Single-family rentals (SFR)
The most common form of direct real estate for individuals. Demand is durable (people always need housing), financing is available, properties are easy to understand. Target 6–10% cap rate, 5–12% cash-on-cash, in markets with reasonable price-to-rent ratios.
Classic SFR investing markets in 2026: stable Midwest and Southeast — Indianapolis, Kansas City, Memphis, Birmingham, Cleveland, Cincinnati, Pittsburgh — and growth Sun Belt markets that have moderated in pricing (Atlanta, Tampa, Jacksonville, Charlotte, Raleigh).
Markets to avoid for new SFR buyers: those where price-to-rent ratios are above 25 (most coastal cities — LA, SF, Seattle, much of Northeast). The math rarely works because rents haven't kept pace with prices.
Institutional SFR has grown dramatically — Invitation Homes and AMH have a combined market cap exceeding $36 billion. But mom-and-pop landlords still account for ~89.6% of the US SFR market, so individual investors are not "competing with Wall Street" the way headlines suggest.