Single-Family Rent Growth Slows Down Nationwide as Build-to-Rent Units Flood the Market

Single-Family Landlords May Struggle to Compete

Well-capitalized BTR players boasting economies of scale have certain advantages over mom-and-pop single-family investors. These include amenities, organized management, and the benefits of being newly constructed. 

However, that comes with a price, and smaller investors can have an advantage by keeping nimble and relatively affordable. Also, BTR construction is susceptible to the whims of Wall Street, which has been spooked by tariff talk, the cost of capital, and rising construction prices.

Forbes reported in March that BTR starts fell by 38% between the first quarter of 2024 and the first quarter of 2025. That doesn’t mean BTR has fallen off the radar. Many communities have not yet been completed, and Forbes estimates the sector will rebound in 2027 once the current inventory is completed and rented. 

The Advantages of Investing in a Build-to-Rent Community

In the meantime, there is an opportunity for smaller investors to take advantage of the lull.

There’s a lot to like about buying into a BTR community as a passive income opportunity. Here are some of the obvious advantages.

Amenities

You are buying into a complex with fitness centers, clubhouses, landscaping and gardens, walking trails, dog parks, and co-working spaces.

Choice of units

BTR communities usually offer a selection of homes, including single-family residences, townhouses, and duplexes. 

The ability to piggyback off community marketing

You can use your stylish BTR website to advertise your vacant unit(s). 

Scaling up within the same community

If you like the idea of buying at scale, it might be possible to purchase several units within the same community.

Easy to outsource management

There is likely one management company that handles all the rental units within a community, making oversight and maintenance easy to coordinate.

Disadvantages of Investing in a BTR Community

Any investment comes with risks, and a BTR community is no different. Here are a few of the disadvantages of investing in one.

Expense

There is not likely to be much price negotiation if you are picking up a single home in the BTR community. It’s not as if you are finding a house that needs work or through a short sale. In addition, you are also paying for the amenities and prestige of being in the community. 

While you can charge premium rents, don’t expect your cash flow to be too exciting in the early years if you’re getting a mortgage at current interest rates. BTRs are a long-term vehicle and place to park cash rather than leverage it.

Market saturation risk

BTRs have been all the rage on Wall Street amongst the big REITs, but it is possible to have too much of a good thing. If the market gets saturated, many units will sit vacant, making it tough to stand out from the crowd.

Limited rent increases

Owning within a BTR community means you are restricted in how much rent you can charge compared to the other rentals in the community. 

Final Thoughts

Rent growth is determined by supply and demand. There has been an influx of single-family home construction in the last few years, and builders are currently hesitant to proceed with more projects until there is some clarity about construction costs.

However, rent growth is likely to continue at quite a pace once the current inventory is absorbed, because the U.S. housing market is in an inventory deficit of around 4.7 million homes as of July numbers, according to a recent Zillow analysis of census data. 

Investors need to be strategic about their investment choices, basing them on their investing capability and the amount of time they want to dedicate to a project. If you wish to invest as your full-time or part-time occupation, driving for dollars, making multiple offers, attending auctions, and getting involved in the rehab process will likely enable you to pick up some deals at discounts in a currently slow market.

However, if you want a completely hands-off experience and have deep pockets, buying BTR homes for cash and outsourcing the management and leasing could be the way to go.