(10) if the economy slows down and fewer people have money for rent, rents may drop, scaring buy-to-rent investors out of the market. Cap rates aren’t great (maybe 7-9%, 9% if you’re lucky) in SD, and you need 5.5-6%+ to cash flow if you borrow with a “normal” downpayment.
Personally, I think that current prices are sustainable. I don’t think we’ll see a return to the bubble any time soon (maybe unless we’re talking about high-end stuff), but I don’t see prices dropping a lot either. Maybe 10% in either direction.
