Residential real estate investor sentiment has slipped to its lowest reading on record, according to the Scotsman Guide. RCN Capital's Investor Sentiment Index landed at 84 at the end of June, down from 87 at the end of March, after a sharp 14-point drop earlier in the year tied to the start of the Iran war.
The wholesale lender points to macroeconomic volatility and interest rate pressure as the main drags.
What happened
- Source: RCN Capital Investor Sentiment Index, published Tuesday
- Latest reading: 84 (end of June 2025)
- Previous quarter: 87 (end of March)
- Earlier drop: 14 points in Q1, attributed to the start of the Iran war
- Cited headwinds: macroeconomic volatility, interest rate pressure
- Backdrop: sentiment already weakened since the index began in July 2023
What RCN Capital is saying
The wholesale lender of business-purpose rental and rehabilitation loans reports that fix-and-flip investors and rental property investors both feel the market conditions are weighing on activity. The Q1 drop was the largest single move since launch, and the Q2 follow-up extends the slide.
Sentiment indices are a soft indicator. They tell you how a self-selecting pool of investors feels, not how deals are actually doing. But a record low is still a record low, and it tracks with what brokers and hard-money lenders have been saying all year.
Our analysis
For investors and brokers with a commercial lens, the read is straightforward. Residential deal flow is throttling because the cost of capital is up and uncertainty is high. Fix-and-flip economics depend on quick turnover; rental economics depend on cheap debt relative to yield. Neither is set up well here.
Who benefits? Patient buyers with cash, plus operators who can take distressed inventory off sellers who cannot wait. Who loses? Highly used flippers and new-entrant landlords who bought at recent peaks. Watch the gap between RCN sentiment and actual origination volumes. If origination holds up while sentiment is in the basement, that is your buying window.
Worked example: a fix-and-flip operator in a softening Sun Belt market
Say you are a flip operator in Phoenix with two open projects. With sentiment this low, sellers of as-is product are more likely to accept realistic offers because competing flipper capital is sidelined. The move: tighten acquisition standards, slow rehab spend to essentials only, and list at a price that will move in 60 days, not 90. If rents plateau and rates stay sticky, the play is to harvest the next nine months of motivated sellers, not chase volume.
What to watch next
Watch for the next RCN reading in October. If sentiment climbs even a few points, that suggests the rate path is stabilising. If it prints another low, expect more lender competition for the remaining credit-worthy borrowers, which is good for marginal borrowers but bad for origination margins.
Key takeaways
- The Investor Sentiment Index has now printed two consecutive quarterly lows, both driven by rates and macro volatility.
- A record-low sentiment reading tends to precede, not follow, a buy window for cash buyers.
- The fix-and-flip maths gets harder the longer rates stay elevated.
Frequently asked questions
What is the latest reading?
84, the lowest in the index's history.
What is causing the weakness?
Macroeconomic volatility and interest rate pressure, with the Iran war cited as a Q1 trigger.
When did the index launch?
July 2023, per the report.
What is the practical impact on operators?
Slower deal flow, tighter margins on flips, and a buyer's market for those with cash.
