{"id":187674,"date":"2026-04-24T10:11:34","date_gmt":"2026-04-24T16:11:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=187674"},"modified":"2026-04-24T10:43:00","modified_gmt":"2026-04-24T16:43:00","slug":"corporate-landlords-find-a-loophole-in-their-real-estate-ban","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/corporate-landlords-find-a-loophole-in-their-real-estate-ban","title":{"rendered":"Corporate Landlords Found a Loophole in Their Real Estate Ban, Putting Them in Direct Competition With Flippers and BRRRR Investors"},"content":{"rendered":"

You know the saying, “If it\u2019s too good to be true…” That comes to mind when you discover that big investors still have a loophole that allows them to buy single-family homes, despite President Donald Trump\u2019s proposed ban, putting them in direct competition with the small investors the ban was supposed to protect.<\/span><\/p>\n

The loophole, <\/span>ResiClub<\/span><\/a> reports, concerns distressed properties. Washington has carved out an exception to the ban, allowing institutions in the single-family space to undertake renovations, putting them in direct competition with <\/span>fix-and-flip investors<\/span><\/a> and <\/span>BRRRR<\/span><\/a> landlords.<\/span><\/p>\n

What Trump\u2019s Ban Does and Doesn\u2019t Cover<\/span><\/h2>\n

In January 2026, to much<\/span> media coverage<\/span><\/a>, President Trump signed an executive order titled “Stopping Wall Street from Competing With Main Street Homebuyers,\u201d which included small investors. Trump pledged to push Congress to codify the restriction into law.<\/span><\/p>\n

According to the<\/span> White House fact sheet<\/span><\/a> and legal summaries, one of the order\u2019s core policies stated, “The order directs key agencies to issue guidance preventing relevant federal programs from approving, insuring, guaranteeing, securitizing, or facilitating sales of single-family homes to institutional investors.\u201d<\/span><\/p>\n

The Wall Street Journal<\/span><\/a><\/em> reported in February that in a follow-up memo to key congressional committees, the White House proposed a specific threshold: Investors owning more than 100 single-family homes would <\/span>be barred<\/span> from buying additional properties.<\/span><\/p>\n

The Senate Housing Bill\u2019s \u201cRepairs\u201d Loophole<\/span><\/h2>\n

On March 12, the U.S. Senate passed a bipartisan housing package, H.R. 6644, rebranded as the <\/span>21st Century ROAD to Housing Act<\/span><\/a>, which included the ban on institutional investors purchasing single-family homes, with certain exceptions.\u00a0\u00a0<\/span><\/p>\n

According to corporate law firm<\/span> Mayer Brown<\/span><\/a>, the specific exception that affects small investors is the following:\u00a0<\/span><\/p>\n

Part of a renovate-to-rent program that:<\/span><\/p>\n

1. Substantially rehabilitates SFHs that do not meet certain local building codes<\/span><\/p>\n

2. Makes improvements costing not less than 15% of the purchase price<\/span><\/p>\n

What Are the Repercussions for Small Investors?<\/span><\/h2>\n

The renovation loophole would conceivably see institutional landlords funnel resources into fixer-uppers and overpower small landlords by inserting an <\/span>escalation clause<\/span><\/a>. If this happened en masse, it would change the playing field for both flippers and landlords.<\/span><\/p>\n

The next question is, how is the renovation cost for a single-family home <\/span>being determined<\/span>? According to the renovate-to-rent exception, to be eligible to purchase a single-family home, the renovation costs must be 15% or more of the home\u2019s purchase price. I\u2019m assuming this is before repairs, because if the landlord keeps hold of the property, there is no post-renovation purchase price, unless they are using that term <\/span>in lieu of<\/span> ARV<\/span><\/a>\u2014though the 15% marker would still make it competitive for an ARV.<\/span><\/p>\n

In the big scheme of things, 15% is not a lot of money. Major renovations, including structural and plumbing work, can cost <\/span>50% or more of a home’s purchase price<\/span><\/a>. <\/span>So 15% could be fairly light cosmetic upgrades, done by a contractor with a top-of-the-market estimate, which would <\/span>just<\/span> about cover most single-family homes on the market.<\/span> There needs to be clarification on how renovation costs are determined.<\/span><\/p>\n

What should concern smaller investors is that large institutions prefer properties that need work, generally spending around<\/span> $20,000 to $40,000<\/span><\/a> per property (as of 2021 data).<\/span><\/p>\n

Local Landlords Still Dominate<\/span><\/h2>\n

Currently, institutional investors are not major players nationally in the single-family space, holding around 3% of single-family rentals,<\/span> according to UBS<\/span><\/a>, drawing on Bank of America research. Most holdings are in the Sunbelt, where there are generally fewer houses in need of major repairs than in the Northeast and Midwest, which have many older homes.<\/span><\/p>\n

However, in some cities, the number of homes owned by large institutions is staggering. According to <\/span>government data<\/span><\/a>, the following Southern cities have a high concentration of institutional investors, as of 2022:\u00a0<\/span><\/p>\n