How SFR Investors Can Win in Today’s Market

The housing market isn’t what it was three or four years ago—and it’s not going back anytime soon. For single-family investors, this means adapting to a “new normal” where higher mortgage rates, increased carrying costs, and a rise in resale inventory are reshaping the investment landscape.

Well gone are the days of buyers lined up around the block and bidding wars on every listing. But that doesn’t mean opportunity has vanished—it just looks different now. Many of the conditions that are causing hesitation in the broader market may work in favor of investors who approach this cycle with discipline, creativity, and a long-term mindset. 

From financing strategies to market-specific deal flow as listings sit longer, to improved pricing power on insurance for larger portfolios—today’s environment rewards those who are prepared to pivot. The good news? With the right approach, investors can still uncover solid opportunities to build wealth, grow cash flow, and position themselves ahead of the next upcycle.

Here are five things investors can do to win in today’s housing market.

Buy the Deal, Not the Fed

Waiting on the Fed to cut rates is not an investment strategy—it’s a gamble. 

While many would-be investors sit on the sidelines, hoping for a pivot that may come too late or too slowly, experienced investors are staying active and searching for deals that pencil out. They’re underwriting conservatively, negotiating more aggressively, and prioritizing deals that make sense in today’s market—based on current rates, rents, and risks. Rather than chasing hypothetical upside tied to future monetary policy, they’re baking in downside protection on the front end. It’s not about timing the Fed. It’s about structuring the deal so that it works with the hand you’re dealt today.

More Inventory Is An Opportunity for Value Buyers 

After a long stretch of near-record-low active inventory, single-family investors are finally seeing more resale homes come to market. For some, that might sound like bad news—more competition, less pricing power. However, the reality is that this normalization creates opportunities, particularly for disciplined buyers who focus on value. In some markets, specific properties are now remaining on the market for extended periods. Sellers growing fatigued by slow sales may be more willing to negotiate, opening doors for buyers to purchase homes below their previous peak prices. Especially in Q3 and Q4, expect pockets of deals that require some repairs or capital expenditures—classic value-add plays where investors can boost rents and equity over time.

Investor Sentiment: More Bullish Despite the Headwinds

Interestingly, when we fielded the LendingOne–ResiClub SFR Investor Survey this quarter, we found that investors are becoming more confident about buying—even as they acknowledge that the market feels slower and mortgage rates are higher than previously expected. In fact, in Q2 2025, 79% of single-family investors said they’re likely to purchase at least one more property in the next 12 months. That’s up from 61% in Q2 2024 and 77% in Q4 2024.

This shift signals that many are embracing the new normal rather than waiting for old conditions to return. They recognize that market dynamics have changed permanently and are adjusting acquisition criteria accordingly, or they may be attracted by rising inventory and some markets turning into buyers’ markets. This pragmatic mindset bodes well for the single-family investment space. Rather than being paralyzed by uncertainty, investors who stay disciplined, focus on fundamentals, and pursue value will be best positioned to succeed.

Insurance Stability Emerging After the Storm—Don’t Be Afraid to Policy Shop

The last few years have seen a surge in property insurance costs, fueled by rising replacement values. However, according to our intel, this lagged inflationary spike is beginning to level off. This provides investors with better clarity for cash flow projections and long-term planning.

And if you’re savvy, you’ll even be able to get it lowered a little.

For those with multiple properties, now is an ideal time to explore portfolio-level insurance, which spreads risk across your holdings and can unlock significant discounts. 

Even for smaller landlords, policy shopping—getting fresh quotes, reassessing coverage levels, and comparing carriers—can yield real savings in a market that’s no longer spiking month after month.

It’s Time To Be Strategic! 

Yes, the housing market today looks very different from the frantic boom of the pandemic years. But for single-family investors willing to think strategically and embrace change, it remains fertile ground for growth. Whether it’s taking advantage of ARMs, leveraging portfolio-level insurance savings, or hunting down value deals in rising inventory.

The market’s “new normal”—and no one truly knows how long it’ll last—might require a little more patience and flexibility, but it also offers a real opportunity for those ready to adapt and invest with their eyes wide open.

Market Softness Brings Opportunity

As we head deeper into 2025, the real estate landscape continues to evolve. Investor sentiment is mixed—part optimism, part hesitation. And frankly, that’s understandable. Inventory is creeping up, buyer urgency is softening, and certain pockets of the market feel like they’re in a holding pattern. But for adaptable investors, this period could offer the best entry points we’ve seen in years. 

That may not sound exciting on the surface, but for investors with capital, patience, and a solid strategy, this type of market tends to reward consistency over speed.

To help cut through the noise and identify the signals that truly matter, I’ve outlined five crucial aspects of the current real estate environment that every investor should know.

1. Inventory For Sale is Rising

After several years of breakneck price growth and ultra-low inventory, we’re entering a healthier—if slower—market cycle. We’re finally seeing inventory levels normalize in some markets—especially in the former boomtowns in the Sun Belt. 

Properties are sitting a bit longer, sellers are negotiating again, and the power dynamic is beginning to shift in more markets. Days on market are ticking up. Home price growth and rent growth have cooled or plateaued in many metros.

For investors, this is welcome news. Why? Because the past few years have made it tough to source value-added deals. Now, with the pace of resale activity subdued, properties are sitting a bit longer—and investors have a real chance to negotiate again. Whether you’re a flipper or a buy-and-hold operator, this rebalancing opens doors that were closed during the frenzy.

2. Opportunity in Softness: Why Some Weakness May Be Bullish

It’s also worth remembering that real estate markets don’t move in straight lines. Periods of cooling often set the stage for the next leg up. Investors who can stomach short-term uncertainty may find themselves well-positioned when the cycle turns.

Active housing inventory for sale continues to rise, especially in the Sun Belt metros, where higher inventory is giving savvy investors more leverage at the negotiation table—and more room to underwrite conservatively.

The ongoing growth in inventory is driven by strained affordability and rate-induced sluggishness. The fundamentals remain intact—the long-term outlook for rents and demographics is still supportive. This is just a market recalibration. And those who view it through that lens may come out ahead.

3. Be Mindful of Builder Competition

If you’re flipping or leasing homes near active new-home communities, tread carefully. Builders—who’ve seen their inventory of completed unsold homes jump—have affordability advantages you don’t. They can offer big rate buydowns, closing cost incentives, and sometimes eat significant price cuts to move product.

Say you’re planning to list a renovated home for $350K in a school district where a builder is also marketing new construction at $350K to $375K. If your end buyer is rate-sensitive, they may opt for the new build—especially if the builder is throwing in sweeteners.

It’s crucial for investors to avoid direct competition with a national builder’s incentive budget. Knowing the market, understanding comps, and focusing on product differentiation can help navigate this landscape.

4. Stay Disciplined on Tenant Quality

There’s growing chatter about the broader economy softening. Whether or not we enter a true downturn, it’s worth noting that consumer confidence is fragile—and that matters when you’re underwriting tenant risk. Lower-income households, in particular, are showing more strain. Credit card delinquencies are up. 

This environment means staying disciplined on your screening, being conservative on your underwriting, and planning for contingencies if rent growth slows or turnover rises.

5. Adaptability Remains Your Greatest Asset

No, I don’t think the average 30-year fixed mortgage rate will return to 4.0% anytime soon. And no, we won’t see the price appreciation that defined 2020–2022. But that doesn’t mean the opportunity is gone—it just means the playbook is different. 

For years, this asset class rewarded speed. Now, it’s rewarding discipline and adaptability. That means thinking creatively about acquisitions (bulk deals, off-market leads), getting sharper on your renovation budgets, and being intentional with your portfolio strategy. The investors who thrive in this next phase won’t be the ones waiting for yesterday’s market to return. They’ll be the ones who adjust their approach and find upside in today’s more balanced—but still very investable—landscape.

The real estate investment landscape is looking brighter and more promising as 2025 begins. Following a period of significant changes resulting from the pandemic, real estate investors are now benefiting from more stabilized borrowing costs and a clearer economic outlook. As the housing market steadies and for-sale inventory returns to normal levels, we expect more favorable buying opportunities to emerge in some markets.

While investors haven’t seen the significant pullback in mortgage rates many had hoped for when the Federal Reserve began its rate-cutting cycle, several factors are coming together that could make 2025 a year of opportunity for investors.

Here are a few things to know as the 2025 housing market kicks off.

Election Uncertainty Is Behind Us—and It’s Fueling Momentum

Uncertainty surrounding elections can significantly impact major capital and investment decisions. We saw a build-up of decisions that did not happen for a few months leading up to the election. There’s always going to be a psychological component to the housing sector and our investors were seeking more certainty on housing, interest rates, and economic policies.

With the political landscape now more transparent, we’re seeing a first-hand tangible uptick in deal-making and long-term planning. While there’s still uncertainty surrounding the 2025 fiscal policy agendas, some investors who had delayed decisions last year are jumping back into the market.

Improving Investor Sentiment

Among single-family investors we surveyed in Q4 2024, 76% say they are either “very likely” (55%) or “somewhat likely” (21%) to buy at least one investment property in 2025.

This marks improving investor confidence: In our Q3 2024 survey, just 60% of single-family investors said they were “very likely” (38%) or “somewhat likely” (22%) to buy at least one investment property in the next 12 months.

While single-family investors may not be overly bullish, they are cautiously optimistic. 76% expect at least mild home price appreciation in their local market in 2025, and 84% plan to raise single-family rents this year.

Inventory Is on the Rise

Total active listings for sale are beginning to rebound in certain parts of the country, even as new listings remain subdued.

Much of this rise in active inventory has been concentrated in the Southwest and Southeast, areas that experienced significant demand during the pandemic housing boom. As active inventory climbs, investor buyers in these regions gain some negotiating power.

Analysts at LendingOne expect year-over-year growth in U.S. active inventory to continue in 2025. It might not be a big inventory jump, but it will help move housing into a more balanced market.

Big Picture

As the U.S. housing market evolves in early 2025, I expect investment activity to rise and investors to adapt to the changing market. Institutional and retail investors are recalibrating to meet the demands of a market characterized by stabilized interest rates and normalizing inventory. While challenges persist, particularly around affordability and supply, opportunities are available for those with more value-added strategies. Inventory and days on the market of properties requiring renovation have increased, which is positive for real estate investors going into the year.

The Housing Market is at an Inflection Point

As we prepare to head into 2025, the U.S. housing market is at an inflection point. We’ve seen unprecedented low inventory levels over the past few years, and we still face a national market defined by limited supply. This inventory scarcity in many markets has kept home prices high, given investors few homes to consider, and made it challenging for single-family investors to find acceptable deals.

The good news? 

Now that the average 30-year fixed mortgage rate has dropped to 6.08% as of last week, and the Fed has shifted into rate-cutting mode, some homeowners—who might have wanted to sell their home and buy something else over the past two years but didn’t, unwilling to trade their 3% or 4% rate for a 7% or 8% rate—may now consider making the move if rates stay below 6.0%.

For single-family investors and landlords, this could create opportunity. 

While the market may not be delivering major price corrections, I expect that transaction volumes will increase as rates stabilize. This uptick will foster a sense of optimism in the market. A slight increase in turnover within the existing home market will create more opportunities for investors to find the right deals, even if we don’t experience significant price drops or the same level of rent appreciation we had over the prior years. Moving forward, maintaining realistic expectations regarding proforma rents and expenses will be key for investors as they evaluate the increased inventory to the market.

Here are a few expanded thoughts.

 

Listing Recovery Will Take Time

Now that mortgage rates have come off the highs, we should begin to see more new listings. However, it’ll take time/years to get the resale market fully back to pre-pandemic 2019 levels for new listings. Even with mortgage rates coming down slightly, we’re still in a situation where the majority of homeowners are sitting on sub-4.5% rates, and many are unwilling to sell their homes unless it’s necessary. Simply put, the lock-in effect will ease but not disappear in 2025.

Total U.S. new listings for sale, by month

There are Already More Deals in Regional Pockets

Unlike new monthly listings, total active listings—everything for sale in a given month—are already beginning to increase/recover in some areas of the country. Affordability concerns, the end of the pandemic migration boom, and competition from builders using buydowns mean that existing homes are taking longer to sell in certain pockets of the country. For example, Days on Market are increasing in some areas. Much of the increase in active inventory has occurred in pockets of the Southwest and Southeast, which were extremely red-hot during the pandemic housing boom. Homebuyers have already gained more leverage in areas where active inventory is rising.

Where active housing inventory for sale is above (purple) or still below (yellow) pre-pandemic levels

The Biggest Mortgage Rate Dip is Here--But a Little More Could Come

The biggest drop in mortgage rates, with the average 30-year fixed mortgage rate as tracked by Freddie Mac falling from 7.79% in October 2023 to 6.08% as of last week, might already be here. While most of the major research firms still expect some more declines for mortgage rates, they don’t foresee anything too dramatic coming over the next year. 

Below is the forecast for the average 30-year fixed mortgage rate in Q4 2025: 

  • Mortgage Bankers Association: 5.80%
  • Fannie Mae: 5.70%
  • Wells Fargo: 5.55%

Where the average 30-Year Fixed mortgage rate is predicted to go through the end of 2025

 

Big Picture

As mortgage rates decrease slightly and more inventory enters the market, transaction volume should increase, boosting confidence across the real estate sector, including among realtors, mortgage professionals, and investors. Though significant home price and rent changes are unlikely in 2025, the increase in confidence and transaction volumes should make everyone involved in the market happier in 2025. 

Despite challenges in the market for real estate investors, according to ATTOM’S Q1 2023 U.S. Home Flipping Report, fix and flip activity remains high across the country as profits and returns for flippers show signs of improvement.

Key Highlights from the Report for Fix and Flip Investors: 

ATTOM reported that 72,960 U.S. single-family homes and condos were flipped in the first quarter, representing 9 percent of all sales. This number decreased from 9.4 percent of home sales in Q1 of 2022, but it was still up from 8 percent in Q4 2022, hitting the second-highest level this century. 

Flipping activity did rise, according to their research, but mixed trends resulted for raw profits and profit margins, with both figures increasing slightly from end of last year to beginning of this year but remaining near low points over the last decade. 

Although lower than last year, improvement was seen in the gross profit on transactions nationwide, increasing to $56,000 in Q1 2023, and total profit on flips nationwide was up 4.7 percent from $53,500 in Q4 2022. 

 

Metros with the Largest Flipping Rates in Q1 2023:

According to ATTOM’s research, from Q4 2022 to Q1 2023, of the 74 percent of U.S. metro areas analyzed, home flips as a portion of home sales increased. 

 

Highest Flipping Rates for Counties with 10 or More Home Flips:

The report goes on to state that home flips represented a minimum of 10 percent of all home sales in 36 percent of the U.S. counties analyzed during Q1 2023. This figure surpassed the 21 percent recorded in Q4 2022. 

 

Top 10 Zip Codes with Highest Flip Rates Q1 2023:

ATTOM concluded their report with the list of top 10 zip codes with the highest home flipping rates in Q1 2023. This includes ZIPs with 5 or more home flips recorded in the first quarter of this year. Gila Bend, Arizona made the top of the list at 62.5%. 

Whether you’re a seasoned investor or just starting out, understanding the dynamics of this current real estate market can provide you with a competitive edge and maximize your profitability, especially when deciding your next strategic investment opportunity.  Looking to invest in your next fix and flip property?

Learn more about our fix and flip loans with competitive rates, low fees and high leverage options for real estate investors.