But in Houston, one of two Lone Star state cities on the list, last place on the list doesn’t necessarily mean that things are dire. In fact, it’s just the opposite for those who are investing in homes to rent out.

  • Rents in Houston climbed 9.6 percent.
  • But even though Houston is last on the list, it comes in second-best in yield, with 14 percent.
  • Although the California and Florida markets are showing the biggest gains in monthly rents, yield gains are much more moderate.

Rental market intelligence provider RentRange recently ranked the top 25 U.S. MSAs (metropolitan statistical areas) for single-family home rental price gains and best investment yields. The results were surprising for some, and a cautionary tale for others.

But in Houston, one of two Lone Star state cities on the list, last place on the list doesn’t necessarily mean that things are dire. In fact, it’s just the opposite for those who are investing in homes to rent out.

Boule / Shutterstock.com

Boule / Shutterstock.com

The RentRange reports uses a wealth of numbers that the company has cataloged, crunched and supplied to customers since 2011. This new report tracks data for the third quarter of 2015 and the same quarter in 2014 in it’s new report.

In that time period, rents in Houston climbed 9.6 percent.

California and Florida cities dominate the top 10 spots in the rankings for rental increases, and hold a dozen of the spots on the overall list.

But even though Houston is last on the list, it comes in second-best in yield, with 14 percent.

The other Texas metro on the list, Dallas/Fort Worth, is at 13.4 percent. The top metro for average yield is Birmingham, Alabama, at 14.8 percent. And, it is that metric which RentRange CEO Walter Chernoff points out is a critical number for investors.

“Home prices are going up,” said Charnoff, “so the yield is a less impressive number than the rent price increase.”

He says that his company’s data show that there is still great opportunity in real estate investing, but points out that to achieve desired yield on those investment results, investors need to be more informed before buying and rehabilitating investment property.

Although the California and Florida markets are showing the biggest gains in monthly rents, yield gains are much more moderate. For example, the top metro on the list, Cape Coral, Florida, shows a 23.6 percent change in rent, yet a 9.1 percent average yield. The markets in those two states, Chernoff said, are in the process of normalizing, and that includes rental properties that may have been let out at rents below what they could realize.

RentRange gathers rental data on approximately 250,000 single-family homes each month from a variety of sources, including multiple listing services, property managers, landlords and listing web sites. The yield are figures are calculated RentRange’s proprietary automated valuation model.

Charnoff says that RentRange’s unique and clean data sets allow them to produce the most accurate data. He says the release of the information has created conversation among professionals in the real estate field.

“Other data sources commingle multi- and single-family rentals,” Charnoff said. “RentRange has enough data so that we can separate the two, and can track the single family segment because of how much data we have available.”

RentRange provides Rental Market Intelligence to the financial services and real estate industries. The company was acquired by Altisource Portfolio Solutions in October.

Email Kimberley Sirk.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription