A lot of markets are experiencing growth in the rental sector, which in turn is attracting investors that hold single family homes to rent instead of flip. So what markets are the best for investor returns?

The real estate management company, HomeUnion, recently complied a list of best and worst metros by cap rates. A property's cap rate is the correlation between a property's net operating income (rents minus expenses) and the market value of the property. For example, HomeUnion said that a $100,000 home that rents for $1,000 per month ($12,000 a year in gross income) and has $4,000 in annual expenses (bringing the total to $8,000 net income), would have an 8% cap rate — 8,000 is 8% of 100,000. 

According to HomeUnion, here are the top 10 single-family investment rental markets (cap rate included):

1. Memphis (7.3%)
2. Oklahoma City (6.9%)
3. Pittsburgh (6.4%)
4. Cincinnati (6.4%)
5. Houston (6.1%)
6. Indianapolis (6%)
7. Cleveland (5.9%)
8. Baltimore (5.9%)
9. Milwaukee (5.9%)
10. Tampa (5.9%)

Main Article: "Here are the 10 Top and Bottom Investment Markets for Single-Family Rentals," HousingWire (02/23/16)