SFR Investing: A Guide to Seizing the Sector’s Momentum

Single-family rental (SFR) investing is surging as this asset class outperforms. With homeownership less attainable and lifestyle renting more popular, the sector’s tailwinds bode well for long-term growth. If you are new to this space, our guide has answers to commonly asked questions.

How SFR Investing Helps Investors Build Long-Term Wealth

SFR, which includes properties such as single-family homes, townhomes, and condos, represents more than half of the country’s rental housing stock, and investors are increasingly drawn to this sector’s stability and long-term growth potential. Investors choose to add SFR to their portfolio for the sector’s steady income generation, long-term appreciation, and flexibility.

Compared to multifamily properties, SFRs generally have more flexible exit strategies, wider market appeal, and more tenant stability, as tenants often stay longer while maintaining the quality of their homes. Investors also benefit from:

• Positive cash flow: SFRs’ rental income often exceeds monthly expenses like mortgage payments, taxes, and maintenance; this surplus can be reinvested or used to fund other projects
• Appreciation driven by inflation, neighborhood development, and property upgrades
• Geographic Diversification: These properties are located across cities and suburban areas
• Equity growth through mortgage paydown and value-added renovations

Together, these factors make SFRs a resilient and scalable investment.

What Metrics Are Most Important When Choosing Markets to Invest In?

Areas with strong job growth, quality schools, and ample access to leisure and cultural offerings attract long-term tenants. SFR lifestyle renters value space, privacy, and community, but prefer the flexibility and lower responsibility that come with renting. With higher incomes, many SFR lifestyle renters are renters by choice, not by necessity, and it’s common for them to also own properties while renting one themselves. Investors should partner with lenders and sponsors familiar with different markets to ensure their investments have the right mix of long-term growth indicators, including:

• Population and job growth: Signals strong rental demand and ensures consistent occupancy
• Vacancy rates: Lower rates indicate a tighter, more profitable market
• Cap rates: Help assess return potential relative to property value
• Recession-resistant industries: Diversifying into stable, recession-resistant markets (e.g., with healthcare or government employment bases) can protect your portfolio during downturns

The Non-Bank Lender Advantage for SFR Investors

Working with a lender that is experienced in SFR investing makes a significant difference in the speed of execution, gaining access to capital, and winning market share. Unlike traditional banks, alternative lenders like Arbor do not require deposits to secure a loan, and are often entrepreneurial and relationship-driven, with fewer layers of approval and red tape.

When choosing a lender, determine if they offer these features and if they stand with you for every step:

• Faster approvals and closings: Essential in competitive markets
• Flexible underwriting: Often based on property income, not personal income
• Less documentation: Streamlined processes for experienced investors
• Access to specialized products: Including interest-only, rehab, and BTR loans
• Investor-centric approach: Tailored to the unique needs of SFR portfolios

What Types of SFR Financing Products Are Available?

Arbor offers a suite of financing solutions tailored for SFR investing. Whether you’re acquiring, building, or repositioning properties, Arbor’s products are designed to support your strategy:

• Fixed-rate term financing: Provides stability for long-term holds
• Build-to-rent financing: Access capital for new construction projects
• Bridge financing: Short-term loan for acquisitions or renovations
• Lines of Credit: Flexible capital for portfolio growth

Arbor is Your Partner for the Life of Your SFR Investment

From acquisition to stabilization and beyond, Arbor is your partner for the life of your SFR financing. Our well-rounded team understands the nuances of SFR investing and has worked with clients in markets across the country to grow portfolios and help fulfill the sharp demand for single-family rental homes. Working with Arbor features, quick access to capital, competitive financing terms, and personalized service are standard with every relationship we build.

Ready to grow your SFR portfolio? Contact us to learn more about how Arbor can help you unlock the full potential of this rising asset class.

Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily, single-family rental, and affordable housing financing options or view our multifamily articles and research reports.