You know the saying, “If it’s too good to be true…” That comes to mind when you discover that big investors still have a loophole that allows them to buy single-family homes, despite President Donald Trump’s proposed ban, putting them in direct competition with the small investors the ban was supposed to protect.
The loophole, ResiClub reports, concerns distressed properties. Washington has carved out an exception to the ban, allowing institutions in the single-family space to undertake renovations, putting them in direct competition with fix-and-flip investors and BRRRR landlords.
What Trump’s Ban Does and Doesn’t Cover
In January 2026, to much media coverage, President Trump signed an executive order titled “Stopping Wall Street from Competing With Main Street Homebuyers,” which included small investors. Trump pledged to push Congress to codify the restriction into law.
According to the White House fact sheet and legal summaries, one of the order’s core policies stated, “The order directs key agencies to issue guidance preventing relevant federal programs from approving, insuring, guaranteeing, securitizing, or facilitating sales of single-family homes to institutional investors.”
The Wall Street Journal reported in February that in a follow-up memo to key congressional committees, the White House proposed a specific threshold: Investors owning more than 100 single-family homes would be barred from buying additional properties.
The Senate Housing Bill’s “Repairs” Loophole
On March 12, the U.S. Senate passed a bipartisan housing package, H.R. 6644, rebranded as the 21st Century ROAD to Housing Act, which included the ban on institutional investors purchasing single-family homes, with certain exceptions.
According to corporate law firm Mayer Brown, the specific exception that affects small investors is the following:
Part of a renovate-to-rent program that:
1. Substantially rehabilitates SFHs that do not meet certain local building codes
2. Makes improvements costing not less than 15% of the purchase price
What Are the Repercussions for Small Investors?
The renovation loophole would conceivably see institutional landlords funnel resources into fixer-uppers and overpower small landlords by inserting an escalation clause. If this happened en masse, it would change the playing field for both flippers and landlords.
The next question is, how is the renovation cost for a single-family home being determined? According to the renovate-to-rent exception, to be eligible to purchase a single-family home, the renovation costs must be 15% or more of the home’s purchase price. I’m assuming this is before repairs, because if the landlord keeps hold of the property, there is no post-renovation purchase price, unless they are using that term in lieu of ARV—though the 15% marker would still make it competitive for an ARV.
In the big scheme of things, 15% is not a lot of money. Major renovations, including structural and plumbing work, can cost 50% or more of a home’s purchase price. So 15% could be fairly light cosmetic upgrades, done by a contractor with a top-of-the-market estimate, which would just about cover most single-family homes on the market. There needs to be clarification on how renovation costs are determined.
What should concern smaller investors is that large institutions prefer properties that need work, generally spending around $20,000 to $40,000 per property (as of 2021 data).
Local Landlords Still Dominate
Currently, institutional investors are not major players nationally in the single-family space, holding around 3% of single-family rentals, according to UBS, drawing on Bank of America research. Most holdings are in the Sunbelt, where there are generally fewer houses in need of major repairs than in the Northeast and Midwest, which have many older homes.
However, in some cities, the number of homes owned by large institutions is staggering. According to government data, the following Southern cities have a high concentration of institutional investors, as of 2022:
- Atlanta: 25%
- Jacksonville, Florida: 21%
- Charlotte, North Carolina: 18%
Determining the scope of work and what constitutes the 15% threshold could be key to determining how involved Wall Street gets in encroaching on the domain of smaller landlords.
Strategies for Small Landlords to Compete With Wall Street for Single-Family Homes
Come in with speed and flexibility
Corporations are notoriously slow to act unless they have a connection at the Loss Mitigation Department of a bank, with foreclosure and bankruptcy attorneys, or at the building department (none of which is uncommon). Smaller investors, with their ears to the ground, could seal a deal before a hedge fund gets all the appropriate sign-offs.
Target niche markets
Smaller landlords can find success in smaller markets where they have deep community knowledge. This is particularly applicable in markets where viability is determined on a block-by-block basis, which corporate algorithms might miss.
Have financing ready to go
Though corporations have deep pockets, accessing the cash can sometimes be a process, during which time a smaller operator with cash on hand can swoop in and execute a deal.
Final Thoughts: It’s Hard to See Wall Street Simply Walking Away From Single-Family Homes
In recent years, Wall Street has preferred investing in build-to-rent communities, where it can exercise greater operational control. However, it’s hard to see institutions completely giving up on owning single-family housing in suburban American neighborhoods where owner-occupants also own homes, and school districts determine house prices. The money is too good.
Currently, the best places to invest, due to purchase price and cash flow, remain the Sunbelt and the Midwest, and it’s hardly surprising that this is where most of the single-family rental houses are. It’s also not surprising that institutional investors are embedded in certain neighborhoods here, especially in Atlanta, Phoenix, Jacksonville, and Tampa.
What’s interesting is that a 2025 study by Joshua Coven, highlighted by the Brookings Institute, “estimates that entry into a local market by institutional investors decreased the number of homes available for purchase by owner-occupiers by only 0.22 units for each home bought by the SFR firms” and that “relatively few, smaller SFR landlords were wiped out by the increased competition following entry of institutional players.”
All this means that supply rather than competition is the real enemy of both small and institutional landlords. The current stats also suggest that if corporate landlords can find a way to continue to invest in some of America’s most profitable cash-flowing cities, they probably will.
