Why Single-Family Rentals Are Outperforming Multifamily Properties (and What It Means for You)

Investing in real estate has always been about making the most intelligent, most strategic decisions. But with the rental market evolving so quickly, you might ask yourself: Which is the better investment—single-family rentals (SFRs) or multifamily properties?

If you’ve been leaning toward multifamily, the numbers might surprise you. Over the past five years, single-family rentals have outperformed their multifamily counterparts in nearly every critical metric—rent growth, tenant retention, and overall demand. Whether you’re a seasoned investor or just dipping your toes into real estate, understanding the shift in rental trends could give you the competitive edge you need to grow your portfolio.

In this post, we’ll unpack the key factors driving single-family rentals to the top of the market, explore how multifamily properties compare, and help you decide where to focus your investment dollars. By the end, you'll see why SFRs are the key to unlocking stronger returns and long-term success.

The Rise of Single-Family Rentals: What’s Driving the Trend?

Single-family rentals are more than just a hot trend—they’ve become a cornerstone of the rental market. Let’s break down why:

• Consistent Growth: SFRs have been on an unprecedented winning streak. Between 2018 and 2023, annual rent growth for SFR renewals remained above 5% for 27 consecutive months, even during economic uncertainty. Compare that to multifamily properties, which have seen a notable slowdown, and the difference is clear: SFRs are thriving.

  
  

• Higher Rents, Greater Returns: With an average asking rent of $2,108 in 2023, SFRs significantly outpace the $1,729 average for multifamily units. This translates to higher revenue potential for investors, even as growth rates moderate.

  
  

• Tenant Stability and Retention: Families, who comprise the bulk of SFR tenants, tend to settle in for the long haul. In 2023, single-family rentals enjoyed an impressive 95.8% occupancy rate. This level of stability not only minimizes turnover costs but also ensures steady income streams.

Why Multifamily Properties Are Struggling to Keep Up

While multifamily units still hold appeal for certain types of investors, their growth story isn’t as rosy:

• Slowing Growth Rates: Multifamily rental growth has tapered off, with a modest year-over-year increase of just 1.6% in 2023. It's a far cry from the gains during the pandemic's housing boom.

  
  

• Cost Advantages, But at a Price: Multifamily properties often boast lower per-unit maintenance and management costs. However, these efficiencies may not outweigh the lower rent growth and shorter tenant retention periods.

The Bigger Picture: SFRs vs. Multifamily Investments

What’s fueling this divide? Much of it ties back to how renters’ priorities have shifted post-pandemic:

• Demand for Space: The pandemic fundamentally reshaped how people view their living spaces. With remote work and hybrid schedules becoming the norm, renters crave homes with more room to breathe—SFRs deliver just that.

  
  

• Economic Resilience: Despite rising inflation and fluctuating interest rates, SFRs have shown remarkable resilience. From stronger rent collection rates to higher tenant retention, single-family homes provide a reliable hedge against economic uncertainty.

What Lies Ahead for the Rental Market

So, where do we go from here? Single-family rentals (SFRs) and multifamily properties hold value for investors, but their trajectories paint distinct pictures of the future rental market.

The Future of Single-Family Rentals:

SFRs are positioned to dominate in the years ahead, particularly in markets with limited housing supply, and family demand continues to grow. With more families prioritizing space, privacy, and access to suburban amenities, single-family homes cater perfectly to these evolving preferences. In addition, the pandemic-driven shift toward remote work has made it clear why SFRs have become the go-to option for renters seeking comfort and stability.

Economic resilience also sets SFRs apart. Even during periods of uncertainty, these properties have maintained strong occupancy rates, consistent rent collection, and steady tenant retention. As housing markets tighten and construction struggles to keep up with demand, SFRs will likely see continued appreciation in rental income and property values. This presents a rare opportunity for investors to capitalize on a high-demand, low-supply market that shows no signs of slowing down.

What About Multifamily Properties?

While multifamily properties may not experience the same explosive growth, they're far from obsolete. Urban multifamily units could regain traction as rising affordability pressures push renters back toward smaller spaces closer to city centers. However, this resurgence is likely tempered by competition, oversupply in some markets, and shifting renter priorities. Investors drawn to multifamily properties must carefully evaluate markets and target properties with high value-add potential or those in revitalization areas.

The Bottom Line:

Single-family rentals will likely remain the frontrunner for real estate investors, thanks to their unmatched tenant stability, higher rental yields, and ability to align with long-term market trends. While still valuable, multifamily properties will require a more strategic, market-specific approach to deliver competitive returns.

What This Means for You

If you want to maximize your returns and build a resilient investment portfolio, the choice is clear: single-family rentals are the star of the moment. Their consistent rent growth, higher average rents, and unparalleled tenant stability set them apart in a competitive market. But what makes SFRs such a winning choice for today's investors?

First, consider the appeal of steady income. With occupancy rates hovering around an impressive 95.8% and tenants who tend to stay longer—often families looking for stability—you’re not just investing in a property; you’re investing in predictable, recurring revenue.

Second, SFRs deliver both short-term gains and long-term security. The high demand for these properties drives strong rental returns today, while their family-centric appeal and market resilience make them an intelligent hedge against economic fluctuations. Even during uncertain times, single-family rentals have shown they can weather storms better than most real estate assets.

Finally, SFRs allow you to align your investment strategy with the lifestyle changes shaping the market. As more renters seek space, comfort, and community—values SFRs naturally provide—your investment is positioned to meet the needs of a growing demographic. That’s a win-win for your portfolio and the people you serve.

Whether you’re new to real estate investing or looking to diversify your holdings, single-family rentals offer a unique combination of growth potential, reliability, and market alignment that’s hard to ignore.

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