In 2025, real estate investors have a unique opportunity to follow market trends and build wealth through single-family home investments. While multifamily investments have stumbled over the last year as apartment construction has slowed, single-family homes have not only appreciated in market value, but their rental prices rose as high as 6.2% in one city and 5% in many others, while annual rent growth has stayed around 1% for multifamily properties.
Real estate investors and developers are positioned to benefit from single-family home investments by leveraging local trends, uncovering emerging opportunities, obtaining highly competitive 30-year financing and optimizing properties to match demand. Savvy commercial mortgage brokers can help their clients to take advantage of these development opportunities.
Know the neighborhood
Having a deep understanding of the neighborhood your clients are investing in is essential to identifying market trends that broader market data may overlook. Brokers need to be aware of upcoming construction projects, new businesses in the area and other local developments that can give their clients a competitive edge.
Recently, a lender noted how one of his borrowers capitalized on this advantage. The client learned that a town he was considering had approved plans to build a new hospital. Increased jobs in the community meant higher housing demand. The borrower leveraged local properties to benefit from the town’s growth.
By pairing these opportunities with the unique needs of local rental markets — such as top-rated schools, transit access, or specific home types — brokers can help their clients find long-term investment success.
Long-term financing
A major development in the single-family investing market is the rise of easily accessible, long-term financing through debt service coverage ratio (DSCR) loans. These loans provide 30-year financing without the hurdles of traditional bank loans.
Previously, such loans were obtainable only through local banks with slow approval times and strict program requirements, which often led to investors being turned away. Today, many nonbank lenders close DSCR loans in less than 30 days with rates as low as 7.25%.
DSCR loans force investors to do something critical — evaluate their potential properties based on how the income of the property will support the repayment of the loan. Rather than relying on personal debt-to-income ratios, lenders evaluate a property’s ability to cover its loan payments using the DSCR formula, which is monthly rent divided by the combination of principal, interest, taxes, insurance and association fees.
A DSCR of 1.0 means the property breaks even, covering its debt and other standard expenses. Most lenders, however, look for a minimum of 1.2 to ensure positive cash flow and financial stability.
In today’s market, there has been a major rise in DSCR loan programs because they provide investors the opportunity to capitalize on a cash-flowing investment property quickly and economically. The program unlocks financing for a high-performing niche of eligible investors, many of whom are building their single-family portfolios in high-demand markets. With the current housing supply imbalance, single-family rentals continue to rise, and the DSCR program is ready to help with a record amount of liquidity.
Unique opportunities
Single-family homes provide opportunities to stand out in competitive markets by providing flexibility in both resale and rental strategies. Unlike multifamily properties, single-family homes appeal to a broader audience — including homebuyers and investors —offering flexible exit strategies.
This appeal is reinforced by rising rental demand — according to Zillow’s rental market report in December 2024, single-family homes rent for 20% higher than the typical apartment. This is the largest difference ever recorded by the real estate portal, highlighting the massive opportunity currently in front of investors.
To unlock untapped potential, investors should focus on properties that align with shifting market dynamics. For example, suburban areas with limited inventory can be ideal for repositioning a home to meet niche demands, such as mid-luxury rentals. Similarly, properties near emerging job hubs or transit-oriented developments can deliver consistent returns while remaining resilient to market fluctuations. Properties that align current demand and future potential allow you to create a portfolio that is both adaptable and profitable over time.
Long-term value
Rising single-family home prices continue to push many potential buyers toward renting, which creates stable demand. Investors should use this window to acquire properties with long-term potential, such as those in growing suburban markets where families are relocating.
To help your investor maximize returns, help them focus on optimizing properties for their specific locations and target audience. Renters in different markets have distinct expectations. One area might favor preserving original hardwood floors for their character and charm, while another area might prefer sleek, modern finishes.
Similarly, open-floor plans may be highly desirable in one region, while others prioritize defined spaces for remote work. Understanding these nuances allows investors to align property features with local demand, increasing rental value.
The ability to pivot with the market and focus on tenant-first strategies will be key to maintaining consistent returns. By staying realistic, adaptable and informed, investors can take advantage of 2025’s market dynamics to grow their portfolios sustainably.
The single-family housing market continues to show resilience and opportunity in 2025, making it a compelling choice for real estate investors By staying ahead of local trends, leveraging competitive DSCR financing, and focusing on tenant-centric property enhancements, brokers can help their clients capitalize on rising rental demand and future-proof their portfolios. With careful planning and strategic execution, single-family investments can become a cornerstone of long-term wealth creation.
