Millennials in their 20s and 30s as well as retiring baby boomers dramatically impact the rental market. Investors and property managers that take care of investors’ assets often wonder, “What is a good state in America to own rental properties?” Fortunately, there are several states benefiting from the renter’s nation. Many Millennials continue to delay home ownership because of massive student loan and other debts. Also, tight mortgage lending creates a barrier for many aspiring home owners. According to an article by housingwire.com, there are a lot of opportunities for investors and property managers as rent rises faster than median home prices in many markets. A recent report by RealtyTrac analyzed different factors that make certain states ideal for rentals. Rent growth is not as fast as wage growth in 43 percent of the geographic areas studied by RealtyTrac, which means there is potential for higher rental returns for single-family homes.
As far as annual gross rental yields, Baltimore, Maryland had a rate of almost 29 percent. According to data by rentjungle.com, the average apartment rent in Baltimore is $1717. Property managers often encourage rental property owners to consider rent hikes since the average rent increased by about 9 percent or $147 in just 6 months in Baltimore. Property managers who want to take care of luxury rentals often gravitate to Inner Harbor, Jonestown and Locust Point. Professional landlords who want to manage more affordable rentals find a lot of low to moderately priced rentals in Franklintown, Cherry Hill and Lower Northwood. For investors who own townhouses, the booming rental markets are in Hunt Valley, Towson and Timonium, Maryland.
Experts found the single family rental return in Florida’s Miami-Dade County was about 8 percent. A lot of investors in recent years bought up homes in the Tampa area to turn into rentals. Some of the communities with a lot of rentals in Hillsborough County include Riverview, Ruskin, New Tampa, Temple Terrace and Brandon. Florida was hit hard by the housing decline, which resulted in a lot of foreclosures. The so-called shadow inventory of foreclosures is still hitting the market in 2016. Investors often find 3-bedroom, 2-bathroom homes ideal as rentals for about $150,000 to $200,000 in the Tampa Bay area.
A report by bankrate.com points to Michigan as a great city with promising cities to buy profitable rental properties. For instance, in Detroit investors find 3-bedroom homes for as little as $45,000, but the median rent for the same house is about $850. Finding single-family homes overlooking Lake Michigan often translate into higher market rent.
With a gross yield of about 15 percent, investors flock to the Chicago area. The median listing price for homes in Chicago is about $134,000. A comparable 3-bedroom home in Chicago rents for $1,700. Other attractive areas include Northwest, Indiana, which is within commuting distance to Chicago. In Northwest, Indiana, some popular communities for renters include Hobart, Chesterton, Portage and the Miller section of Gary.
When it comes to the best state in the U.S. to own rental properties, it’s also about personal preference and convenience. Every state has cities and towns that are more likely to attract renters. With the trend of baby boomers renting instead of owning, it’s likely the demand for rentals will stay high. The key for property managers is to educate rental property owners about making the right renovations to appeal to today’s more discriminating renters.
At The Landlord Property Management Academy, we provide property management training including coaching sessions with best-selling real estate author Bryan Chavis. Talk to us about what is a good state in American in which to own rental property and other real estate investing tips. For more information about our next-generation learning solutions, contact us.