Rents across the country have declined for 30 consecutive months on a year-over-year basis, according to Realtor.com’s February 2026 Rental Report – hitting their lowest level since March 2022. The national median asking rent sits at roughly $1,357, down 1.5% from a year ago. In some Sun Belt markets, the drop is much steeper: Austin, TX is down 18.2% from its pandemic peak, Birmingham, AL is down 17.1%, and Memphis, TN is down 16.1%.
Tracy and I rent our primary residence. After looking at comps in our area, we decided to approach our landlord and get a jump on our next 12-month renewal. Supported by comps, we asked for what would have been a 10% reduction. We settled for a 7.5% reduction, although the market is showing our landlord would have had to drop more if he were to re-rent to new tenants. That’s how loud things are right now.
For landlords – and especially for landlords who have sold property with seller financing, or who are thinking about using seller financing as an exit – this environment is worth a closer look. What softening rents mean for you depends a lot on where you sit in the transaction.
What’s Driving the Rent Softening
The simplest explanation: supply caught up.
A construction boom that ran from roughly 2021 through 2024 delivered a large wave of new multifamily and townhouse units to market. Vacancy rates climbed. Renters gained negotiating leverage they hadn’t had in years. By late 2025, Cotality’s Single-Family Rent Index showed national rent growth cooling to near 15-year lows, with 38% of major metros posting year-over-year declines.
The softening isn’t uniform. Sun Belt markets that saw explosive population growth – Austin, Phoenix, Tampa – absorbed the most new inventory and saw the deepest rent corrections. Markets with tighter supply, like Chicago and Philadelphia, have held up better. But the national trend is clear: the landlord-favored rental market that defined 2020 through 2023 has shifted.
The April 2026 Apartment List report showed three consecutive months of slight rent increases nationally, suggesting some stabilization heading into summer. But rents are still down 1.7% year-over-year and 5% from their 2022 peak – and the pipeline of new construction, while slowing, has not fully cleared the market.
What This Means If You Own Rental Property
Falling rents compress cash flow. If you bought a rental in 2022 or 2023 at elevated prices and financed it expecting 2022-era rents, you may be staring at tighter margins than you planned for. Vacancies take longer to fill. Rent concessions that disappeared a few years ago are back in some markets.
For landlords who are tired, overleveraged, or simply ready to simplify, this creates pressure to exit – but not necessarily from a position of strength. An investor buyer using third party financing needs to show the lender that the property can carry the debt. Softer rents make that harder to demonstrate on paper.
Seller financing for landlords works particularly well in this kind of market.
Why Seller Financing Works as a Landlord Exit Right Now
When you sell a property with seller financing, you act as the bank. Instead of a lump-sum payment at closing, you receive monthly payments – principal and interest – from the buyer over time. The note is secured by the property.
This structure has advantages that become more pronounced when the market is uncertain.
You expand your buyer pool. Lenders want clean debt-service coverage ratios on investment properties. When rents are soft, those numbers are harder to produce. A buyer who struggles to qualify through a third-party lender may be able to work directly with you – with a reasonable down payment, a fair interest rate, and terms that reflect what the property can support. That means more buyers competing for your property.
You collect income without the headaches. You’re no longer managing tenants, paying for repairs, taxes, and insurance, or worrying about vacancies. You collect a payment each month, and without all of the expenses, you may find you keep more of what you collect. For landlords approaching retirement or those who’ve simply had enough, that simplicity has real value.
You spread your tax exposure. A seller-financed sale is typically treated as an installment sale under IRS rules. You recognize the capital gain over time as you receive payments – not all at once in the year of sale. For landlords sitting on significant appreciation, the difference can be substantial. This is worth a specific conversation with your CPA before you close.
The main risk to understand: if your buyer stops paying, you may need to foreclose. That’s why down payment size, the buyer’s creditworthiness, the documents, and loan-to-value ratio all matter when you structure the deal. Seller financing deserves the same diligence and involvement with knowledgable professionals as any real estate transaction – it just gives you more flexibility in how you get there.
What If You Already Hold a Seller-Financed Note on a Rental Property?
If you sold a property years ago with seller financing and your buyer uses it as a rental, the current rent environment is worth staying aware of – especially if their rental income is the primary source of debt service on your note.
Soft rents don’t automatically mean a struggling borrower. It depends on the property, the local market, how much cushion was built into the original deal, and whether your buyer has other income sources. But if you’ve been watching the headlines and wondering whether your note is still as solid as it looked when you closed, it’s worth thinking through.
The good news: a well-structured, performing seller-financed note on a rental property still has real value. If you’d rather convert that future income stream into a lump sum of cash today – rather than track your borrower’s rental income for the next 15 or 20 years – that option is available to you. At Porch Swing Funding, we buy seller-financed notes in full or in part, and we can give you a clear picture of what yours is worth with no obligation to sell.
If You’re Thinking About a Seller-Financed Sale: A Note on Timing
Rent softening doesn’t last forever. Apartment List’s April 2026 data showed three straight months of modest increases nationally, and construction pipelines are slowing in many markets. The gap between today’s rent levels and where rents may settle in 12 to 18 months may not be enormous – but landlords who are ready to exit have a window right now where buyer demand for flexible financing terms is meaningfully higher than it was two or three years ago.
Buyers are actively looking for alternatives to conventional lending. Sellers who are willing to carry financing have more negotiating leverage, not less. If a seller-financed exit has been something you’ve been thinking about for a while, this is not a bad moment to have that conversation.
Where to Start
If you’re a landlord weighing your options – whether that’s selling with seller financing, understanding what a note you already hold is worth, or just trying to make sense of how the current market affects your situation – we’re happy to talk through it.
There’s no sales pitch. We work with everyday people who have real estate notes and real decisions to make, and we try to make the process feel as clear and comfortable as possible.
Request a quote or contact us directly – we’d be glad to help you think it through.
