South & Midwest Regions Best for SF Rentals

From the Wall Street Journal:

Investors in single-family rental housing face the brightest prospects for steep returns in a string of cities in the Midwest and South, many of which were hit hard in the economic downturn, according to a study released Wednesday.

Foreclosure-tracking firm RealtyTrac ranked the 20 best markets in the country for landlords to buy single-family rental houses by calculating the annual return an investor could achieve from buying and renting out a typical three-bedroom house.

Memphis, Tenn., Saginaw, Mich., Toledo, Ohio, and Jacksonville, Fla., were among those on the list. In Jacksonville, the median sales price for a three-bedroom home is $90,000, and the average rent is $1,198 a month, according to figures compiled by RealtyTrac. After setting aside money for taxes, fees and maintenance, the cash flow from renting such a property is $719 a month, or $8,628 a year. That works out to an annual yield of 9.59% of the purchase price of the home, the eighth-best in the country.