Small Landlords Still Dominate the Investor Market—Here’s Where They’re Snapping Up Homes for a Bargain

Real estate investors scouring affordable metros in search of bargains they can rent out at a healthy profit margin are reshaping those markets—and small-scale landlords continue to crowd out larger players.

The U.S. investment landscape is increasingly divided: In high-priced Western and coastal states, such as Montana and California, deep-pocketed aspiring landlords are willing to pay up to 35% above the median sales price in anticipation of high returns, according to the latest Realtor.com® Investor Report Midyear Update.

On the other end of the spectrum, in more affordable Heartland states such as Michigan, Maryland, and Wisconsin, investors are zeroing in on the lower end of the housing market, sometimes paying less than half of what a typical homebuyer would.   

"Even as investors pull back from [COVID-19] pandemic-era activity, they’re facing fewer headwinds than many typical buyers," says Danielle Hale, chief economist of Realtor.com. "With affordability still stretched and inventory tight, many would-be buyers remain sidelined, giving investors a larger share of the market and, in some areas, more influence over prices."

At the metro level, real estate investors saw the biggest discounts in Detroit, where the typical landlord paid a staggering 58% less than an individual homebuyer. 

For context, in October, Detroit’s median list price edged down to $268,000, more than $156,000 below the national figure, making Motor City one of the most affordable large cities in the U.S., according to the latest monthly housing market trends report from Realtor.com.  

Bargain hunters' top destination

For Erica Collica Swink, associate broker at Detroit-Max Broock Realtors, it's no surprise that real estate players are flocking to her budget-friendly city in search of large returns on investment.

"Home prices in Detroit are significantly more affordable when compared to other cities across the country, which is very attractive to investors," Collica Swink tells Realtor.com. "We are still in a 'transformation-recovery' stage where there is a ton of opportunity."

The real estate professional explains that as Detroit continues to develop its infrastructure, this transitional period provides what she calls "the perfect storm" for investors to snap up affordable properties in need of repairs that individual buyers often do not have the time or money to carry out.

Collica Swank maintains that the influx of investors has benefited Detroit, rather than pushing individual homebuyers out of the market.

"Detroit is such a large city—it’s 139 square miles—so there’s a lot of land and real estate available to where buyers aren’t feeling squeezed out," she adds.

Affordable Heartland

Beyond Detroit, several Midwestern metros offering an appealing mix of affordable homes and stable rental demand have been attracting investors in droves.

In Pittsburgh, the typical buyer aiming to become a landlord spent just $115,000, 52.7% below the median sales price of $252,000. 

Notably, in October, Pittsburgh stood out among the top 50 U.S. metros for having the lowest median list price, at $250,000.  

Meanwhile, Baltimore offered investors the third-biggest discount on properties, at 52%, followed by Cleveland, at 51.4%, and Milwaukee, at 50.1%.

"These discounts show that investors are targeting lower-priced homes and entry-level stock, which often provide the best rent-to-price ratios and long-term income potential," says Realtor.com senior economic research analyst Hannah Jones.

Small investors push out big players

Looking at the big picture, 10.8% of all homes purchased in the second quarter of 2025 went to investors, representing a slight year-over-year increase—and driving up prices in highly competitive areas. 

Meanwhile, small investors maintained their dominance, capturing the second-highest share of the market since 2007 (62.7%) as larger players pulled back, with their buying activity falling to 20.1%. 

For investor buyers, the biggest challenge is having to balance affordability with potential returns. With that goal in mind, in the second quarter, investors gobbled up the largest share of homes in budget-friendly Missouri (18.9%), Mississippi (17.1%), Nevada (15.4%), Indiana (14.3%), and Alabama (13.4%). 

"These states are generally affordable but have seen rental prices hold up better than national rents, creating an opportunity for investors," says Jones. "Nevada in general, and Las Vegas in particular, has seen a significant shift of late as falling demand has resulted in climbing inventory and falling prices. Investors are increasingly taking advantage of this shift."

Sin City beckons investors

Echoing the report's findings, Tania Jhayem, real estate agent and investment specialist with Urban Nest in Las Vegas, tells Realtor.com that Nevada continues to be a "huge draw" for investors, especially for smaller and independent ones.

"The lack of state income tax, low property taxes, and overall landlord-friendly environment make it easy for investors to see solid returns without a lot of red tape," explains Jhayem. "We still have a relatively strong rental market, but we're seeing early signs of normalization: more available homes, slightly longer days on market, and landlords needing to be more competitive with pricing to be successful in renting out their properties."

The agent contends that Sin City has benefited from a continued inflow of newcomers from higher-priced areas—a trend that has created consistent demand for both long- and short-term rentals.

"I’ve noticed more investors this fall purchasing with the intent to rent rather than flip," shares Jhayem. "Many are taking advantage of price adjustments and motivated sellers, and they’re focused on long-term stability versus quick profits."

Similar to Detroit, investor presence in Las Vegas has had an overall positive impact, according to Jhayem.

"It keeps the market moving, helps revitalize older properties, and adds much-needed rental inventory," concludes the agent.