I live in a townhouse in Seattle, just a few miles north of the Amazon campus. The real estate market is extremely hot right now in my area. My own townhouse has appreciated in value ~$125,000 in the last three years. Everything that is put on the market sells within days….even condos and townhouses.
So I've noticed the townhouses in my neighborhood are mostly being purchased by investors. The average sale price of these townhouses is somewhere between $475,000 - $525,000 depending on size, condition, etc. Yet they are only renting out for around $2400 - $2800. I've never heard of one renting above $3000.
I'm unsure if the investors buying these places are individuals or large companies.
I'd consider myself a novice in all things real estate….but I know the 1% rule. What am I missing? Why would investors be snatching these places up if they can't get close to 1% back in monthly rent?