McKinney, Frisco, Plano, Little Elm are flooded with rentals right now. Not sure what the dynamic is, but could be a few reasons.
Little Elm is a Bedroom community, I remember when gas prices went up years ago, I got a flood of calls of people wanting to move. Commuting in the F350 and Expedition got expensive. Almost everyone in Little Elm commutes somewhere.
The other cities I think there are a few dynamics....move up owners....been there 10 years, and now have more income, kids, family and low basis in the old house. Some sentimental value coming from countries where they perhaps never owned and culture of never selling. So they move up and rent the old house. They'll probably beat every true investor on rent as they just try to cover expenses on 1/2 your current mortgage and 1/2 your interest rate. Forget the 1% rule, they'll rent at 1/2% rule all day long.
I think there are also some people who moved during pandemic thinking WFH was forever. They bought the house and now boss says come back to work in Seattle or San Jose 3-4 days a week. Doesn't make sense to commute, so they rent....and those rents looks super super low to me, but they can't really sell and buy in CA or WA. That' won't end well I expect. Put a tenant in a new $600-$800,000 at $3000-$4000/month and those houses will be trashed in 3-4 years when they figure out they're not returning to DFW.
Also many of the buyers in those areas have different goals than local investors. Many are trying to preserve capital vs earning returns. Hard to compete with that. That means they're from countries with crazy inflation or risk of government seizure of assets, or maybe even today war torn/risk countries. So many of them don't care about ROI, just protect my capital. Sometimes I call that the 0% rule.
