Small Landlord Sentiment Improves as Collections Stabilize

Small landlord sentiment improved in the first quarter of 2026 as rental collections normalized and operating cost growth decelerated. The National Real Estate Investors Association (NREIA) Sentiment Index reached 58 in Q1, the highest reading since early 2022. The survey-based index polls 2,200 small landlords owning fewer than 20 units each on business conditions.

Rental collections performance drove much of the improvement. NREIA members reported average collection rates of 94.2% in Q1, up from 91.8% a year earlier and approaching the pre-pandemic benchmark of 96%. Pandemic-era rental arrears accumulated among a subset of tenants have largely worked through either repayment, eviction resolution, or tenant turnover.

"The small landlord operating environment has notably stabilized over the past 12 months," said Rebecca McLean, executive director of the National Real Estate Investors Association. McLean said NREIA members' primary 2025 complaints about insurance and property-tax inflation have not gone away, but the rate of increase has slowed to more manageable levels.

Insurance cost growth moderated. NREIA survey respondents reported average rental property insurance premium increases of 8.4% for 2026 renewals, compared with the 18.2% average increase recorded in 2025. The moderation reflects partial stabilization in reinsurance markets and improving underwriter visibility on weather-related loss experience.

Property tax increases remained elevated but declined in severity. Surveyed landlords reported average property tax increases of 5.8% for 2026, compared with 8.3% in 2025. States including Texas and Georgia that enacted property tax reform produced some of the relief; states with aggressive revaluation cycles including Illinois and New Jersey continued to drive above-average increases.

Tenant eviction activity remained below historical norms. Eviction Lab data covering 10 major U.S. metros showed Q1 2026 eviction filings at 74% of the pre-pandemic baseline, essentially unchanged from Q4 2025. The persistence of below-normal eviction filings reflects a combination of continued state and local tenant protections in many jurisdictions and landlord efforts to avoid eviction costs when alternative resolutions remain available.

Rent growth remained modest for small landlord portfolios. Surveyed NREIA members reported effective rent growth of 3.2% year-over-year in Q1. Small landlords often operate in Class B and C market segments where rent growth has outpaced Class A newer apartments. The combination of moderate rent growth and slower expense inflation has produced a more favorable operating spread.

Outlook for 2026 remains cautious. Approximately 38% of NREIA members surveyed said they planned to acquire additional properties in 2026, up from 31% in late 2025. Small landlord buyers continue to favor Midwest value markets and select Sun Belt submarkets with moderated supply conditions. The index respondents expecting net portfolio growth exceeded those expecting net reduction by the largest margin since 2021.

Regulatory concerns remain elevated. Among surveyed landlords, 62% identified state or local rent control and tenant protection expansions as a top-three risk for 2026. The concern was most pronounced in California, New York, Minnesota, and Washington State, where rent stabilization and source-of-income protection measures have progressed. Landlord trade groups continue to advocate against expansion of those measures while supporting federal and state mitigation of insurance and property-tax pressures.