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Best Places to Invest in Single-Family Rental Properties in 2025

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Looking for the best places to invest in single-family rentals in 2025? You've come to the right place! Based on a new report by ATTOM, the top 10 counties for buying single-family rentals in 2025 offer a sweet spot of wage growth and attractive rental yields. Keep reading to discover which counties made the list and why they're poised for success.

Best Places to Invest in Single-Family Rental Properties in 2025

Why Single-Family Rentals?

Before we dive into the specific counties, let's quickly recap why single-family rentals (SFRs) are a popular investment choice. They offer several benefits:

  • Consistent Cash Flow: Rental income provides a steady stream of revenue.
  • Appreciation Potential: Real estate tends to increase in value over time.
  • Tax Advantages: Depreciation, mortgage interest, and other expenses can be tax-deductible.
  • Tangible Asset: Unlike stocks or bonds, you can physically see and manage your investment.

However, not all markets are created equal. Finding the right location is crucial for maximizing returns and minimizing risks. Factors like job growth, population trends, affordability, and local regulations can significantly impact the profitability of an SFR investment.

The Big Picture: Rental Yields in 2025

ATTOM's Q1 2025 Single-Family Rental Market Report paints an interesting picture of the SFR market. Across the 361 counties analyzed, the projected annual gross rental yield for three-bedroom properties in 2025 is 7.45%. While that's a decent return, it's slightly down from the 2024 average of 7.52%.

The report suggests that rental yields are expected to decline in nearly 60% of the analyzed counties between 2024 and 2025. This is largely due to home prices increasing faster than rents in many areas. In fact, median single-family home prices rose faster than median rents in 54% of the markets studied. Between 2024 and 2025, median single-family home prices have risen in approximately two-thirds of the counties with sufficient data, typically increasing by around 10%, which is a big factor.

This means that as an investor, you need to be extra selective and strategic when choosing your next rental property.

How Were the Top 10 Counties Selected?

To identify the top counties, ATTOM looked for areas where:

  • Wage Growth is Positive: Rising wages indicate a healthy local economy and the ability for renters to afford higher rents.
  • Projected Rental Yields are Attractive: A higher rental yield means a better return on investment.

The report specifically highlighted 28 “SFR Growth” counties where average wages increased over the past year and projected annual gross rental yields for three-bedroom properties in 2025 exceed 10%.

The Top 10 Counties for Buying Single-Family Rentals in 2025

Alright, let's get to the list you've been waiting for! Here are the top 10 counties, according to ATTOM's data, along with some additional insights:

  1. Suffolk County, NY
    • Year-over-year wage growth: 7%
    • 2025 Annual Gross Rental Yield: 18%
    • Why it's great: Suffolk County, located outside of New York City, benefits from its proximity to a major employment hub while offering more affordable housing options. The strong rental yield and solid wage growth make it an attractive market for SFR investors.
  2. Atlantic County, NJ
    • Year-over-year wage growth: 2%
    • 2025 Annual Gross Rental Yield: 18%
    • Why it's great: Atlantic City may be what you think of when you think of Atlantic County, but there are plenty of rentals that can be found.
  3. Jefferson County, AL
    • Year-over-year wage growth: 9%
    • 2025 Annual Gross Rental Yield: 16%
    • Why it's great: As the home to Birmingham, Jefferson County boasts a diverse economy and a growing population. The combination of strong wage growth and a healthy rental yield makes it a promising market.
  4. Mobile County, AL
    • Year-over-year wage growth: 5%
    • 2025 Annual Gross Rental Yield: 19%
    • Why it's great: Mobile's economy is driven by industries such as aerospace, shipbuilding, and manufacturing. The relatively low cost of living and attractive rental yields make it an appealing option for investors.
  5. Ector County, TX
    • Year-over-year wage growth: 5%
    • 2025 Annual Gross Rental Yield: 15%
    • Why it's great: Ector County, home to Odessa, is a major player in the oil and gas industry. While this sector can be volatile, the area's strong job market and competitive rental yields make it a worthwhile consideration.
  6. Indian River County, FL
    • Year-over-year wage growth: 2%
    • 2025 Annual Gross Rental Yield: 12%
    • Why it's great: Indian River County may be located in Florida, and the city itself may draw some tourists, but the lower wage growth is a little offsetting.
  7. St. Louis City, MO
    • Year-over-year wage growth: 7%
    • 2025 Annual Gross Rental Yield: 12%
    • Why it's great: St. Louis City offers a mix of affordability, cultural attractions, and job opportunities. The strong wage growth and attractive rental yield make it a compelling market for SFR investors.
  8. Litchfield County, CT
    • Year-over-year wage growth: Not Specified
    • 2025 Annual Gross Rental Yield: 17%
    • Why it's great: Litchfield County combines a rural setting with proximity to major metropolitan areas. The high rental yield, despite the lack of specific wage growth data, suggests a strong demand for rental properties.
  9. Charlotte County, FL
    • Year-over-year wage growth: 4%
    • 2025 Annual Gross Rental Yield: 16%
    • Why it's great: With its beautiful beaches and sunny weather, Charlotte County attracts both tourists and retirees. The steady wage growth and solid rental yield make it a potentially lucrative market for SFR investments.
  10. Saint Clair County, IL
    • Year-over-year wage growth: 8%
    • 2025 Annual Gross Rental Yield: 16%
    • Why it's great: Located near St. Louis, Saint Clair County benefits from a strong regional economy. The robust wage growth and attractive rental yield make it an appealing option for investors.

Beyond the Numbers: Due Diligence is Key

While these counties show promise based on ATTOM's data, it's important to remember that real estate investment is never a sure thing. Before making any decisions, you need to conduct thorough due diligence. This includes:

  • Analyzing Local Market Conditions: Research vacancy rates, average rents, and property values in specific neighborhoods.
  • Evaluating Property Condition: Inspect properties carefully for any potential repairs or maintenance issues.
  • Understanding Local Regulations: Familiarize yourself with zoning laws, building codes, and landlord-tenant laws.
  • Assessing Risk Tolerance: Determine how much risk you're willing to take on and invest accordingly.

I've seen too many investors jump into deals without doing their homework, only to end up with costly mistakes. Take the time to research and understand the market before committing to any investment.

My Personal Take:

In my opinion, while the data from ATTOM is a great starting point, it's crucial to consider your individual investment goals and risk tolerance. For example, if you're looking for a more stable, long-term investment, you might prioritize counties with consistent job growth and lower volatility. On the other hand, if you're willing to take on more risk for potentially higher returns, you might consider markets with emerging industries or rapid population growth. Also, visit the areas of interest and observe things yourself.

Final Thoughts

Investing in single-family rentals can be a rewarding way to build wealth and generate passive income. By carefully analyzing market trends, conducting thorough due diligence, and considering your personal investment goals, you can increase your chances of success.

The top 10 counties for buying single-family rentals in 2025, as identified by ATTOM, offer a compelling combination of wage growth and attractive rental yields. However, remember that these are just starting points. Always do your research and consult with experienced professionals before making any investment decisions.

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Single-Family Homes Construction Surges in September 2024

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Single-family homes are more than just a popular housing option; they represent a significant component of the American real estate market. In September 2024, single-family home construction surged, indicating a renewed interest among homeowners and builders alike, particularly in the Northeast. This increase is largely attributed to a dip in mortgage rates, making it more affordable for families to invest in their own homes.

Single-Family Homes Construction Surges in September 2024

Key Takeaways

  • Surge in Construction: Single-family home starts increased by 2.7% nationally in September.
  • Regional Growth: Notably, the Northeast experienced a 10.6% increase from the previous month.
  • Mortgage Rates: Average mortgage rates fell to 6.18%, encouraging more construction and buying.
  • Future Trends: Expectations for construction might see a downturn due to climbing mortgage rates.

Understanding Single-Family Homes

Single-family homes are standalone structures designed to house one family. They generally feature separate entrances, yards, and often garages. Unlike multifamily dwellings (like apartments or condos), these homes provide privacy, space, and the option for personal customization. The appeal of single-family homes has persisted, as they represent stability and independence for many buyers.

According to the U.S. Census Bureau, single-family home construction achieved a seasonally adjusted annual rate of 1,027,000 in September 2024, posting an increase of 5.5% compared to last year. Despite these numbers, the multifamily market has been experiencing a slowdown, which might influence future trends in the single-family market.

The Recent Surge in Single-Family Home Construction

The recent uptick in single-family home construction can be largely attributed to changes in mortgage rates. A significant drop to an average of 6.18% in September made it more inviting for potential homeowners to consider building or purchasing new homes (Freddie Mac). This shift has prompted builders to ramp up their construction efforts, especially in the Northeast, where we observed a 77.4% annual increase in new constructions.

While these numbers are promising, experts like Joel Berner, a senior economist at Realtor.com, urge caution. He noted that the seasonal adjustments could create a skew, particularly in regions like the Northeast that experience significant seasonal variations (Realtor.com).

Regional Variations in Construction Rates

Breaking down the data region by region reveals some interesting trends. The Northeast saw a 10.6% month-over-month rise in single-family home starts in September, while the West experienced a slight decline of 0.9%. The varying performance across regions highlights the complexities of the housing market and the different factors influencing construction and home buying behaviors.

According to reports, while single-family home building increased, an overall downturn in the market for multifamily construction continued, indicating that builders may be shifting their focus more towards single-family homes as consumer demand leans in that direction (NAHB). However, the decrease in multifamily starts could impact housing availability and affordability.

Mortgage Rates and Their Impact

Current conditions regarding mortgage rates are pivotal for homeowners and builders alike. As of mid-October 2024, mortgage rates have started rising again, hitting 6.44% after a period of decline. Higher rates generally suppress housing starts, as potential buyers may hesitate to take on larger loans. Robert Dietz, Chief Economist at the National Association of Home Builders, reiterated that rising rates in October could dampen growth in upcoming months (Yahoo Finance).

There's a delicate balance that affects single-family homes: low mortgage rates can spur demand but rising rates threaten the viability of many potential home purchases. Consequently, those in the market for a home need to carefully consider timing and rates.

Affordability Crisis and Future Implications

Despite the surge in construction activity, affordability remains a pressing concern for many homebuyers, particularly first-time buyers and low- to moderate-income households. The combination of increased construction activity and rising housing costs poses challenges moving forward. Experts emphasize that a significant increase in new construction is vital to easing the housing affordability crisis (Builder Magazine).

Recent discussions around housing affordability have reached national platforms, especially ahead of the November presidential election. Candidates are proposing various solutions, such as reducing building regulations and offering tax incentives for builders, to encourage new housing development (Marketplace). While these proposals may raise hopes, achieving real change relies heavily on local land use and regulatory decisions.

My Take on Single-Family Homes

Single-family homes represent not just housing but a pathway to stability for many families. However, the rising costs and fluctuating rates create a challenging environment for both buyers and builders. It's crucial that we take a proactive approach to ensure that affordable housing continues to be accessible.

Conclusion

Single-family homes continue to be a cornerstone of the American real estate market, driven by both a desire for independence and the recent decrease in mortgage rates. As construction surges, particularly in regions like the Northeast, the landscape of homeownership is continuing to shift. Understanding these dynamics is essential for anyone involved in buying, selling, or constructing homes in today’s market.

Single-Family Rent Forecast 2024 for Renters and Investors

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Single-family rents continue their upward climb in 2024, leaving renters across the US wondering just how high the ceiling is. It's a question on everyone's minds: Will this trend continue, or are we due for a cooldown? Let's dive into the current state of single-family rentals, examine the factors driving this market, and explore potential scenarios for the remainder of 2024.

Single-Family Rents in 2024

Current State of the Market: Steady Growth, Regional Variations

As of July 2024, the typical asking rent for a single-family home in the US reached $2,294, representing a 0.4% increase compared to the previous month — Zillow. This figure marks a 4.7% surge from July 2023 and a significant 40.1% leap since the onset of the pandemic.

While the overall trend points towards growth, regional variations are apparent. Some major metropolitan areas witnessed a slight dip in single-family rents month-over-month:

However, the broader picture reveals that 49 out of the 50 largest metro areas experienced year-ago increases. The most substantial annual jumps were concentrated in the Midwest:

Factors Driving Single-Family Rent Increases

Understanding the forces behind these rent hikes is crucial for both renters and investors. Several key factors are contributing to the upward pressure on single-family rents:

  • Housing Shortage: The US continues to grapple with a housing shortage, particularly in the single-family market. Low inventory levels, driven by years of underbuilding and increased demand, give landlords more leverage to raise rents.
  • Rising Interest Rates: The Federal Reserve's efforts to combat inflation have led to significantly higher mortgage rates. This has pushed homeownership out of reach for many potential buyers, increasing the demand for rentals and putting upward pressure on single-family rents.
  • Inflation and Economic Uncertainty: Persistent inflation is impacting costs across the board, including property taxes, maintenance, and insurance for landlords. These increased operating expenses are often passed on to renters in the form of higher rents.
  • Demographic Shifts: The largest generation in US history, Millennials, are increasingly seeking out the space and amenities offered by single-family homes as they enter their prime family-raising years. This surge in demand further contributes to rising single-family rents.
  • Remote Work Flexibility: The rise of remote work, accelerated by the pandemic, has allowed for greater geographic flexibility. Many renters are now choosing single-family homes in suburban or even rural areas, driving up demand and rents in those markets.

Forecast for the Remainder of 2024: Cautious Optimism or Continued Climb?

Predicting the future of any market is a complex endeavor, but by analyzing current trends and potential influencing factors, we can outline possible scenarios for single-family rents in the latter half of 2024:

Scenario 1: Moderate Growth Continues

This scenario assumes that current trends largely persist. Factors supporting this outlook include:

  • Continued Housing Shortage: The housing shortage is a long-term issue unlikely to be resolved quickly.
  • Elevated Interest Rates: While a sharp increase in interest rates is not anticipated, they are expected to remain relatively high, continuing to impact affordability for homebuyers.
  • Steady Demand for Single-Family Homes: Demand for the space and amenities offered by single-family rentals, especially from Millennials starting families, is projected to remain strong.

Scenario 2: Growth Slows, Potential for Stabilization

Factors that could contribute to this scenario include:

  • Easing Inflation: Should inflation continue to cool, the pressure on landlords to increase rents to cover expenses may lessen.
  • Increased Housing Supply: Even modest increases in new construction, particularly in the single-family market, could help alleviate some pressure on single-family rents.
  • Shifting Renter Preferences: If economic uncertainty lingers, some renters might opt for more affordable options like smaller units or shared housing, potentially impacting demand for single-family rentals.

Scenario 3: Unforeseen Economic Factors

The real estate market is sensitive to broader economic conditions. Unforeseen events, such as:

  • Recession: A significant economic downturn could lead to job losses and decreased demand for rentals, potentially causing single-family rents to stagnate or even decline.
  • Changes in Government Policy: New legislation or regulations related to housing, interest rates, or taxation could have unpredictable effects on the rental market.

Navigating the Single-Family Rental Market in 2024

Whether you're a renter searching for your next home or an investor evaluating opportunities, understanding the dynamics of the single-family rental market is paramount.

Tips for Renters:

  • Start your search early: Due to low inventory, it's crucial to begin your search well in advance of your desired move-in date.
  • Be prepared to be flexible: Consider expanding your search geographically to include areas with potentially lower rents.
  • Negotiate with landlords: Don't be afraid to negotiate lease terms, such as rent amount or length of lease, especially in a competitive market.

Tips for Investors:

  • Conduct thorough market research: Identify areas experiencing high demand for single-family rentals and carefully analyze potential return on investment.
  • Factor in rising costs: Account for potential increases in property taxes, insurance, and maintenance when calculating expenses and setting rental rates.
  • Stay informed about market trends: Continuously monitor economic indicators, housing market data, and rental trends to make informed investment decisions.

Soaring rental rates are transforming the single-family rental market in 2024. Yet, underlying economic forces offer potential for both renters and investors who can navigate these changing conditions.

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Good News for Renters? Single-Family Rent Growth Slows Down

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The latest Single-Family Rent Index (SFRI) by CoreLogic®, a leading real estate data and analytics firm, paints a picture of stability in the single-family rental market for April 2024. Let's delve deeper into the report's findings to understand what this means for renters and potential investors.

Nationally, rents are exhibiting a wait-and-see approach. Year-over-year growth came in at 3%, mirroring the pattern observed for most of the past year. This stability extends across all four price tiers for single-family rentals, with the exception of the higher-priced segment, which showed a modest increase compared to April 2023.

A Tale of Two Rental Markets: Single-Family Homes vs. Apartments

The report highlights a growing divide between rental types. While single-family rentals are experiencing steady growth, attached properties like condos and townhomes are telling a different story. For the second month running, attached rentals witnessed a year-over-year decline of 0.5%. This trend is particularly evident in Florida markets, alongside Austin, Texas, New Orleans, and Phoenix.

Experts point to a couple of possible explanations for this divergence. The completion of new multifamily apartments in certain areas is creating more competition for attached rentals. This could signal a potential shift in renter preferences. As the pandemic eases, it appears Americans are prioritizing more personal space and are willing to pay a premium for it, if their budget allows. Additionally, the high barrier to entry into homeownership due to rising prices might be keeping some renters in single-family homes for a longer haul.

Insights for Renters and Investors

Whether you're a renter searching for a new place to call home or an investor considering the single-family rental market, here are some key takeaways from the report:

  • Expect rent growth to remain on an even keel. CoreLogic predicts that single-family rents will maintain their current pace of around 3% growth throughout the remainder of 2024.
  • Location is paramount. While national trends offer a general perspective, there are significant variations across different markets. St. Louis, for instance, saw a healthy 6.3% annual increase, while Miami and Austin experienced rental price dips. Researching local market trends is crucial before making any decisions. Consider factors like job market strength, overall cost of living, and the availability of single-family rentals in your target area.

Beyond the Headlines: A Look Ahead

While the SFRI provides a valuable snapshot of the current market, it's also important to consider factors that could influence future trends. Here are a couple of areas to watch:

  • Impact of economic conditions: Broader economic factors like inflation and job growth can affect renter demand and willingness to pay higher rents. If inflation continues to rise, renters might prioritize affordability over extra space, potentially impacting single-family rental demand. On the other hand, a strong job market could lead to increased renter incomes, allowing them to absorb moderate rent hikes.
  • New construction: The pace of new single-family home construction could influence rental vacancy rates and potentially impact rental prices. A surge in new construction could lead to increased competition among landlords, potentially putting downward pressure on rents. Conversely, a slowdown in construction could tighten vacancy rates and give landlords more leverage to raise rents.

Beyond Location: Digging Deeper into Market Dynamics

While location is undeniably important, successful renters and investors should also consider the nuances within a market. For example, the SFRI report highlights that the lower-priced tier of single-family rentals (<75% of the regional median) saw a more significant slowdown in growth compared to higher tiers. This suggests that budget-conscious renters might be feeling the pinch of rising costs and could be looking for ways to save. Investors focusing on this segment might need to factor in potentially lower rental income compared to higher-priced properties.

By keeping an eye on these emerging trends alongside market data, you can position yourself to make informed decisions in the ever-evolving world of single-family rentals. Remember, knowledge is power, and staying informed about market conditions is essential for both renters and investors to navigate the market with greater confidence.

Single-Family Homes and Their Potential

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As we continue to go through Morgan Stanley's “Housing 2.0: The New Rental Paradigm” we're more confident that 2012 will be a big year for real estate investors.  For one, the financial services company boldly concludes, “…gross rents are historically attractive relative to current distressed prices. Adding to this attractiveness is the fact that multifamily data shows rents continuing to rise.”

This is a good indicator for real estate investments. Anyone who’s been active in the market clearly knows why rental properties have become precious assets among investors. And for the newbie, it isn’t that difficult to discover the logic here. A depressed housing market with very affordable properties means that demand for homes are down. This indicates that buyers opt to rent properties instead of buying a home. With this surge in rental demand, real estate investors are just as excited as everyone else who are poised to earn positive cash flows from their rental properties.

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