Best Property Types for Rental Income in 2025

With housing costs rising and rental demand remaining strong, real estate continues to be one of the most reliable paths to passive income. But not all rental properties are created equal.

If you’re considering real estate investing this year, here are the top property types in 2025 that offer strong rental income potential.

1. Single-Family Homes in Suburban Areas

Single-family rentals (SFRs) continue to be a top pick for investors.

Why they work:

• Consistent long-term tenants (often families)

• Lower turnover compared to apartments

• Tenants often handle minor maintenance

2025 Trend:

Suburbs near growing cities with good schools and remote-friendly jobs are seeing the most demand.

2. Small Multifamily Properties (Duplexes, Triplexes, Quads)

These offer a great balance between cash flow and manageability.

Benefits:

• Multiple income streams from one property

• Easier to finance than large apartment buildings

• Ideal for “house hacking” (live in one unit, rent the rest)

2025 Note:

Multifamily properties remain in demand, especially in areas with rising rent prices.

3. Short-Term Rentals (Airbnb/VRBO)

Vacation rentals can offer significantly higher income per night—if managed well.

Pros:

• High cash flow in tourist-heavy markets

• Flexibility to block dates or use personally

• Tax write-offs on furnishings, utilities, and repairs

Risks:

• Requires active management (or a property manager)

• Subject to local short-term rental regulations

2025 Tip:

Look for destinations with year-round tourism and flexible local laws.

4. Mixed-Use Properties

These combine residential and commercial units—like an apartment above a shop or café.

Why it works:

• Diversified income streams

• Commercial tenants often sign longer leases

• Higher ROI in walkable, urban areas

Ideal for:

Investors comfortable with a bit more complexity and seeking long-term wealth building.

5. Student Housing Near Colleges & Universities

Always in demand, student rentals can be cash flow machines.

Advantages:

• High occupancy during the school year

• Per-room rental strategy increases income

• Repeatable tenant cycles (semester-based)

Considerations:

• Higher turnover and potential wear-and-tear

• Must be close to campus and transit options

6. Build-to-Rent Communities

These are purpose-built single-family homes or townhomes for renting—an emerging trend.

Why they’re growing:

• Many families prefer the privacy of a home over an apartment

• Institutional investors are pushing this trend

• Tenants stay longer and treat it more like a home

2025 Outlook:

If you’re investing in new developments, consider targeting the build-to-rent niche in fast-growing metros.

Bonus: REITs (Real Estate Investment Trusts)

Not a physical property, but a passive rental income option through dividend-generating real estate funds.

• Low entry cost (even $100 or less)

• Hands-off investing

• Ideal for portfolio diversification

Great for those not ready for hands-on management but still want exposure to real estate income.

Final Thoughts

In 2025, the best rental property depends on your goals, location, and capacity to manage the investment. Whether you prefer the long-term reliability of a single-family home or the high-reward (but hands-on) nature of a vacation rental, there's a property type to fit your income strategy.

Thinking about building a rental income portfolio?I’d love to help you evaluate markets, run cash flow projections, and find the right property to get started. Reach out today for a free consultation!