Investor returns on rise for Mecklenburg rentals

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Mecklenburg County is picking up the pace on the return investors get on buying residential rental properties. The potential average gross yield for investors rose to 7.91 percent in the first quarter, while returns are expected to dip slightly nationally, according to a RealtyTrac report in which counties likely to yield the best returns in the first quarter of 2015 are highlighted.

RealtyTrac’s analysis found that investors buying U.S. residential property in the first quarter can expect to receive an average annual return of 9.04 percent, down slightly from 9.06 percent in the third quarter of 2014, the most recent residential rental property report from RealtyTrac.

Conversely, those in the Charlotte area get a 7.91 percent annual return, up from 7.06 percent in the third quarter.

Mecklenburg County ranks 323^rd out of 516 counties for buying residential rental properties, up from 425^th out of 586 counties in the third quarter of 2014.

Returns were calculated using annual gross rental yields: the average fair-market rent of three-bedroom homes in each county, annualized, and divided by the median sales price of residential properties in November.

Nationally, the median sales price for single-family homes and condos was $190,000 in November, RealtyTrac says. In Mecklenburg County, it was $170,000.

The average monthly fair-market rents on a three-bedroom home in Mecklenburg County rose 2.19 percent to $1,120 this year from $1,096 in 2014, RealtyTrac reports. That’s slightly higher than the average 2.03 percent hike experienced by all the counties analyzed, which combined have an average rent of $1,255, up from $1,230 last year.

Institutional investors bought nearly 18 percent of all single-family homes sold in Mecklenburg County in 2012, a figure that grew to 20.9 percent in 2013 before ebbing to about 19.7 percent in 2014. That’s one of the highest rates in the country, RealtyTrac says.

Gaston, Cabarrus and Union counties also had a higher-than-average percentage of sales to institutional investors.

Gaston County has an annual gross yield of 13.86 percent, placing it 34^th on RealtyTrac’s list. Cabarrus County rentals, meanwhile, have a return of 10.52 percent, giving it a ranking of 118. Union County has an annual return of 7.43 percent, placing it 364^th on the list.

Mecklenburg County placed second overall in the company’s “25 Counties Where Wall St. is Most Likely Your Landlord” report. The regions with populations over 100,000 that have the highest percentage of single-family homes now owned by institutional investors are Atlanta, Charlotte, Shreveport, La., Memphis, Tenn., and Oklahoma City, Okla.

Institutional investors are defined as entities that buy more than 10 properties in a calendar year. Institutional investors bought 8,852 homes in Mecklenburg County between January 2012 and October 2014, the third highest number in the U.S., according to RealtyTrac. The Phoenix area ranked first, followed by Houston, Charlotte, Dallas, Detroit and Las Vegas.

Nationally, institutional investors bought nearly half a million homes during that time, most often holding them as rentals.

RealtyTrac said the Charlotte area was a prime market for buying single-family homes as rentals because of its relatively low home prices, a healthy rental market and an influx of millennials moving here.

Topping RealtyTrac’s list for potential rental returns in the first quarter was Clayton County, Ga., in the Atlanta metro area, with a 25.83 percent yield, followed by Bibb County, near Macon, Ga., with a 22.33 percent return and Baltimore City in Maryland, with a 20.99 percent yield.

The New York City metro area ranked last, with a yield of 2.55 percent, followed by metro areas of San Francisco, 3.39 percent, and Kings County, N.Y., 3.72 percent.