IRVINE, CA—Memphis, TN sits atop a ranking of the most and favorable single-family rental (SFR) markets measured by cap rate, with a cap rate of 7.3%, while the lowest cap rate in the study is San Francisco's 2.7%. This according to a recent ranking by HomeUnion, an online real estate investment management firm enabling value investing in SFR properties.

Cap rates are the relationship between an investment property's net operating income (rents minus expenses) and the market value of the property.

“Other asset classes underperformed in 2015, while single-family rental investors saw healthy returns in terms of income and appreciation in markets across the country,” explained Steve Hovland, manager, research services at HomeUnion. “Favorable supply and demand fundamentals and shifting views about renting among Millennials and seniors, created increased occupancy rates, which resulted in higher rent prices.”