Why the Build-to-Rent Strategy is Set to Benefit the Most From the Institutional Investor Ban

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President Donald Trump hasn’t completely prohibited Wall Street’s institutionalized investors from buying single-family homes in America, but he’s made it very hard for them to do so. In the process, he has left a clear path for build-to-rent investors—many of whom have scaled back their single-family house purchases recently—to expand their already burgeoning business model.

According to the White House Fact Sheet on the proposed Executive Order, which still needs to be approved by Congress, federal agencies, including the Treasury, HUD, the VA, and USDA, are being told to stop insuring, guaranteeing, or securitizing purchases of single-family homes by large investors where legally allowed.

The order also calls on regulators such as the DOJ and FTC to prioritize antitrust enforcement against coordinated vacancy or pricing strategies in local single-family rental markets, and to identify institutional investors’ involvement in federal housing assistance programs by demanding full disclosure of ownership.

The White House’s whiteout on single-family home purchases by Wall Street takes from one hand and gives with the other, allowing housing titans such as Invitation Homes, Blackstone, and Pretium Partners to continue their build-to-rent business, as it does not affect the number of single-family houses available to the public.

The Loophole

The government ruling still allows single-family homes to be purchased by institutional investors in all-cash deals and through non-agency funding, which could create workarounds for REITs raising capital through initial public offerings. There is also nothing to prevent REITs from securing private financing for their single-family projects.

“Trump’s executive order lays out the framework for how an institutional investor ban would operate, but key questions remain. Most importantly, the order does not define what qualifies as an ‘institutional investor,’ or exactly how the policy would be enforced,” said Realtor.com senior economist Jake Krimmel in a release about the news.

Inventory Is Unlikely to Be Affected

Given that institutional investors only own approximately 1% of the single-family rental market, it is unlikely that the government’s new ruling will unleash a flood of single-family inventory.

Krimmel added:

“Even under perfect enforcement, the policy would add little inventory overall. Because it only curbs future institutional demand, any effect would show up as homes sitting on the market slightly longer, rather than a surge of new supply. At best, this would amount to an inventory trickle, and likely only in select Sunbelt metros where inventory has already risen sharply due to market forces. In the supply-constrained Northeast, corporate investor activity is minimal, so the policy would have little to no impact on inventory.”

Build-to-Rent’s Free Reign

Build-to-rent has recently been the preferred investment vehicle for institutional investors due to its centralized operation, ability to build at scale, and lack of competition from single-family buyers or political overseers.

The latest governmental order only amplifies these reasons. The main players, firms such as Invitation Homes, American Homes 4 Rent, and Pretium, delivered over 70,000 units in 2023 and 321,000 homes since 2012, according to John Burns Research and Consulting, as shown in the Wall Street Journal. Major homebuilders such as D.R. Horton and Lennar saw many of their new homes directly swallowed up by the build-to-rent behemoths.

“There’s going to have to be a change in the model,” Trevor Koskovich, Northmarq’s head of investment sales, told the Journal. “This is great for the build-to-rent segment.”

How Small Investors Will Be Affected by the Built-to-Rent Boom

The influx of new build-to-rent communities could change the complexion of the suburbs, with many would-be single-family homeowners still priced out of the market due to the cost of housing in good school districts looking to this housing stock. 

However, BTR communities’ impact on single-family rentals and smaller investors remains up for debate. Reuters noted that Wall Street money will undoubtedly pour into BTR communities, but it’s unclear if that will affect MLS inventory, which smaller investors usually transact with. Considering that over 90% of the market is owned by mom-and-pop investors with fewer than 10 properties in their portfolio, it’s unlikely BTR communities will have a profound effect on the single-family rental market.

Also, there is a discrepancy between single-family rental prices and BTRs. According to a 2024 analysis by Parcl Labs, BTRs were overall considerably more expensive. However, Beekin, a data and analytics company, put the rental premium at around 10%-15% toward BTRs.

However, as BiggerPockets noted in October, there are distinct advantages for investors who want to be hands-off and outsource all aspects of management and leasing to invest in BTR communities. Beekin, which leverages its data through LeaseMax, a revenue management software used by BTR communities and therefore has a vested interest, suggests that these reasons are strong enough to sway tenants to move into BTRs rather than small investor-owned SFR units. 

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The next question is: Will enough BTR communities be built to affect the SFR market?

According to Forbes, using CoStar data, BTR communities could rise to about 15% of single-family starts over the next five years as renters seek more space but remain priced out of homeownership. Whether that is enough to tip the scales and take from the SFR market remains to be seen.

Markets With the Largest Built-to-Rent Communities

Phoenix, Dallas, and Atlanta undoubtedly have the largest BTR communities, with secondary markets such as Wilmington, Delaware; Des Moines, Iowa; and Chattanooga, Tennessee also seeing a heavy construction pipeline, according to Point2Homes/Yardi’s metro-level database of completed single-family build-to-rent deliveries from 2020 to 2024 and active pipeline counts as of April 2025, as examined by Lending One.

Markets with ample land and strong employment opportunities are ideal for BTR communities. These generally tend to favor Sunbelt states, but the Midwest and some West Coast cities are definitely within its scope, and smaller investors need to stay aware and possibly decide at some point whether it’s worth ceding the labor-intensive nature of being a small investor to throwing their lot in with the BTR heavy hitters. There are pros and cons to this, as we pointed out.

Final Thoughts

Although Donald Trump’s executive order is unlikely to have an immediate or large-scale effect on the single-family housing market, for everyday investors and flippers, eliminating institutional and corporate competition could prove significant.

John Walker, a Realtor and flipper in Pittsburgh, told BiggerPockets that he couldn’t wait for hedge funds and other corporations that have been buying up real estate to leave the city, adding:

“It’s just impossible for smaller investors like me to compete. A couple of weeks ago, for example, I was bidding on a property for a flip and came up against a hedge fund. They put an escalation clause in their offer, which meant that whatever the highest offer was, they would better it by $1,000, so there was no way I could ever win that bidding war. It’s causing house prices to increase and making it impossible for most flippers to turn a profit, or for buyers to afford. So yeah, I’ll be glad to see the back of them.”

Rather than moving the affordability needle on a massive scale, the White House’s ban on institutional investors buying single-family houses might be felt the most in the trenches, with everyday investors trying to find the fine margins of profitability. In a tight housing market, every small win is a reason to celebrate.