Midwest cities like Detroit and Cleveland are among top cities, while 8 out of 10 of the worst cities for single-family rental cash flow were in California.
MyPerfectMortgage.com, an industry-leading mortgage and real estate resource, released a study that has determined the 101 best cities for single-family rental cash flow in 2023.
The analysis looked at data on home prices, property tax rates, typical rents, vacancy rates, and more to determine where single-family rental investors have the best chance of making a profit.
Potential monthly cash flow in the top 10 cities are:
- Detroit: $722
- Jackson, Miss.: $690
- Cleveland: $645
- Birmingham, Ala.: $609
- Lehigh Acres, Fla.: $580
- Baltimore: $578
- Philadelphia: $475
- Montgomery, Ala.: $380
- Toledo, Ohio: $375
- Memphis, Tenn.: $375
“Single-family rental investors have a tough job,” said Tim Lucas, Senior Editor at MyPerfectMortgage.com. “It’s much easier to find cash flow in apartment buildings or small multifamily properties. Single-family residences come with high per-unit property taxes and maintenance costs.”
Lucas continued, “Acquisition costs are also through the roof. Home prices are up more than 35% since the second quarter of 2020, while rental income has risen just 17% over the same period. Mortgage rates have more than doubled. These factors are really putting the squeeze on single-family investors looking for yield.”
The study compiled over 110,000 data points and considered 312 U.S. cities in the analysis. The top 101 cities had the most advantageous combination of high rents, low home prices, lower-than-average property taxes, and low vacancy rates.
For example, Cleveland, Ohio, number three on the list, boasted typical rents of $1,273 per month, low taxes, and a typical home price of just $97,805, yielding monthly cash flow of $645.
Not all cities fared as well.
Following the methodology, an investor buying a single-family home in Sunnyvale, Calif. might lose $6,862 per month thanks to low relative rents, nearly $900-per-month property taxes, and a typical home price close to $2 million.
Not surprisingly, eight of the 10 worst single-family rental markets were in California. Top cities for investors were concentrated in the Midwest and Southeast.
With this study, real estate investors can make better decisions when deciding when and how to invest.
About MyPerfectMortgage.com: MyPerfectMortgage.com is a leading online mortgage and real estate platform that helps borrowers find the best mortgage products for any situation. With a network of lenders and a team of experienced mortgage professionals, MyPerfectMortgage.com provides a simple and convenient way to compare mortgage options for a new home, investment property, or refinance. For more information, visit the My Perfect Mortgage website.
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SOURCE My Perfect Mortgage