Why Now Might Be the Smartest Time to Invest in Single-Family Rentals (SFRs)

[Vincent Ribes]

The U.S. real estate market in 2025 is experiencing a dynamic shift. While recent tariffs and economic fluctuations have introduced some uncertainties, they also present unique opportunities for savvy investors. With an anticipated economic rebound in 2026, now could be an opportune moment to delve into Single-Family Rental (SFR) investments.


Tariffs: A Double-Edged Sword

Recent tariffs on imported construction materials like lumber, steel, and appliances have led to increased building costs. For instance, tariffs on Canadian lumber have added approximately $7,500 to $10,000 to the cost of a new single-family home . While this might seem daunting, it also means that fewer new homes are being built, tightening housing supply and increasing demand for existing rental properties.


SFRs: Steady Demand Amidst Market Fluctuations

Despite the challenges, the SFR market remains robust. Occupancy rates are high, with nearly one-third of U.S. markets exceeding 95% occupancy . Additionally, in many areas, renting remains more affordable than buying, making SFRs an attractive option for tenants and a reliable income source for investors .



Looking Ahead: Economic Rebound on the Horizon

Economists predict a positive shift in the housing market, with home sales expected to increase by 9% in 2025 and 13% in 2026 . As mortgage rates stabilize and the economy strengthens, property values are likely to rise, offering potential appreciation for SFR investors.

Key Metrics to Monitor
• Cash-on-Cash Return: Evaluates the annual return on the actual cash invested, providing insight into the property’s profitability.
• Capitalization Rate (Cap Rate): Helps compare the potential return on investment properties by analyzing the ratio of net operating income to property value.
• Debt-Service Coverage Ratio (DSCR): Assesses the property's ability to cover its debt obligations, crucial for securing financing.
• Tenant Turnover Rate: High turnover can erode profits; aim for strategies that promote tenant retention.

While tariffs have introduced new challenges, they also underscore the value of existing rental properties in a constrained housing market. With strong occupancy rates and an anticipated economic rebound, SFR investments offer both stability and growth potential. Now might be the ideal time to capitalize on these market conditions and invest in single-family rentals.