In this article, we will take a look at the best residential REITs to buy in 2025.
The US housing market is most likely to lag through 2025, according to JP Morgan, with home price growth expected to remain below 3%. Existing home sales are at an all-time low, and although inventory is slowly increasing, it’s still below average. While underbuilding is often blamed for supply issues, long-term data suggests that new household formations and housing completions have mostly balanced out over the past 30 years. Even so, home prices are expected to grow modestly. That is largely due to the wealth effect: homeowners with strong equity positions and renters with gains from the stock market are helping sustain prices, despite broader affordability challenges.
The U.S. housing market remains stuck in a prolonged slowdown through 2025, with new data from the National Association of Realtors (NAR) highlighting ongoing weakness. Business Insider reported that pending home sales dropped 0.8% from May to June and declined 2.8% year-over-year, reflecting continued buyer hesitation. While housing inventory has increased, many sellers are choosing to withdraw listings rather than reduce prices. This has kept home prices at record highs, worsening affordability, particularly for first-time and younger buyers.
The real estate sector is under pressure from rising interest rates, increasing construction costs, and stricter regulatory requirements, according to Jonathan Rose, CEO of the Jonathan Rose Companies. Despite these challenges, recent federal legislation has provided developers with renewed support by expanding the Low-Income Housing Tax Credit (LIHTC). The bill increases states’ 9% credit allocation by 12% and eases financing requirements. These measures are expected to accelerate affordable housing development. While the US still faces a significant housing shortage, estimated at around 10 million units, Rose sees the bill as a meaningful step forward and an opportunity for impact-focused investment.
However, concerns remain over a proposed $27 billion cut to federal rental assistance, which has already prompted some lenders to scale back. Rose remains cautiously optimistic, noting bipartisan support in Congress for affordable housing.
With this outlook in mind, let’s take a look at some of the best residential REITs to buy in 2025.
A residential neighborhood with a new construction house, a symbol of the bank’s success.
Our Methodology
We used the Finviz stock screener to filter residential REIT stocks. The 10 chosen stocks were some of the best residential REITs that also received positive coverage from Wall Street analysts and mainstream media outlets recently. These stocks were favored by top hedge funds in the first quarter of 2025 as well, as per Insider Monkey’s Q1 2025 database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. UMH Properties, Inc. (NYSE:UMH)
Number of Hedge Fund Holders: 10
UMH Properties, Inc. (NYSE:UMH) is one of the best residential REITs to buy. In the beginning of July, UMH revealed operating results for the second quarter of 2025. The REIT made progress in both operations and finances, turning 188 homes from its inventory into rental units that now generate income. This brought the total number of rental homes to around 10,600, with a high occupancy rate of 94.4% in Q2. In addition, UMH’s same-property occupancy rose by 76 units during the second quarter and by 251 units over the past year, reaching 88.2%.
UMH Properties, Inc. (NYSE:UMH) also saw a boost in home sales, with gross sales revenue increasing to $10.3 million, up from $8.8 million last year. Given the higher occupancy and rent increases throughout 2024 and into 2025, same-property rental and related charges for July 2025 rose by 9.2% compared to July 2024. Overall rental and related charges for the second quarter came in at $55.9 million, up 8.5% from $51.5 million the year before.
UMH also refinanced ten of its communities, which have about 2,000 sites, under a Fannie Mae credit facility. This refinancing provided $101.4 million at a fixed interest rate of 5.855%. The certified appraisal valued these properties at $163.5 million or about $82,000 per site. Since UMH invested $66.6 million in these communities, their value has gone up by about $96.9 million, or 146%, which shows the properties have appreciated a lot.
The company also sold around 1.8 million shares of common stock through its At-the-Market program. These shares sold at an average price of $17.60, raising about $31.0 million in total.
President and CEO of UMH Properties, Samuel A. Landy, commented:
“Our communities continue to experience strong demand which we are converting into occupied sites through our rental home and sales programs. We are proud to announce that our second quarter sales set a new quarterly sales record.”
UMH Properties, Inc. (NYSE:UMH) is a real estate investment trust that was founded in 1968. It owns and operates manufactured home communities across 12 states, with around 26,000+ homesites, including rental homes and self-storage units.
9. NexPoint Residential Trust, Inc. (NYSE:NXRT)
Number of Hedge Fund Holders: 14
NexPoint Residential Trust, Inc. (NYSE:NXRT) is one of the best residential REITs to buy. On July 16, NexPoint Residential announced that it has completed the restructuring of its corporate revolving credit facility in partnership with JPMorgan Chase, Raymond James, RBC, and Synovus.
The new credit facility will mature in June 2028, but the company has the option to extend it until June 2029. The interest rate will be based on the term Secured Overnight Financing Rate (SOFR), with an added 150 to 225 basis points depending on the company’s total leverage ratio each quarter.
The credit facility is backed by ownership shares in partner companies that hold mortgaged properties, along with money raised from equity sales and other financial events. The company said it plans to use the facility for things like tax-friendly acquisitions, working capital, and general business needs. There was no debt remaining on the old facility.
Matt McGraner, Chief Investment Officer, commented:
“Our new credit agreement provides us with the flexibility to take advantage of new opportunities to drive growth and performance in improving fundamental and investment markets,”
NexPoint Residential Trust, Inc. (NYSE:NXRT) is a public REIT that focuses on buying and managing middle-income apartment properties with potential for upgrades. These properties are mainly in big cities and surrounding areas in the Southeastern and Southwestern United States.
8. Independence Realty Trust, Inc. (NYSE:IRT)
Number of Hedge Fund Holders: 19
Independence Realty Trust, Inc. (NYSE:IRT) is one of the best residential REITs to buy. On June 9, Citizens JMP maintained a Market Outperform rating on IRT, assigning a price target of $25 on the shares. Analysts believe the company is better positioned in the near term compared to Mid-America Apartment Communities, Inc. (NYSE:MAA), which holds a Market Outperform rating with a $170 price target.
Citizens JMP analysts said that even though Independence Realty Trust has a positive outlook, it is not enough to change the company’s full-year forecast. The company has paid dividends for 13 years in a row, with a current yield of 3.74% and a 6.25% dividend increase in the past year.
While the near-term forecast for IRT remains strong, analysts pointed out that the company is relying on a shift in the supply and demand balance in the Sunbelt apartment market to see substantial gains in net operating income.
Independence Realty Trust is keeping a close watch on market trends as it moves forward with its strategic initiatives. The company’s results will depend on how these conditions evolve in the near future.
Independence Realty Trust, Inc. (NYSE:IRT) is a real estate investment trust that owns and manages apartment communities in growing American cities like Atlanta, Dallas, and Denver. The company buys properties near job centers with good schools and shopping centers.
7. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 27
Sun Communities, Inc. (NYSE:SUI) is one of the best residential REITs to buy. On July 17, Morgan Stanley began coverage of SUI with an Equal Weight rating and a $135 price target.
Morgan Stanley thinks there are several possible outcomes for the REIT and says Sun Communities’ low debt gives it room to make new acquisitions. The company is in good financial shape, though it might be slightly overvalued based on its fair value. It also has a strong history, having paid dividends for 33 years straight, with a current yield of 3.32%.
The investment firm believes SUI will mainly focus on manufactured housing and recreational vehicle properties, with more attention on the former based on what management has shared. They also expect Sun Communities to work on making its current operations better by raising rental rates and running things more efficiently.
In 2024, Sun Communities, Inc. (NYSE:SUI) worked on getting rid of assets that did not fit its core strategy and made its operations and finances simpler. This included selling its Safe Harbor marina business, while still keeping its properties in the UK.
Morgan Stanley analysts expect that Sun Communities might still sell its Park Holidays business, which they believe the market would see as a good move. However, with the company’s improved debt position, it may not feel as much pressure to sell right away.
Sun Communities is a public REIT that owns and operates manufactured housing and RV communities. As of 2025, the REIT owns or holds a stake in 500 properties across the US, Canada, and the UK.
6. Invitation Homes Inc. (NYSE:INVH)
Number of Hedge Fund Holders: 30
Invitation Homes Inc. (NYSE:INVH) is one of the best residential REITs to buy. On June 6, Citi upgraded INVH to Buy, and trimmed American Homes 4 Rent (NYSE:AMH) to Neutral, based on relative value and the view that Invitation Homes’ financial performance is expected to catch up to its competitor.
According to Citi, INVH’s recent 6% underperformance compared to American Homes 4 Rent has increased the valuation difference, presenting an attractive buying opportunity.
Citi observed that INVH trades at a cap rate approximately 30 basis points below AMH’s, placing it near the historically lowest spread levels.
The analysts commented that Invitation Homes Inc. (NYSE:INVH) is in a strong position to handle these risks because it knows the build-to-rent (BTR) market well, including rent prices and property values. They also mentioned that the company’s outlook seems cautious, which means it might actually do better than expected when it comes to occupancy and rent growth.
The firm sees more upside potential from INVH’s lending strategy, estimating it could lift yearly earnings by 7 cents, which is an increase of about 3.5% over the coming years. The program also increases the potential to secure built-to-rent assets from residential developers.
Citi believes both Invitation Homes and American Homes 4 Rent will keep growing rents by around 4% in the next few years, even though lease growth has slowed down recently. While AMH might have already hit its peak in new lease growth in May, Citi says the differences between the two companies are small and probably just because of how the data is measured or seasonal changes.
Invitation Homes Inc. (NYSE:INVH) is a major American REIT that focuses on single-family homes. It provides modern houses in good locations, close to jobs and schools.
5. Veris Residential, Inc. (NYSE:VRE)
Number of Hedge Fund Holders: 30
Veris Residential, Inc. (NYSE:VRE) is one of the best residential REITs to buy. On July 23, VRE released its Q2 2025 results, showcasing improved efficiency and headway on strategic plans.
In Q2 2025, Veris saw a 5.6% boost in same-store NOI, which pushed year-to-date growth to 4.4%. This happened because the company experienced revenue growth while also cutting same-store costs by 3.4%. The company kept its occupancy rate high at 93.9% and saw a 4.7% increase in rent growth in Q2 this year. VRE rents to wealthy residents, with an average household income of $445,334 per unit and a rent-to-income ratio of 10.6%.
So far, the company has sold or signed contracts to sell around $448 million worth of its non-core assets, in a bid to improve its finances by disposing of properties that are not part of its long-term plans.
Veris Residential, Inc. (NYSE:VRE) is actively pursuing its balance sheet optimization strategy by lowering borrowing costs and deleveraging through asset sales. In April, it amended its $500 million credit facility, achieving a 55-basis-point cost reduction and enhanced asset-level flexibility.
Veris raised its 2025 outlook and is now expecting core FFO per share to fall between $0.63 and $0.64, slightly better than the earlier estimate. They also raised their same-store NOI growth forecast to 2.0% – 2.8%, given stronger operations and better revenue performance.
Veris Residential, Inc. (NYSE:VRE) is a real estate investment trust specializing in the ownership, operation, and development of high-quality Class A multifamily properties across the Northeast.
4. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 32
AvalonBay Communities, Inc. (NYSE:AVB) is one of the best residential REITs to buy. On July 10, AVB finalized a public issuance of $400 million in 5.000% Senior Notes, maturing in 2035, as part of its long-term capital financing strategy.
The $400 million senior notes offering was executed under AvalonBay’s Form S-3 shelf registration, and the underwriting team consisted of Wells Fargo Securities, Barclays Capital, Scotia Capital, and Truist Securities, reflecting strong institutional backing.
AvalonBay’s notes have started earning interest from July 10, 2025, with payments made twice a year on February 1 and August 1, starting in 2026. The notes are set to mature on August 1, 2035, unless the company decides to pay them off earlier.
AvalonBay anticipates net proceeds of approximately $393.9 million from the offering, after deducting underwriting discounts and related expenses. The company has indicated that these funds will be allocated toward repayment of outstanding obligations under its commercial paper program, as well as investments in land acquisitions, residential projects, community acquisitions, structured investment program funding, and the repayment of existing debts. The funds may be held in cash or near-cash assets, or managed according to AvalonBay’s liquidity strategy, until they are allocated.
AvalonBay Communities, Inc. (NYSE:AVB) is an REIT that develops, acquires, and manages apartment communities across major US metropolitan cities.
3. Essex Property Trust, Inc. (NYSE:ESS)
Number of Hedge Fund Holders: 34
Essex Property Trust, Inc. (NYSE:ESS) is one of the best residential REITs to buy. On June 24, Raymond James upgraded Essex Property from Market Perform to Outperform, while lowering the rating for Mid-America Apartment Communities, Inc. (NYSE:MAA) to Market Perform from Outperform. Raymond James attributed these changes to persistent softening in rent growth and current valuation differentials.
Essex benefits from its strong presence in tech-focused West Coast markets, which continue to lead national rent growth. Analysts noted that as of mid-June 2025, asking rents in San Francisco, San Jose, and Seattle had increased by 4.2%, 4.2%, and 2.5%, respectively.
Analysts consider Essex relatively safe from supply pressures impacting Sun Belt markets and suggest its conservative guidance allows room for upside. The firm noted improved cash delinquencies and early signs of rent growth recovery in Oakland, adding that Essex’s cost of capital advantage could be a key asset in the second half of the year if attractive investment opportunities emerge.
Overall, Raymond James adopts a neutral to cautious outlook on most multifamily REITs, citing irregular seasonal leasing softness and unsteady rent growth across markets as factors limiting short-term visibility.
Essex Property Trust, Inc. (NYSE:ESS) is an REIT specializing in the acquisition, development, and management of multifamily residential properties in select West Coast markets.
2. Equity Residential (NYSE:EQR)
Number of Hedge Fund Holders: 36
Equity Residential (NYSE:EQR) is one of the best residential REITs to buy. On July 7, Evercore ISI upgraded EQR to Outperform from In Line, while bumping the price target to $75 from $74. The rating upgrade aligns with Evercore’s reaffirmed FFO estimates of $0.99 for Q2 and $3.99 for the full year 2025, reflecting confidence in Equity Residential’s performance and placing estimates at the upper limit of the expected range.
The investment firm expects Equity Residential to post 3% same-store revenue growth in Q2, 30 basis points above the market average. For full-year 2025, it projects 3% same-store revenue growth for the full year, slightly ahead of consensus by 10 basis points. This is driven by solid rent gains in core coastal markets, while Sunbelt properties remain weaker. Evercore added that the company’s own guidance for revenue growth ranges from 2.25% to 3.25%.
Equity Residential (NYSE:EQR) deals in the acquisition, development, and management of residential properties in high-demand urban markets aimed at affluent, long-term renters.
1. Equity LifeStyle Properties, Inc. (NYSE:ELS)
Number of Hedge Fund Holders: 38
Equity LifeStyle Properties, Inc. (NYSE:ELS) is one of the best residential REITs to buy. On July 15, Morgan Stanley began coverage of ELS with an Equal Weight rating and assigned a price target of $67.5.
The firm anticipates year-over-year growth in Core Income from Property Operations for ELS at 5.6% in 2025, 4.5% in 2026, and 4.7% in 2027. The company also maintains a robust track record of shareholder returns, with 19 years of consistent dividend increases.
Morgan Stanley added that ELS is positioned for steady growth, with steady mid-single digit gains from internal operations and moderate external expansion, given tight cap rates on premium manufactured housing assets. Together, these factors are expected to support around 4.5% annual growth in FFO and AFFO per share from 2025 to 2027.
Research indicates that manufactured housing REITs are expected to lag the broader REIT sector in FFO growth through 2025 and 2026, following a weak 2024.
Equity LifeStyle Properties, Inc. (NYSE:ELS) is an American operator of manufactured home communities, RV resorts, and campgrounds in North America, offering a range of housing and recreational options in high-demand locations to meet diverse customer needs.
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