As inventory rises for rental homes here in the Kansas City area I am beginning to see rent rates flatten out a bit. I don’t have quantitative numbers to back my hunch…but it’s a hunch based on all my years of real estate investing experience. Passive money is coming back in to the real estate investing market here in KC and with that has come lower cash on cash returns.
The next step will be that we will begin to see vacancies rise as all these new rental homes come on the market for rental purposes. Trulia did a post on flattening rental rates nationally and here is a great quote from the article;
“Why have rents stopped rising on single-family homes? More supply. Investors have purchased single-family homes – including many foreclosures – and are renting them out. In fact, the number of single-family rentals nationally has increased by almost one third since the housing market last peaked: that’s nearly 4 million more single-family homes rented in 2012 than in 2005.”
You read that right…an increase of 1/3. That is significant.
Don’t push the panic button just yet. But be looking to adjust your expectations.