Average rental yields on US property showed mixed results during the first five months of this year. Some counties registered year-on-year rises, whilst in others there were slight decreases as the housing market stabilised. However, overall, buy-to-let property in the US continues to be “a brilliant strategy”.
The most recent analysis on the US buy-to-let market carried out by RealtyTrac and published last week looks at rental yields obtained on 3-bedroom properties in 285 counties throughout the country. On average, owners of a buy-to-let property in the US could expect to earn 8.94 per cent this year compared to 9.07 per cent last year.
RealtyTrac analysts believe that the current trend shows stabilisation in the market as US property prices experience more moderate appreciation and fall into step with rental rates. “Returns from buy-to-let property are becoming more predictable,” said Daren Blomquist, vice-president of RealtyTrac, commenting on the results of the report.
Mr Blomquist firmly believes that investment potential in US buy-to-let property remains high and describes it as “a brilliant strategy”. “It allows investors to hedge their bets in a real estate market shifting away from homeownership and towards a sharing economy,” he said.
In 116 of the countries surveyed (41 per cent of the total), potential returns from buy-to-let properties increased due to the fact that the increase in rental rates was higher than the rise in house prices. Counties registering the highest increases in rental yields include Philadelphia with a 17.67 per cent return potential, Cayahoga in Ohio where yields can reach 14.62 per cent and Jacksonville in Florida with the potential for a 13.39 per cent annual return.
Buy-to-let property in Florida counties included in the survey continue to lie between the 6.61 per cent obtained on average in Lucie County and the 14.6 per cent possible in Hernando County. Highlights within the state include Osceola and Orange Counties (home to Orlando) where gross rental yields on 3-bedroom homes average between 9.87 and 11.45 per cent a year. In Orange County, the average monthly rental rate stood at US$1,403 between January and May with the average sales price at US$170,566.
In Duval County (home to the city of Jacksonville, one of the fastest growing in economic terms in the state), average annual rental yields were a high 13.39 per cent. Monthly rentals for a 3-bedroom property in Jacksonville were around US$1,311 while the average price for such a property stood at US$117,494.
Further south in Sarasota and Hillsborough Counties, potential returns from buy-to-let properties ranged from 7.65 to 8.11 per cent a year. The monthly rate for a rental was US$1,294 in Charlotte County and US$1,368 in Sarasota. Prices for property in these two states average considerably higher than in Jacksonville with a 3-bedroom property in Charlotte County costing around US$191,479. In Sarasota, it costs an average of US$214,685.