Key Takeaways 

  • SFR renovations fuel K&B revenues. In 2023, SFR renovations are predicted to account for 13 percent of all K&B remodeling spending.
  • Institutional investors boosting K&B market. Institutional investors are spending an estimated $3 billion in residential U.S. construction. This includes $1 billion in direct spending from “Built To Rent” operators and $2 billion in “indirect” K&B spending. 
  • Better materials for long-term investments. Investors are using higher quality materials because they expect to own SFRs for 15 years or more, ultimately protecting the value of the home with the assumption that tenants will remain in the properties longer. 
  • SFRs prove valuable during a recession. Historically SFR growth has stayed positive, even in recessionary periods – which is a strong investment in 2023 with a recession likely to occur. 

By Seth Ellison


Single-Family Rentals, or SFRs, are critical to the K&B industry, with renovations accounting for 13 percent of all K&B remodeling spending ($8.5B out of $66.7B) in 2023. The SFR market comprises nearly 15 million units, a 3.1 million increase since 2001, which has boosted K&B remodeling spending on rental units – especially given these units’ larger average footprint vs. other rentals.

The SFR occupancy rates remain at near-full capacity at 96 percent. Although slightly down from 98 percent in early 2021 – due in part to rent increases that are pricing some tenants out, as well as additional built-to-rent supply in some markets – the enduring high occupancy rate demonstrates the strength of this market category. And, with housing inventory remaining low in 2023, the demand for SFR properties will remain strong.

SFR Spending

Institutional investors are positively affecting K&B spending by an estimated $3 billion in residential U.S. construction, including $1 billion in direct spending from “Built To Rent” operators. This is driven by either initial remodeling on older homes when purchased or ongoing improvements to existing SFR properties. They are also responsible for an additional $2 billion boost in “indirect” K&B spending.

Those investors who buy and prepare an older home for rental spend about 10 percent of the purchase price on renovations, and more than 70 percent of those investors make both kitchen and bath upgrades prior to renting. 

Institutional investors keep housing supply low which forces homeowners to “stay and remodel” rather than to move. These improvements increase home values, which in turn, provides further incentive for homeowners to invest in their homes.

SFR Upgrades and Incremental Rents

After acquiring a SFR home there is usually an extensive renovation process involving value-additive upgrades. Investors are using slightly higher quality materials than basic “for-sale” builders use for new “Built-To-Rent” housing because they expect to hold the investment for 15 years or more. The use of better quality materials improves durability and thus longevity, ultimately protecting the value of the home with the assumption that tenants will remain in the properties longer. 

Kitchen and bath upgrades made by institutional investors allow SFR operators to disproportionately realize higher incremental rent than other household upgrades. On average, every dollar spent on K+B upgrades yields $2.40 in incremental rent.

The SFR Failsafe

In these uncertain economic times, Single Family Rental properties provide benefits to the investors who own them as well as the K&B industry. K&B revenues increase due to the influx of dollars investors spend renovating newly acquired properties and maintaining existing portfolio properties. 

SFRs have proven to be a sound investment strategy because they provide a steady stream of rental income even during recession. It should be noted that it has been reported that the probability of a recession occurring in 2023 has risen to 61 percent by many economists’ predictions.1 However, despite these predictions, the SFR industry continues to see steady growth through 2025.

To access the full 2023 Kitchen & Bath Market Outlook download the report here.

1 Economists say there is a 61% likelihood for a recession in 2023 – Business Insider