Cleveland tops the list again, while San Francisco has the worst cap rate for single-family rental (SFR) buyers

HomeUnion, an online real estate investment management firm, has named the top 10 best housing markets for single-family rental (SFR) home investors in the first quarter, as well as the worst markets for investors. Once again, Cleveland has has earned the top spot with a cap rate of 11.5 percent and a median investment home price of $75,512. San Francisco, perennially idenitified as one of the most expensive housing markets in the U.S., is the worst place for investors, with a cap rate of 2.8 percent and median price of nearly $1.2 million.

“For the past two years, we have been tracking the investment and owner-occupied housing markets,” explains Steve Hovland, director of research for HomeUnion. “And metros in the Midwest and Southeast always earn top billing because of their low entry prices and moderate rents. Cleveland has often ranked at the top – or near the top – of the best places to purchase a single-family rental (SFR) property,” he shares.

“Coastal locations will be challenging for investors,” Hovland continues. “Because median investment home prices and rents are so high, we weren’t surpised to see that investors will have to settle for nominal returns in most markets in the Bay Area, SoCal and Pacific Northwest,” he adds.

Here are the top markets for real estate investing in the first quarter, based on first-year returns:

Metro Investment Home Price YOY Change Cap Rate
Cleveland $75,512 16.2% 11.5%
Cincinnati $87,092 11.4% 9.8%
Columbia, SC $94,372 4.9% 8.6%
Memphis, TN-MS-AR $86,975 1.1% 8.5%
Richmond, VA $121,682 5.8% 8.2%
Oklahoma City, OK $97,960 22.4% 8.2%
Indianapolis $101,948 6.5% 8.1%
St. Louis $96,412 8.3% 8.1%
Pittsburgh $95,489 -4.5% 8.0%

Here are the worst markets for real estate investing in the first quarter, based on first-year returns:

San Francisco $1,118,702 9.7% 2.8%
San Jose $928,355 12.8% 2.8%
Orange County $762,587 14.7% 3.0%
Los Angeles $546,177 9.0% 3.4%
San Diego $507,585 6.6% 3.6%
Seattle $439,212 26.9% 3.7%
Sacramento $313,845 18.4% 4.0%
Salt Lake City $253,124 28.6% 4.2%
Oakland, Caif. $488,853 8.6% 4.2%
Portland, Ore. $310,481 15.0% 4.3%

                 
About HomeUnion
HomeUnion is an online real estate investment management firm. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in rental properties. The company uses a combination of research and proprietary analytics to incorporate data on over 110 million homes and 200,000 neighborhoods into their database, and then delivers its solutions to an on-the-ground infrastructure that currently serves 11 locations. HomeUnion’s role spans the lifecycle of the investment transaction: identifying sound investments, handling all aspects of acquisition, maximizing income, protecting asset value, and selling the asset when the time comes.