Legislative headwinds and financing volatility: An outlook for the SFR sector

There are few things more destabilizing for any industry than uncertainty.

Since President Trump's January 2026 executive order targeting institutional single-family rental (SFR) investors, conversations in the real estate industry have been dominated by the 21st Century ROAD to Housing Act.

At the recent Single Family Rental East Forum, panelists in the State of the SFR/BTR Industry session agreed that, for the most part, the new regulations themselves were not the issue. It was the ongoing uncertainty around the legislation itself that was the real problem.

The subsequent session, The State of SFR/BTR Financing, examined the current state of financing and lenders’ perspectives.

Focus in a slower market

The general feeling among delegates gathered at IMN’s Single-Family Rental East conference in Miami Beach, Florida, was that while most of the rules in the legislation were broadly manageable, uncertainty about their implementation was slowing the market.

Doug Brien, CEO of Roofstock, called it "a wet blanket thrown back on the industry," which had begun the year with cautious optimism about interest-rate trajectory and activity levels.

Where did this leave the day-to-day focus?

Operators had to turn their focus inward, some of the panelists thought.

“Because there hasn't been a lot of capital deployed, a lot of folks have focused on growing NOI, tightening up management…and AI is an incredible opportunity,” said Doug Brien.

“You saw the publics had the most tepid blended rent growth they've had since 2017... the focus more broadly in the industry is around operations, maintaining occupancy and less about rent growth,” added Doug Dale, Co-founder, Chief Real Estate Investment Officer & Head of Institutional at PURE HomeRiver Property Management.

Capital markets had bifurcated.

“There's more financing going on than equity,” said Beth O'Brien, CEO & Founder at Encore Finance. “I think you lean into the opportunity, and because of the uncertainty and the slowdown in overall transactions, people who are well capitalized are really leaning in and trying to get a few things under their belt so they can get grandfathered.”

Where should investors look to deploy capital?

There was an inflection point in a handful of jurisdictions that looked soft but were hitting the delivery wall, with positive absorption to come, said Beth. Florida was a good example: “I've actually been positively impressed in Florida with the absorption rate and the lease-up rate. Obviously, people are making some concessions to get through this bubble.”

Doug Dale felt deliveries would probably normalize to around 2022 levels this year, presenting an opportunity: “If you have patient capital and you believe in the demographic story, there are 1.8 million millennial and Gen Z households that haven't formed yet.”

But the legislation had put the SFR industry in the spotlight, and the panel said one thing that had become obvious: they needed to do a better job of fighting its corner.

“As a group, we have to work harder to educate both local markets as well as DC on the benefits we are bringing both to residents for affordable housing, as well as why it's beneficial to the overall housing market,” said Doug Dale.

“Everyone living in these houses is a human, not a corporation. As an industry, we have failed to get that across in a way that's meaningful for the policy makers in this country,” agreed Beth.

Meaningful shifts in financing

In the second session, Charles Goodwin, Head of Bridge and DSCR Lending at Kiavi, framed the macro backdrop sharply: "We've seen it slow down in 2025 and 2026, it could be three more years to return to normal levels of affordability. So you just have to prepare for it.”

The lending landscape, however, was at odds with this. “The product that is being put out by lenders is more aggressive than it was when rates were almost free. Leverage is higher, there's more 100% fix and flip financing,” said Nate Trunfio, Chief Strategy Officer at Genesis Capital.

There were fewer deals available, but the capital was there, said Cortney Newmans, CEO at Asteris Lending, “for the borrower that has demonstrated they can survive the market”.

Experienced operators were thriving; mid-tier and smaller players were being squeezed out, and portfolios were being tested:

"If you have aggregated meaningful-size portfolios, not all of it is gonna turn out well, you actually need to be a really good operator, and we're seeing those cracks right now. To me, that creates other opportunities for the more disciplined investors," said Joakim Mortensen, Chief Originations Officer at CoreVest.

Meanwhile, competition from non-QM lenders was reshaping the market, as Eric Abramovich, Co-founder, Roc Capital put it: “You have this money pouring in, and the non-QM players consider the DSCR product a very formulaic underwrite, just like a consumer loan.” But, he cautioned, “you’re dealing with pretty sophisticated entrepreneurial operators… and that trades very differently than a consumer loan.”

The consequences of that shift are already raising concerns. “It’s quite scary, frankly, that volumes are booming and they’re booming by lenders that don’t fully understand the product they’re underwriting,” he added. Charles reinforced the point with a stark example: “I saw a non-QM lender who’s not counting the P in PITI towards the DSCR calculation.”

At the time of writing, the 21st Century ROAD to Housing Act is sitting with the Senate, awaiting a vote on the House-amended version that dropped the seven-year disposition rule. While confidence at the conference was pretty high that the bill would go through, there was still a fair amount of conjecture on whether it would continue to go back and forth.

Across both sessions, the message was consistent: this is a moment for the prepared, the disciplined, and the well-capitalized.

The SFR industry is at a pivotal moment, balancing uncertainty with innovation and resilience. Continue this vital dialogue and collaborate on actionable solutions at the Build-to-Rent Fall Forum this September in Dallas. Let’s shape the future of housing together and ensure the continued growth and success of the BTR and SFR sectors!