DataIndustry News

Where you get the best return on investment for SFRs

Thinking about investing in single-family rentals in California? Think again...
  • Single-family rentals in Los Angeles and California offer the lowest returns compared to other metros across the country.
  • Cleveland, Ohio is prime for rental investments.
  • Out of the 50 metros HomeUnion examined, a majority offer between 6 and 7 percent cap rates.

Online residential real estate investment management firm HomeUnion released the ten best and ten worst markets for single-family rental (SFR) property returns. The results show SFRs in the Midwest and Southeast to be the most profitable. Steve Hovland, director of research services at HomeUnion, said that although coastal communities might be the best for the long term investor, but "the ROI won’t be as immediate as it will in the Heartland." According to HomeUnion's list, which analyzes first-year SFR returns, or cap rates, Cleveland, Ohio offers the best return on investment when it comes to rental properties. Cap rates are the correlation between the property's net operating income (rent minus expenses) and the market value of the property. As mentioned Cleveland, Ohio offers investors the best return. According to HomeUnions data, Cleveland SFRs offer an 11.1 percent cap rate. Coming in second place is Columbia, South Carolina, where SFRs afford investors a 9.7 perc...