The Rise of Single-Family Rentals in 2025

In 2025, the real estate market is undergoing a significant shift, and the demand for single-family rentals (SFRs) continues to soar. Historically, single-family homes were associated primarily with ownership, but evolving societal and economic factors are driving a surge in interest for rental properties in this category. This blog delves into the factors fueling the rise of single-family rentals in 2025 and how investors, brokers, and wholesale partners can take advantage of this growing trend.

Changing Housing Preferences

Millennials and Gen Z, the largest portion of the renting population, are reshaping the housing market. Unlike previous generations, many young adults are delaying homeownership or choosing to forgo it altogether. The flexibility and convenience that come with renting, particularly single-family rentals, have become more appealing. SFRs offer tenants more space, privacy, and a sense of community when compared to apartment living, which is attractive to renters seeking a home environment.

This shift in preference presents opportunities for investors and brokers to tap into an emerging market, especially in suburban areas where these housing options are varied. For lending partners, understanding this demographic shift can lead to identifying the right properties in desirable locations and structuring deals that appeal to these tenants.

Flexibility and Lifestyle Choices

Remote work and the gig economy have played a large role in the surge of single-family rentals. The ability to work from anywhere allows individuals to move away from urban centers and settle in suburban or even rural locations. These regions typically offer larger living spaces, more affordable rents, and amenities such as yards, parks, and excellent schools—attractive features for families and individuals seeking an improved quality of life.

As remote work becomes more permanent, the demand for single-family homes in less densely populated areas will continue to grow. This is where lending partners can find substantial opportunities, as identifying properties in areas with these emerging trends can lead to profitable deals for real estate investors looking to expand their portfolios.

Economic Factors Driving the Shift

While homeownership has traditionally been seen as the pinnacle of financial success, today’s economic landscape is challenging that notion. Escalating home prices and stricter mortgage requirements make it difficult for many first-time buyers to enter the housing market. In contrast, renting offers a more accessible option with fewer upfront costs and fewer risks associated with property depreciation or maintenance.

Single-family rentals offer a more affordable, less risky alternative for those who can't or prefer not to own a home. Investors have noticed this trend and are increasingly turning to single-family rental properties to meet the demand for this type of housing. Brokers and lenders, particularly those working with investors, can benefit from understanding these economic dynamics and offering tailored solutions that address investor goals, from securing financing for SFR properties to identifying high-demand areas.

Investor Appeal: Why Single-Family Rentals are on the Rise

The growing demand for single-family rentals has caught the attention of investors, including institutional players like real estate investment trusts (REITs) and private equity firms. These groups are rapidly acquiring single-family homes to build portfolios that generate consistent rental income, provide diversification, and hedge against market fluctuations. The potential for long-term appreciation also makes SFRs an appealing investment vehicle.

For wholesale lenders, this trend is a clear signal of an expanding market. The opportunity to work with institutional investors and private buyers to acquire SFRs in hot markets can be lucrative. Real estate professionals can identify undervalued properties that can be quickly flipped or leased out for consistent cash flow.

Market Dynamics and Affordability Challenges

However, the rise of institutional capital entering the single-family rental market has led to increased competition and rising property values in certain regions. While this bodes well for investors looking for long-term appreciation, it has raised concerns over affordability for low- and middle-income renters.

As property prices rise, renters in desirable neighborhoods may struggle to find affordable housing options. Policymakers are increasingly pressured to address housing affordability issues, which may lead to regulations that could impact investor returns. For wholesale lenders and brokers, staying on top of local policy changes is crucial, as these shifts can affect deal structures, rental rates, and long-term property values.

For investors, a strong understanding of local market dynamics will be necessary to navigate potential changes in rent control laws and tax incentives, ensuring that their investments remain profitable. Real estate professionals can help by identifying emerging markets or distressed properties where these changes are less likely to impact profitability.

Technological Innovation in the SFR Market

Technological advancements are changing the way single-family rental properties are managed and leased. Property management platforms and digital marketplaces are making it easier for landlords to automate rent collection, streamline maintenance requests, and conduct virtual property tours. These innovations not only improve the efficiency of property management but also enhance the tenant experience.

Smart home technology, including security systems, smart thermostats, and keyless entry systems, is becoming a common feature in rental properties. These upgrades add value for both tenants and investors. For brokers and wholesale lenders, understanding the value-add potential of smart home features can be key when identifying properties with higher rental demand and better resale value.

The Role of Wholesale Lenders in the SFR Market

Wholesale lenders can play a critical role in the growing SFR market by helping their clients find properties in high-demand areas and connecting them with attractive financing. With the influx of institutional investors into the SFR space, lending professionals can also provide valuable market intelligence to identify properties with strong potential for rental income and appreciation.

For example, investors who specialize in distressed properties can identify homes that may not be attractive to traditional homebuyers, but can be quickly turned into profitable rental units through renovation. By working with private lenders or exploring creative financing options, these borrowers can structure deals that maximize leverage and minimize risks for both investors and sellers.

The Future Outlook for Single-Family Rentals

As millennials and Gen Z continue to drive the demand for rental properties that align with their lifestyles, single-family rentals are poised to remain a prominent feature of the housing market in the years to come. Brokers and wholesale lenders have an important role to play in ensuring that the rise of SFRs continues to benefit all parties involved.

By staying informed on market trends, investor preferences, and technological innovations, professionals in the real estate industry can adapt to this changing landscape and capitalize on the opportunities it presents.

RCN Capital: Your Partner in Financing Single-Family Rentals

RCN Capital is here to help investors finance their next rental property with flexible, competitive loan options. Whether you’re looking to acquire, refinance, or renovate single-family rental properties, we offer financing programs tailored to your project. We work with real estate professionals, developers, and small business owners across the country to help you secure the financing you need to reach your investment goals. Connect with RCN Capital today to explore your options and take the next step in growing your business or real estate portfolio.