When the Rent-Neutral homes pop up (assume they are REO) have you done a comp check to find out when similar sales have gone for in the past 6 months. What are these homes doing to the neighborhoods.
This is exactly why this problem is about to get catastrophic. These REO reduce values by 20-50% overnight. a few people in a neighborhood get a great deal and 100 people are thrown into a negative equity position. of those, 35% may default. Of those, 75% will end up as REO and in nine months you have another 25 distressed properties in the neighborhood throwing these Rent-Neutral homes in a negative equity posisiton.
Nasty nasty snowball. Rents may come down sharply too if the inventory surges and values drop much more. That one, nobody thinks of.
