**Investing In, Insuring, and Financing Single-Family Rentals: Insights from Kiavi’s Charles Goodwin**
Positive fundamentals are driving the success of single-family rental (SFR) and build-to-rent (BTR) properties, prompting more investors to explore opportunities in the space. ConnectCRE recently spoke with Charles Goodwin, Vice President of Bridge and DSCR Lending at Kiavi, to uncover current trends, insurance considerations, and effective investment strategies in the evolving SFR market.
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### What’s Happening in the SFR and BTR Space?
Single-family rentals and build-to-rent properties are outperforming the traditional for-sale market, which has slowed due to rising inventory levels. While SFR rent growth has cooled from pandemic highs, it’s still registering about 4% year-over-year, a healthy indicator of market resilience.
One key factor is affordability. Homeownership costs have surged to about double the national cost of renting. In states like Texas, where listings have been abundant in recent years, supply is beginning to taper off. This shift signals a potential stabilization that could bolster rent growth over time. Additionally, some homeowners are opting to rent out properties instead of selling at lower-than-anticipated prices, which increases rental supply and creates a more competitive leasing environment.
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### What Should SFR Investors Know About Insurance?
Every SFR investor should begin with a foundation of three key insurance coverages:
1. **Property Insurance** – Covers rebuilding in the event of damage or disaster.
2. **Liability Insurance** – Protects against legal claims or on-premises accidents.
3. **Loss of Rent Insurance** – Covers lost income if the property becomes uninhabitable.
Depending on the situation, investors may also need builder’s risk insurance for significant renovations, vacancy insurance, or short-term rental endorsements for non-traditional leasing.
Timing is another critical factor. During wildfire or hurricane seasons, insurance providers may temporarily pause new policies. Kiavi advises securing insurance 30–45 days ahead of property closings to avoid closing delays. When considering whether to file a claim, weigh the size and type of claim against your deductible and the potential long-term impact on premiums. Minor damage may be better handled out-of-pocket.
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### Are Foreclosures Presenting Opportunities?
Not right now. Despite widespread speculation, foreclosure rates remain low, and most homeowners have significant equity. Forced selling is minimal, which means investors shouldn’t expect a sudden influx of distressed properties. Instead, smart investors are focusing on building relationships with sellers earlier in the sales cycle.
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### Key Considerations When Entering New Markets
Job growth remains the most important metric. It supports rental demand and market stability. Additional factors include rental supply, affordability, and general market trends. Data tools like those offered by Redfin can help guide market research.
That said, real estate is highly localized. Strategies that work in one metro may not translate to others due to varying zoning laws, permitting requirements, or unforeseen issues during title searches. For out-of-state investments, having trusted local partners on the ground is essential. These professionals provide insight into regulations, coordinate with vendors, and help navigate local nuances.
Understanding how your investment strategy aligns with the neighborhood is equally important. What works in an urban hub may stumble in a suburban market. Market alignment can make or break your investment.
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### Is the BRRRR Strategy Still Effective?
Yes. The BRRRR strategy—Buy, Renovate, Rent, Refinance, Repeat—continues to offer strong potential but hinges on smart financing choices. Typically, you begin with a short-term bridge loan to acquire and renovate a property. Once renovations are complete and a tenant is in place, you can refinance into a Debt Service Coverage Ratio (DSCR) loan to replace the higher-interest bridge loan with long-term financing.
The result is stronger cash-on-cash returns and possibly the ability to recoup upfront capital or extract additional liquidity. Ultimately, the BRRRR model leaves investors with a stabilized, income-generating rental property and room to take on the next opportunity.
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### Key Takeaways for SFR Investors
Investors should stay focused on the fundamentals:
– Build strong relationships with sellers.
– Line up financing and insurance in advance.
– Don’t rely on a looming foreclosure wave—it’s unlikely.
Equity positions remain high among homeowners, and systemic distress isn’t significant. Strategic preparation and local knowledge are increasingly the keys to success in SFR investing.
Moreover, target markets with solid rental demand and a lack of recent construction booms. With homeownership now nearly twice as costly as renting, the affordability gap is steering more prospective buyers into the rental pool, especially in the single-family rental sector.
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**Save the Date: Connect Apartments 2025**
Registration is now open for Connect Apartments 2025, a comprehensive conference offering expert insights on various aspects of the multifamily sector. The event will be held on September 11, 2025, at the Fairmont Century Plaza in Los Angeles.
For more information, visit Connect Conferences.
