While the large SFR firms purchased 90% fewer homes in the first two months of 2023 than in the first two months of 2022, we sensed that their strong balance sheets and longer track records will serve them well for the balance in 2023.
Tightening lending standards have made it increasingly difficult to get BTR and SFR deals underwritten. Larger Single-Family Rental (SFR) owners have an easier time obtaining financing than smaller operators, especially today. Larger investors have more established relationships with lenders and can access a broader range of financing options.
In addition, larger SFR investors have a proven track record of managing and maintaining their properties, which makes them a safer bet for their capital partners. They have the resources and expertise to handle unexpected expenses and market fluctuations. They can also absorb any potential losses from defaults or vacancies better than smaller operators, who may have limited resources to fall back on. As a result, many (not all) smaller operators may struggle to obtain financing or may be forced to pay higher interest rates and fees than larger investors.