Memphis Named Top SFR Investment Market

Memphis may be the home of the blues, but its housing market enjoyed more than a little green. The Tennessee city was crowned as the best market for investing in single-family rental (SFR) properties while California’s pricey housing markets were dubbed the worst, according to new data from the Irvine, Calif.-based HomeUnion.

Based on cap rates, HomeUnion identified the top 10 SFR investment markets as Memphis (with a 7.3 percent cap rate), followed by Oklahoma City (6.9 percent), Pittsburgh (6.4 percent), Cincinnati (6.4 percent), Houston (6.1 percent), Indianapolis (six percent) and a four-way tie between Cleveland, Baltimore, Milwaukee and Tampa at 5.9 percent each.

Based on cap rates, the least attractive SFR investment markets were San Francisco and San Jose (tied at 2.7 percent), Orange County (three percent), Los Angeles (3.2 percent), a three-way tie between New York, Seattle and Oakland (each at 3.5 percent), San Diego and Sacramento (tied at 3.6 percent) and Portland (3.9 percent).

“Other asset classes underperformed in 2015, while single-family rental investors saw healthy returns in terms of income and appreciation in markets across the country,” said Steve Hovland, manager, research services at HomeUnion. “Favorable supply and demand fundamentals and shifting views about renting among Millennials and seniors, created increased occupancy rates, which resulted in higher rent prices.”