What’s the one strategic decision every real estate investor should make in 2025? To summarize it in a single phrase: stick with single-family investments. That’s the short answer. The longer answer is that some areas of the country are doing better than others. In 2025, it’s also true that mid-sized cities are where the majority of hot rental markets are located.
Single-family Is King
That’s the short version. Single-family is still the preferred form of housing for American renters in 2025. According to the latest Zillow Rental Market report [1], ”Single-family rent growth remains strong as elevated mortgage rates keep potential buyers out of the sales market.”
As the report makes clear, rent growth remains strong across the country largely because the economy is strong and the labor market is robust. In other words, most people have jobs and are not doing too badly financially. At the same time, housing is too expensive for a lot of those people to be able to become homeowners.
The result is that you have people who have a stable income and the desire to live comfortably. They’re just not quite there yet in terms of buying a home. And what’s the next best thing to owning a family home? Renting one. A single-family rental provides the closest experience to homeownership without actually owning the house. It’s more spacious and private than an apartment in a multi-family unit.
Besides, single-family units are seen as providing better value for money. According to recent data [2], most renters don’t want the ”luxury” amenities offered by many newly-built apartment units. What they want is affordable rent, enough space, and the ability to keep a pet instead of a fancy gym or ping-pong table.
This is good news for those new to real estate investing. You don’t have to invest in a ”luxury” apartment. Instead, look for a spacious property in overall good condition that will offer your tenants a more comfortable, private living arrangement.
Mid-sized Cities Are a Safer Bet
Anyone whose wealth management strategy involves real estate investing should focus their efforts on mid-sized metro areas like Cleveland, St Louis, and Indianapolis. The reason? They’re not the most glamorous cities, but they’re good-enough cities with bustling amenities and, most importantly, healthy labor markets.
Rents are the most competitive in urban areas that can offer the best ratio of well-paid employment to living space. Most renters in 2025 don’t want New York or LA; they want somewhere smaller and friendlier, like Charlotte, NC, or Columbus, OH. Mid-sized cities also allow renters the chance to live ”near an abundance of outdoor space, where they have access to arts and cultural venues, some nightlife and less traffic.” [3]
An Informed Approach to Fractional Real Estate
When choosing your investment opportunities, for example, in fractional real estate, keep the ongoing renters’ preference for smaller metros in mind. They’re perceived as less expensive and more attractive than the largest cities. You don’t have to automatically discard multifamily investment opportunities in these locations, but you likely will get better ROIs out of single-family homes, given that they’re still the first choice of housing type for the majority of renters.
