Investors Are Scooping Up More Single-Family Rentals — But Is It the Smartest Play?

The single-family rental (SFR) market is heating up again — and investors are behind the surge. A new report from real estate data firm BatchData shows that investors accounted for 33% of all single-family home purchases in Q2 2025, the highest level in five years. That’s up sharply from just under 27% in Q1 and nearly 760 basis points higher than the same time last year.

On the surface, it looks like investors are doubling down. But the story runs deeper — and it reveals both opportunity and warning signs.

📊 Investors Are Grabbing More of the Market — Even as Sales Slow

Despite their growing market share, investors actually bought about 16,000 fewer homes in Q2 2025 than they did a year earlier. Overall home sales have slowed so much that investors now account for a bigger slice of a smaller pie. And collectively, they now own 20% of the nation’s 86 million single-family homes.

What’s particularly interesting is who is driving this wave of purchases:

1. 87% of investor-owned homes are held by mom-and-pop landlords with just one to five properties.

2. Mid-tier investors (6–10 homes) own another 4%.

3. Institutional players — those with 1,000+ homes — own just 2%.

In other words, the market isn’t being dominated by Wall Street giants. It’s being fueled by thousands of smaller investors who see SFRs as a reliable way to generate cash flow and build wealth.

💸 Buying Below Market and Targeting Value

Investors are still buying below retail — but they’re willing to pay more than they used to. The average investor purchase price was $455,481 last quarter, below the market average of $512,800 but significantly higher than the $387,633 investors paid a year earlier.

Most of these homes require work: 85% of investor acquisitions came from lenders, foreclosure auctions, government entities, or directly from homeowners — often at a discount because they need repairs. Investors know that sweat equity and value-add improvements are where returns are made.

But it’s worth noting that more than half of these properties (53%) are being sold from one investor to another. That suggests many investors are trading within the ecosystem — often flipping stabilized properties to buyers looking for turnkey rentals.

⚙️ The Hidden Headache: Repair Costs Are Rising

While buying distressed homes can boost returns, it also comes with rising costs. A massive new study by property services provider Lessen — analyzing 680,000 work orders and $470 million in spending — shows how expensive maintaining single-family rentals has become.

Here’s what investors are paying on average per repair call:

1. General maintenance (drywall, water intrusion, etc.): $687 median

2. HVAC: $597 median

3. Plumbing: $425–$501

4. Doors & windows: $366–$421

5. Electrical: $280–$343

The median cost across all job types is $516 per service call. And those costs add up: annual repair and maintenance per property averages $1,752 — and can top $2,600 for many owners.

Beyond cost, the time factor is significant. The average job takes 9.6 days to complete, and some take more than three weeks. Coordinating vendors across scattered properties — often in multiple states — is no small feat.

📉 Rent Growth Is Slowing, Too

Meanwhile, rental income isn’t keeping up with rising costs. Data from Cotality shows single-family rents rose just 2.3% year-over-year in July, down from 3.1% a year earlier — and now below the 10-year pre-pandemic average.

Monthly rent growth came in under 0.2%, well below the typical 0.7% for July. High-end homes saw rent climb 2.9%, while the lower end grew only 1.6%. These figures are a far cry from the 13–14% annual rent spikes of 2022.

This softening rent growth, combined with higher acquisition and maintenance costs, is putting pressure on SFR returns — especially for smaller landlords without scale.

🧠 Active vs. Passive: Where Investors Are Shifting

Buying a handful of single-family rentals might sound like a smart wealth-building move — and for some investors, it is. But it’s also labor-intensive and operationally complex. Between acquisitions, renovations, tenant turnover, repairs, and vendor coordination, you’re not just an investor — you’re a small-business operator.

That’s why many sophisticated investors are reallocating capital from scattered single-family homes into larger, professionally managed multifamily or commercial properties — where scale, systems, and management teams handle the heavy lifting.

With multifamily syndications or private real estate funds, you can:

1. Gain diversified exposure to hundreds of units instead of a few

2. Leverage economies of scale for repairs and operations

3. Delegate management entirely to professionals

4. And collect truly passive income — without the 2 a.m. plumbing calls

📈 Final Thought: Don’t Just Follow the Crowd — Think Bigger

The surge in single-family rental purchases shows that investors are still hungry for real estate. But higher prices, slowing rent growth, and rising repair costs are reshaping the math — especially for those trying to scale one house at a time.

If your goal is long-term wealth and passive income, the real opportunity isn’t necessarily in buying more single-family rentals — it’s in owning smarter. That means thinking beyond individual properties and positioning your capital into scalable, professionally managed assets that work for you, not the other way around.

👉 Ready to learn how wealthy investors are scaling beyond single-family homes?

Join the Passive Wealth Investors Club to see how passive investing in multifamily and commercial deals can free your time and multiply your returns.