Today RealtyTrac released a new report that shows the best and worst rental markets in America by county.
Although there appears to be good and bad markets in all parts of the nation, perhaps unsurprisingly, the vast majority of the best markets appear to be concentrated throughout the Midwest, while the worst markets tend to focus on the East and West coastlines, with California leading the pack with 6 of the top 20 worst markets, followed by New York (with 4) and Virginia (with 3).
To determine the best and worst markets, RealtyTrac divided the average 12 month rental income by the median sales price for residential homes in that county. The results show the Annual Gross Yield, which can give an indication to real estate investors which markets will fare better for cash flow.
According to RealtyTrac:
To calculate the annual gross rental yields we used the median sales price for January 2014 except in states where the sales prices is not required to be disclosed on the sales deeds. In those non-disclosure states we used the median list price for January 2014. The rental rates we used were the average fair market rent on three-bedroom home for 2014 from the U.S. Department of Housing and Urban Development.