Private investment vehicles run by ultra-wealthy families may unexpectedly find themselves affected by President Donald Trump’s proposed restriction on “large institutional investors” purchasing single-family homes. Although the policy announcement was clearly aimed at Wall Street landlords and major private equity players such as Blackstone, legal experts caution that family offices should not assume they are automatically exempt.

Vicki Odette, a partner at the law firm Haynes Boone, explained in an interview with Inside Wealth that the line between institutional investors and private family capital is not always clear. As a result, family offices could be swept into regulatory measures that were originally designed to curb the influence of large corporate landlords in the housing market.

Data suggests that real estate is already a core asset class for many family offices. A survey released last year by Campden Wealth in collaboration with RBC Wealth Management found that approximately 75 percent of North American family offices invest in real estate, allocating an average of 18 percent of their portfolios to the sector. Within those real estate holdings, residential properties account for nearly one-third, highlighting the potential exposure family offices may face if new restrictions are broadly defined.

Much of the uncertainty surrounding Trump’s proposal stems from the fact that the administration has not yet clarified what qualifies as a “large institutional investor.” Odette noted that in recent years, lawmakers and regulators have tended to focus less on an investor’s total assets or organizational structure and more on the number of housing units owned.

For example, a 2024 report issued by the Government Accountability Office examined institutional investors that owned more than 1,000 residential properties with four units or fewer. Proposed legislation has gone even further. The Stop Predatory Investing Act, introduced in March, outlines a category known as “disqualified single-family property owners.” Under that bill, any taxpayer who directly or indirectly owns 50 or more single-family rental homes could fall under stricter rules.

This approach could have unintended consequences. According to Odette, many wealthy families accumulated their fortunes through real estate development and long-term property ownership. In such cases, the families may not view themselves as large institutional investors, yet their portfolios could still exceed the thresholds being discussed.

“There are many affluent families who could end up in this category without ever intending to,” Odette said. “They built their wealth in real estate, and over time that naturally led to owning a significant number of properties.”

Traditionally, family offices have gravitated toward multifamily housing projects and commercial real estate rather than large-scale single-family rental portfolios. These investments often align better with long-term income strategies and professional management structures. However, this is not universally true. Odette pointed out that certain family offices, particularly those based in the southern United States, hold substantial numbers of single-family homes in suburban or rural markets. In these regions, single-family rentals can be a stable and attractive investment, especially where land is abundant and demand remains strong.

Michael Cole, managing partner of R360, a private investment network for centimillionaires, echoed the view that it is still too early to determine how family offices might be affected. He emphasized that the diversity of family office structures complicates any attempt to regulate them as a single category.

One key issue, Cole explained, is that a family office is not a legal entity in itself. Unlike corporations, limited liability companies, or family limited partnerships, the term “family office” describes a concept rather than a formal legal structure. Each family office may operate through a web of entities, trusts, and partnerships, making it difficult for regulators to draw clear boundaries.

“There is no legal entity called a family office,” Cole said. “It’s not a corporation or an LLC. Those are structures that might be used by a family office, but the family office itself is simply a way of organizing and managing wealth.”

This ambiguity could either protect family offices from immediate scrutiny or expose them to broader interpretations of future regulations, depending on how policymakers proceed.

Arielle Frost, a partner in the real estate practice at Withers, believes that any initial enforcement efforts will likely focus on large Wall Street landlords, which are more visible and politically salient targets. In her view, family offices are unlikely to be affected in the early stages of the policy’s rollout.

However, Frost cautioned that the longer-term trajectory remains unclear. Once momentum builds behind a policy initiative, lawmakers may be tempted to expand its scope beyond the original targets.

“The first move is usually the most critical,” she explained. “That’s when political support is mobilized and public attention is highest. After that, the question is whether the issue fades away or whether it becomes a sustained focus of the administration.”

According to Frost, the administration could decide that addressing institutional ownership of housing has fulfilled its political purpose and shift attention elsewhere. Alternatively, it could continue tightening definitions and extending restrictions to additional types of investors, including family offices.

For now, the situation leaves wealthy families and their advisers in a holding pattern. Without clear definitions or finalized legislation, it is difficult to assess the true level of risk. What is evident, however, is that the growing political scrutiny of housing affordability and investor ownership has created an environment where even traditionally low-profile investors may find themselves under the spotlight.

As policymakers debate how to balance housing access with investment activity, family offices may need to prepare for increased regulatory attention. While they are not the primary targets today, evolving definitions and legislative momentum suggest that they may not remain on the sidelines forever.