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.”
| Metro Area | Cap Rate |
| Memphis | 7.3% |
| Oklahoma City | 6.9% |
| Pittsburgh | 6.4% |
| Cincinnati | 6.4% |
| Houston | 6.1% |
| Indianapolis | 6.0% |
| Cleveland | 5.9% |
| Baltimore | 5.9% |
| Milwaukee | 5.9% |
| Tampa | 5.9% |
Based on cap rates, the bottom (least attractive listed first) 10 SFR investment markets are:
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
