Investors Score High Yields for Older, Less-Expensive Rental Homes

In many markets, high rents and relatively low home prices are providing solid investment returns for single-family home rentals.

“It’s still a good time to buy rental single-family homes,” says Daren Blomquist, vice president with data firm RealtyTrac.

The highest yields for these types of properties can often be found in secondary and tertiary neighborhoods in secondary and tertiary markets, however, far away from the places where the largest institutional investors have bought their thousands of rental homes. Somewhat older homes in older neighborhoods are benefiting from rent growth and strong demand for rental housing.

The deals are out there

The rents are rising at single-family rental homes across the country. Rental rates on new leases rose an average of 4.5 percent nationally over the past year, up from a rate of 3.4 percent in July 2014.

“Strong job growth and historically high occupancy rates are fueling higher rents,” according to John Burns Real Estate Consulting.

The average investment return on rental homes is strong and getting stronger. The average gross rental yield is nearly 9 percent, according to the latest report from RealtyTrac.

Read entire article here in National Real estate Investor.

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