Rental property investors take note: Cleveland, Detroit, and Dayton, Ohio, offer the highest return when it comes to single-family homes, according to a recent from RentRange.
In a report released March 30, RentRange identified the 25 U.S. markets with the highest average gross yield on single-family rental properties. According to the data, many of the nation’s most lucrative markets are in “noncoastal, Midwestern states, such as Ohio, Missouri, and Kansas.”
Topping the list was the Cleveland-Elyria-Mentor, Ohio, market, which offered a Q4 2016 average gross yield of 13.7 percent. Following close behind was Detroit-Warren-Livonia, Michigan, with a 13.5 percent yield, and Dayton, Ohio, with a 13.1 percent yield. Memphis, Tennessee, and Toledo, Ohio, finished out the top five.
“Looking at average gross yield rates, Cleveland, Detroit and Dayton top our list of markets with the highest returns for single-family homes,” said Dennis Cisterna, Chief Revenue Officer at RentRange. “These three markets fall within the Rust Belt region, which was once dominated by an industrial-powered economy and is now experiencing population loss and economic decline.”
But just because these markets top the list, Cisterna said, that doesn’t mean they’re automatically great investments.
“For investors,” he said, “whether you are an everyday investor or an institutional investor, it is vital to analyze each property to determine whether it will produce the returns you expect prior to purchasing a single-family residential investment property.”
This can certainly be said for Detroit, which may not present high yields for much longer.
“While Detroit is ranked at No. 2,” the report stated, “yields have declined from a year ago, perhaps due to recent economic improvements. If economic conditions continue to improve, yields may continue to fall as a result of a potential rise in home prices.”
Other metros to make RentRange’s top 25 list included: Milwaukee, Wisconsin; Birmingham, Alabama; Indianapolis, Indiana; Canton, Columbus and Cincinnati, Ohio; Tulsa and Oklahoma City, Oklahoma; Columbia, South Carolina; Houston, McAllen, and Dallas, Texas; Wichita and Kansas City, Kansas; St. Louis, Missouri; Pittsburgh and Philadelphia, Pennsylvania; Chicago, Illinois; Greensboro, North Carolina; and Omaha, Nebraska.
RentRange provides market data and analytics for the single-family rental industry. To read the full report, visit RentRange.com.