[afarrell]

Why would it drive up rents? If people invest in properties to then let/rent them out, then there will be more homes on the rental market. The thing that will prevent this is if there are laws preventing new construction?

The thing that prevents new construction in many areas is laws designed to "preserve the character of the neighborhood". Homeowners/investors have an incentive to push for these laws to keep housing prices high. However, if they actually own a diversified asset that can grow with new construction by adding new properties, then that incentive is reduced.