Central Florida landlords seem to have it all — higher average profits than elsewhere in the U.S. and growing numbers of millennials and baby boomers to sign leases.
Orange and Osceola counties had large pools of renters in their 20s and 30s and offered high rental yields for landlords, according to the Residential Rental Property Report by RealtyTrac. Lake County, which also had relatively high yields for rental-property owners, was ranked as a strong market for leasing to baby boomers.
RealtyTrac ranked counties that had both higher-than-average rental profits and growing demand from millennials and baby boomers, who are considered strong prospects for rentals because they are either in their early career years or are downsizing. The research company considered only single-family homes.
“At the end of the day, this is about where investors can get the best yield on their investment,” said Daren Blomquist, vice president of RealtyTrac. “It’s interesting that Orlando has both components — a growing share of millennials and … a growing share of baby boomers.”
RealtyTrac defined millennials as people born between 1977 and 1992. Boomers are those born between 1945 and 1964.
Overall for Metro Orlando, the average rent is expected to increase 3.4 percent this year, to $945 per month, according to a separate report released Tuesday by Marcus & Millichap. The increase would be the fifth consecutive annual rise in rents for the region.
To determine the country’s hottest markets for landlords, RealtyTrac analyzed population trends, fair-market rent of three-bedroom homes and median residential sales prices to highlight counties where rental yields were highest overall and for leasing to millennials and baby boomers. The 370-county analysis found that investors buying residential rental property during the second quarter got an average annual return of 9.97 percent, which was down from 10.6 percent a year ago.
None of the four counties in Metro Orlando ranked among the top markets for overall rental yields, but three of the counties ranked high for yields in areas with growing populations of millennials and baby boomers.
Of the nation’s largest 370 counties, Osceola ranked 10th and Orange ranked 13th for high yields among markets that were flush with young renters. In Osceola, a quarter of all residents were millennials, and their number increased 13 percent from 2007 through 2013. RealtyTrac reported that landlords in that county could expect a 12 percent annual return.
Orange County had a slightly higher proportion of millennials than Osceola and a sharper increase in that population from 2007 to 2013 — 30 percent. The rental yield was lower, however — 10.8 percent — because higher median prices in Orange drove up the cost of ownership for landlords.
At the other end of the age spectrum, Polk County was rated fifth and Lake County 10th in the nation as emerging baby-boomer markets with relatively high rental yields.
About a quarter of Polk’s residents were baby boomers, and that group grew 13 percent from 2007 through 2013. The rental yield there, according to the report, was 14.6 percent.