I don't think the reality here is nearly as sinister as you make it out to be. If an investor is making an appealing return at the price you're selling it to hi

I don't think the reality here is nearly as sinister as you make it out to be. If an investor is making an appealing return at the price you're selling it to him at then either you're making a poor financial decision by selling or he's playing the game better. I think it's the latter in this case, and I'll explain why. As background: My father was a handyman turned landlord. I've worked on rental houses since 1st grade. A large number of landlords have a similar background. It's not a coincidence. They make money off properties in the price range you describe in a very particular way - they do nearly everything themselves. It is an arbitrage on the cost of maintenance. Think about it this way - if an electrician/plumber/contractor is going to charge $100/hour to do work on the house and rental prices have this cost baked into them, then you can effectively earn $100/hour by doing the work yourself. Enough people do this that the equilibrium price drops below the cost of having professionals do all of the work. Since that is probably the situation you're in, of course you're going to lose money. You seem to have said you have external management on top of that. That in itself would pretty much wipe out the expected yield. The cashflows from <$200,000 houses are WAY too low to have someone else managing it for you. So your game theoretic analysis is somewhat correct, but it's more of a feature than a bug. There is an army of people willing to do unglamorous work with their nights and weekends, and as a result they are not only able to do well by themselves but also systematically lower the cost of housing. You also made a dangerous statement about historical returns on real estate. Historically, across a wide span of markets, real estate tracks wage growth. The recent shift since the mass financialization that started in the 80s being a complete aberration. The alternative is that the real cost of living would grow exponentially. Even with the excess credit of the last 15 years that hasn't happened for most of those outside of SF. If you want to buy a house to live in, I suggest you view it as a consumption good and not an investment. Your money will almost certainly do better in equities.