Single-family rentals: quantifying the location advantage

When investing in single-family rentals we are really investing in the location and buying a piece of that location via the property. In Leverage location for greater profits with single-family rentals we described how HousingIQ can help investors select markets that suit their investment criteria and preferences. 

But what about returns?  Intuitively, the answer has to be “Of course, we can improve returns by selecting housing markets”.  Simply because the single-family rental market is huge, diverse, and impacted by local economic conditions that vary across the US.

To put numbers on the intuition, we looked at the seventeen properties that featured on May 17, 2019. Based on the metro market that the property is located in, we appended the HousingIQ forecast to the property.  And the result?  The annualized return of properties tagged as Outperform was more than 25% higher than the properties tagged as Underperform.  The median appreciation of properties tagged as Outperform was three times that of the properties tagged as Underperform.

Caveat emptor.  This is a quick, back of the envelope, at the level of a proof-of-concept, not quite thorough, non-scientific result.  Still, a 25% improvement in returns is not shabby.  To learn how HousingIQ’s monthly Housing Market Vitality Indicators covering over 400 metro markets can help you improve returns, contact us.