How to Compete in a Market Dominated by Mega Investors

If you've been thinking about investing in real estate, you've probably seen the headlines: Mega investors are buying up single family homes at record levels. Between January and June of 2025 these large players accounted for 32% of all U.S. single family home purchases, compared to 25% in 2024 (New York Post). That means nearly one in three homes went to institutional buyers during the first half of this year.

For many everyday Americans, it can feel discouraging to constantly lose deals to large institutions, suits who often bring cash offers and eliminate contingencies. The question becomes clear: How can small investors carve out their path when competing against giants with deep pockets?

Understanding the Challenge

Mega investors target markets where population growth is strong and housing supply is tight (e.g. Atlanta, Memphis, Los Angeles, etc.). These are cities where first time buyers and individual investors already face limited inventory, especially in the starter homes market.

When large firms step in with aggressive strategies, they set the bar higher for pricing and shorten the time homes stay on market. Everyday investors often find themselves outbid before they even get a chance to negotiate.

Where the Opportunity Lies

Despite these challenges, there's still plenty of opportunity out there. Real estate is not a one size fits all business. While mega investors do focus on scale, they tend to cluster in a few high visibility markets. This leaves secondary metros and overlooked neighborhoods ripe for individual investors.

Take Columbus, Ohio for example. The city has a steady flow of jobs from technology and finance and a large student population from Ohio State University. Properties are still financially accessible (compared to national averages), which makes it easier for smaller investors to enter the picture.

Or consider Greenville, South Carolina. Manufacturing jobs and steady migration have created a healthy rental market. Many large investors overlook Greenville because it does not yet offer the scale they prefer. For a new investor, however, Greenville offers manageable property prices and consistent demand.

These types of secondary markets often provide better cash flow potential and less competition from Wall Street.

A real world example... One of our students recently purchased a duplex in Chattanooga, Tennessee for under $400,000. Institutional investors have been active in nearby Nashville, but have not yet focused on Chattanooga to the same extent. By looking in this secondary market, our student was able to secure a property that now generates consistent monthly rental income and positive cash flow.

Practical Guidance for Breaking In

If you're just starting out, here are a few practical strategies you can employ right now.

1. Look off market. Many profitable deals never make it onto the MLS. Consider probate sales, distressed properties, or direct to seller outreach. Building relationships with wholesalers or local real estate agents can also open doors.

2. Target secondary metros. Explore cities like Indianapolis, Kansas City, or Colorado Springs. These markets are growing but are less saturated with institutional buyers. The entry prices are lower and rental yields are often higher.

3. Build partnerships. Joining forces with other small investors through local meetups or online communities allows you to pool resources and reduce risk. Syndicating a deal with trusted partners can help you to compete with the larger players.

   
   

Final Thoughts

Institutional money is here to stay, but that doesn't mean you have to be left behind. Individual investors still have many ways to enter the real estate market. By focusing on off market opportunities, secondary metros, and creative partnerships, you can build your own path toward financial freedom.

If this topic has sparked ideas or raised questions for you, we'd love to hear your thoughts. What strategies are you considering to accelerate towards your real estate investing goals today?

Let's continue the conversion.