogic. Other top-performing markets for price appreciation include:

  • Colorado (9.8 percent)
  • Washington (8.8 percent)
  • Florida (8.7 percent)

Email Erik Pisor.