Pierce County a good spot for rental home yield, RealtyTrac says

Staff writerApril 3, 2014 

Pierce County is the No. 5 best county in Washington for rental-home investors, according to data from national tracking firm RealtyTrac.

Owners of rental homes in Pierce earn a gross return of about 10 percent, compared with 6 percent in King County and 8 percent in Thurston.

To calculate the annual gross rental yields, RealtyTrac used median sales price for January 2014. It then used the average fair market rent on three-bedroom home for 2014 as listed by the U.S. Department of Housing and Urban Development. That rental figure was multiplied by 12, then that total was divided by the median sales price.

Figures used for Pierce County are a median sales price of $185,000 and a fair market rent of $1,472. For Thurston County, they are $201,500 and $1,365. For King County, they are $360,000 and $1,655.

The state's Nos. 1-4 counties for gross rental yield are Pacific (15 percent), Grays Harbor (12 percent), Stevens (12 percent) and Mason (10 percent).

Nationally, the worst place to find a cash-flowing rental investment is New York County, where the average fair market rent according to HUD is $1,852 but the median sales price of a home is $887,000. That leads to a gross yield of 3 percent. 

Most of the low-yield places are where you might expect: San Francisco, metropolitan Washington, D.C., and Los Angeles. Also included on the list of "bottom 20 markets" is Bozeman, Mont., population about 39,000, where rental investors could expect a gross yield of only 4 percent. The median sales price there is $309,400, according to RealtyTrac.

The best place to find rental returns is Wayne County, in Michigan, where the average fair market rent is $1,124 and the median sales price of a home is $44,900. RealtyTrac predicts an annual gross yield of 30 percent in Wayne County.

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