While many people dream of having enough money to start a real estate investing career, scores of existing homeowners have become investors by default.
Dubbed “accidental landlords,” these homeowners have wound up collecting rents after refusing to lower the sales price on their primary residence, preferring to convert it to a rental property until interest rates drop and they can sell the home for what they feel it’s worth.
Such has been the extent of the trend that these newbie landlords with full-time jobs are influencing the rental market, forcing institutional landlords to rethink their plans and creating fewer opportunities for homeowners.
Accidental Landlords: How They’re Changing Rental Supply
According to a recent Parcl Labs report, stubbornly high mortgage rates, increased inventory, and waning buyer demand have forced many homeowners to delist their homes and instead try their hand at landlording.
In Sunbelt markets such as Atlanta, Dallas, Phoenix, Houston, Tampa, and Charlotte, this has put them in direct competition with large institutional single-family rental (SFR) owners. Rental inventory has swelled by around 20% year over year, with much of it coming from formerly owner-occupied properties.
“When these home sellers cannot find buyers, they face three choices: delist and wait, cut [the] price to find market-clearing level, or convert to rental,” Jesus Leal Trujillo, principal data scientist at Parcl Labs, wrote in his report.
Parcl Labs analyzed the impact. In the six Sunbelt markets where large-scale institutional landlords, such as Invitation Homes, American Homes 4 Rent, and Progress Residential, hold over one-third of their collective assets, the number of accidental landlords has risen…