A single-family-style rental.

Orange County Has Lowest Single-Family Rental Yields

Carrie Rossenfeld Residential & Mixed Use

ATTOM Data Solutions has released its Q1 2018 single-family-rental-market report, which ranks the best U.S. markets for buying single-family rental properties in 2018. The report revealed that, along with Santa Clara County, California, and Kings County, New York, the lowest potential annual gross rental yields among counties with a population of at least 1 million were in Orange County, California, at a yield of 4.5 percent.

The report analyzed single-family rental returns in 449 US counties, each with a population of at least 100,000 and sufficient rental and home-price data. Rental data was from the US Department of Housing and Urban Development, and home-price data was from publicly recorded sales-deed data collected and licensed by ATTOM Data Solutions.

Orange County follows the national trend of decreased average annual gross rental yield—defined as the annualized gross rent income divided by median purchase price of single-family homes. According to the report, this figure among the 449 counties was 8.9 percent for 2018, down from an average of 9.2 percent in 2017.

The trend doesn’t reflect actual growth and opportunity in this market sector, however. According to Daren Blomquist, SVP at Irvine, California–based ATTOM Data Solutions, “Despite declining returns in many areas, the single-family rental market continues to grow thanks to more activity by smaller and middle-tier investors. The biggest increase in market share over the past year has come among investors owning six to 10 single-family rentals, followed by those owning between 11 and 100 rentals. These smaller to mid-tier investors are benefitting from newfound efficiencies in acquisition, financing and property management that allow them to by outside their backyard in areas with higher potential returns, and to leverage their money to buy more properties.”

For the full report, click here.