Interest rates are helping the compressed cap rates.

Yes, yields aren't what they were a year ago, but the flip side to compressed cap rates is that for any given increase in NOI you create, you add that much more value to the property.Now if you buy at a low cap rate and then they start increasing, that's a problem.

Cap rates across the valley are compressed and I really don't see that as changing anytime soon.

Compressed wood cabinets which are now being replaced with real wood because they are literally falling apart with time. 

Caveat is that turnkeys sell for the high-end of market value, so disposal in the first few years will likely lose moneyCONSSpecific market and asset risk is long-term (per property - mitigate by diversifying across different markets and property types)Spreading risk across multiple assets and markets requires multiple investments and quite a bit of due diligenceTurnkey properties (along with most other single-family homes) are becoming harder to acquire and thus more expensive, compressing returns and making it harder to find properties to buy with solid cashflowPortfolio risk from individual units is high (until sufficient number of doors achieved to mitigate this risk)Using leverage requires qualifying with personal credit - may become harder/more expensive with recently-announced changes at Fannie MayRequires some effort (to "manage the property manager") and decisions required at some point for capital expendituresQUESTIONSWhat unique risks are there with the turnkey single-family rental model?

The soils the foundation is bearing on are compressing and/or shrinking/swelling (clay).

In my opinion the spread is not high enough sinse if your home equity line of credit (which is again based on the prime rate) goes up your margins are getting compressed.

Even commercial cap rates are compressed now in King County.

You are right that A & B commercial assets in select areas are experiencing compressing cap rates but investors can still find good deals.

Returns have gotten compressed so people are being more picky.