I've not read anything that indicates what percentage of sales are going to investors. I know in the low priced areas its a fairly high percentage. But are these "investors' factoring in rent declines? I remember in the early 90's a few so called investors I knew got caught by falling rents. They bought foreclosed homes as rentals but factored their numbers on 1990 rents. Unfortunately 1993 rents were quite a bit lower and those guys ended up losing quite a bit of money.
I've watched a few homes near me sell to investors. All of them have "for rent" signs in the yards (well, one did get rented). The rents they are asking are delusional in my opinion. They might have gotten those numbers 3 or 4 years ago but in today's flooded rental market they have no hope. The one house that did rent sold for about 40% less than I would have expected it to. That guy is golden (and I'd love to know how he got that house for the price he did!). But the others are in a world of hurt if they need those rents to cover the monthly nut. The house next door I a assume went to investors. They closed in mid January and have not moved in yet. They have been in it painting for months. I think they must be painting it with artists brushes or maybe a Q-tip. The house was is in good shape when it sold. All in needed as a cleaning and a stove and it could have rented. Now I know what it closed for and I have a good idea of what it can rent for. Unless they put a helluva down payment there's no way that property will generate any profit.
In Orange county rents have fallen nearly 7% in the last year. I fully expect to see at least a 20% decline in the price of rentals in the IE over the next couple of years . I would not at all be surprised to see that number hit 30% or more. How many of these new "investors" have factored that into their P&L equations?