South Florida single-family rentals best for returns

South Florida single-family rentals best for returns

A report for the first quarter of this year reveals that South Florida single-family rentals offer investors some of the best returns in the country. Three counties from the Sunshine State rank in the top three, all providing returns of at least 12% a year. ATTOM points out that investors in single-family homes continue to benefit despite a poorer performance from the housing market generally.

Single-family rentals benefit investors

In 2022, the US housing market performed less well than in 2021 as rising interest rates put a brake on sales. However, the buy-to-let sector produced one of its best results in several years, with an increase in yields across the country.

The ATTOM Q1 2023 Single-family Rental Market report finds that returns on three-bedroom properties should reach 7.5% this year, up from 6.7% in 2022. In addition, 91% of the 212 counties in the report should see an uptick in yields for the first time since 2019.

“Rents for single-family homes are growing while prices have flattened out,” said Rob Barber, CEO at ATTOM, “which has helped boost yields for landlords for the first time in several years.” He highlighted the benefits for “the growing number of investors around the US who rent out single-family properties”.

Rise in rental rates

The housing market in 2022 suffered several setbacks, including soaring mortgage rates and rampant inflation. They reduced housing affordability and, as a result, property prices began to moderate.

In contrast, these factors led to a rise in rental rates as demand put pressure on supply. As a result, three-bedroom rental rates rose by 5 to 20% across the US last year. In turn, these upticks boosted yields from buy-to-let investments. Rental rates should moderate this year in some parts of the country, but in Florida they’re expected to remain high.

Florida single-family rentals dominate table

When it comes to returns, the south will offer the best for investors this year. And within the region, South Florida dominates the table, with three of the top five listings.

Single-family rentals in Indian River County (part of the Sebastaian-Vero Beach metro) will provide their owners with the highest yields of all, with an expected 15%. Collier County comes a close second at 14.7%.

Completing the top five for the Sunshine State is Charlotte County, where investors can expect returns of around 12% this year. The figure is the fifth-highest in the country and confirms this county’s potential for Florida single-family rentals.

Florida real estate tops ranking

The report comes on the back of other data underlining the potential of Florida real estate. ATTOM also revealed that Florida property owners made the highest ROI on sales last year, reaping up to 85.4% in some parts of the Sunshine State.

To compile the report, ATTOM analysed rental returns from 3-bedroom single-family homes in 212 counties with a population of at least 100,000.

(Source: ATTOM)