MyPerfectMortgage.com, a real estate platform, published a study that determined the 101 best cities for single-family home rental cash flow in 2023, with Detroit leading the list at $722 and Sunnyvale the worst at -$6,862.
The report analyzed data on home prices, property tax rates, typical rents, vacancy rates and more to determine where single-family rental investors have the best opportunity to make a profit.
Cash flow refers to the inflow and outflow of money, that is, it includes all your expenses and all sales or receipts.
“Investors in single-family home rentals have a tough job,” said Tim Lucas, senior editor at MyPerfectMortgage.com. “It’s much easier to find cash flow in apartment buildings or small multi-family properties. Single-family residences have high per-unit property taxes and maintenance costs.”
Lucas continued: “Acquisition costs are also through the roof. Home prices are up more than 35% since the second quarter of 2020, while rental income is up just 17% over the same period. Mortgage rates have more than doubled. These factors are really putting pressure on single-family investors looking for yield.”
The study collected more than 110,000 data points and considered 312 US cities in the analysis. The top 101 cities had the most advantageous combination of high rents, low home prices, lower-than-average property taxes, and low vacancy rates.
According to MyPerfectMortgage.com, the potential monthly cash flow in the top 10 cities is:
1, Detroit, Michigan, with $722 cash flow
2, Jackson, Mississippi, with $690
3, Cleveland, Ohio, for $645
4, Birmingham, Alabama, with $609
5, Lehigh Acres, Florida, with $580
6, Baltimore, Maryland, with $578
7, Philadelphia, Pennsylvania, with $475
8, Montgomery, Alabama, with $380
9, Toledo, Ohio, with $375
10, Memphis, Tennessee, with $375
The 10 worst cities for cash flow:
Not all cities fared so well. Following the methodology, an investor buying a single-family home in Sunnyvale, California could lose $6,862 per month thanks to relatively low rents, nearly $900 per month in property taxes, and a lower price. typical housing close to $2 million.
303, California, with cash flow of -$3,963
304, San Jose, California, with -$4,004
305, Irvine, Calif., with -$4,121
306, Fremont, Calif., with -$4,409
307, Cambridge, MA, with -$4,693
308, Santa Clara, California, with -$4,712
309, Berkeley, Calif., with -$4,869
310, San Mateo, California, with -$5,201
311, Bellevue, Wash., with -$5,423
312, Sunnyvale, CA, with -$6,862
For more details on the MyPerfectMortgage.com study, go here.
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