Upstate ranks high for rental investments

Upstate ranks high for rental investments

Apartment for Rent Sign(Photo: Aaron Kohr, Getty Images/iStockphoto)

Three Upstate counties rank among the top markets in the nation for buying residential rental properties.

That’s according to RealtyTrac’s Q2 2014 Residential Property Rental Report which primarily looks at the rate of return a real estate investor could get by buying a rental property in 370 U.S. counties, based on the price they’re buying it for and then the average rents that they can rent out the property for.

The 2014 average rate of return on rental properties is a “very solid” 9.7 percent nationwide, said Daren Blomquist, RealtyTrac vice president.

RealtyTrac factored in unemployment rates along with annual gross rental yields to select the 25 best markets for buying residential property rentals. Counties in the top 25 all had unemployment rates of 4.5 percent or lower in April 2014 — well below the national average of 6.3 percent — and had an annual gross rental yield of 9 percent or higher.

The three best markets for buying residential property rentals were Anderson County, S.C., in the Anderson metro area (15.33 percent annual gross rental yield); Woodbury County, Iowa, in the Sioux City metro area (13.02 percent); and Pickens County (13 percent), RealtyTrac said.

Greenville County was ranked 21st, with a 9.14 percent gross rental yield. Other counties in the state that made the top 25 list were Lexington (11 percent) and Dorchester (10 percent).

Being on the top of this list shows a market that is very healthy, has a very low unemployment rate and is a place where home prices are still reasonably priced, Blomquist said.

The report is primarily for real estate investors to help them identify markets where they can make a good return on their investment on buying properties, he said. It’s also “good news” for first-time home buyers because it indicates markets where it’s probably going to be less expensive for them to buy a property than it is to rent, he said.

RealtyTrac also combined demographic data from the U.S. Census Bureau with the annual gross rental yield data to determine the 25 best markets for renting to the baby boomer population — those born between 1945 and 1964 — and the 50 best markets for renting residential property to the millennial population — those born between 1977 and 1992.

The only metro area in South Carolina in the top 25 list for renting to baby boomers is Hilton Head. The baby boomer population there grew 33.9 percent between 2007 and 2013.

Charleston was the only area in the state to make the listing for top millennial rental markets.

All 50 counties on the list saw an increase of at least 10 percent in the millennial demographic between 2007 (looking at the population ages 15 to 30 at that time) and 2013 (looking at the population between 21 and 36 at that time) and had a millennial population that represented at least 24 percent of the total population in 2013, the report said.

Charleston’s millennial population increased 27 percent during that period. The annual gross rental yields for the top 50 millennial rental markets ranged from 5.53 percent in Charleston County, up to 21.32 percent in Baltimore City, Maryland, RealtyTrac said.

A lot of millennials are renters before they are homeowners, Blomquist said. “Looking at these markets where they’re moving to will be markets where, for at least the next five years, it’s going to be great to own rental property,” he said.

Greenville County saw its millennial population grow by 13 percent between 2007 and 2013. Although Pickens County was ranked among the best markets for rental properties, its millennial population decreased by 13.2 percent during that period.

That could mean the county will likely have fewer millennials to rent to, Blomquist said.

He said the decrease may be due to younger generations moving to Greenville County.

“The trend with millennials is that prefer to live in more urban, centrally located, walkable types of areas, he said.

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Source : http://www.greenvilleonline.com/story/money/business/2014/07/04/upstate-ranks-high-rental-investments/12225389/

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