11 Feb 2026TRANSCRIPT
What is Working In Today's Real Estate Market
What is Working In Today's Real Estate Market Podcast Transcript
Hello everyone, and welcome to the Investing in Real Estate Show. I'm your host, Lex Levinrad. In today's episode, I want to discuss two important topics: first, whether we are heading into a new foreclosure crisis, and second, what strategies are currently working for real estate investors in today's market.
Let's begin by discussing the overall state of the market and whether we are moving toward a foreclosure crisis. There are several ways to look at this. If you compare today's data to the peak levels seen in 2008—particularly foreclosure numbers and MLS inventory—you could argue that the market is still in relatively good shape. That assessment would be accurate. However, when you examine year-over-year trends, a different picture emerges. Foreclosures have increased significantly, bank-owned properties are up year over year, and MLS inventory has risen substantially.
For example, in our local South Florida MLS, there were approximately 15,000 properties for sale in 2022. That number doubled to 30,000 in 2023, increased again to about 45,000 in 2024, and has now reached nearly 60,000 listings. While these numbers are not yet comparable to the levels seen during the 2008–2009 crisis, the market has clearly shifted. We are now in a buyer's market, and sellers are facing increased challenges.
There are, of course, exceptions. Certain luxury markets—particularly waterfront properties or ultra-high-end neighborhoods such as Lighthouse Point or Boca Raton—remain relatively unaffected. High-net-worth buyers are generally less sensitive to interest rates and economic fluctuations. However, affordability remains a major issue for the average household, especially in South Florida, where median home prices are often beyond what the typical U.S. income can comfortably support.
When you look beyond South Florida and examine markets across the Midwest and other regions of the country, affordability pressures become even more apparent. Florida, in particular, tends to behave as a boom-and-bust market, unlike more stable markets such as Cleveland, where price swings are typically less dramatic. Markets such as Austin, parts of Nevada, Arizona, and Florida have experienced sharper corrections, especially in areas like Southwest Florida, including Cape Coral and Naples.
Currently, the situation is widely described as a housing crisis rather than a financial crisis. However, it is possible that financial impacts could increase over time if mortgage defaults and foreclosures continue to rise. Banks may respond by tightening lending standards, particularly institutions that originated large volumes of loans at peak prices or that hold depreciated bond portfolios.
From my perspective, what I am seeing on the ground—particularly in what I refer to as "middle America" markets—is a growing shift toward affordability-driven investing. My focus has historically been on affordable markets within Florida and other regions where housing costs align more closely with rental demand and average incomes.
Early in my career, while living in Boca Raton, I began purchasing properties further north in areas like Port St. Lucie, where homes were significantly less expensive. As prices increased there, I moved further north again into markets such as Fort Pierce, where properties were even more affordable. These purchases generated strong cash flow despite being located in lower-income neighborhoods, because acquisition prices were low relative to rental income.
Today, I see similar opportunities emerging again in certain markets. Investors should pay attention to areas experiencing population growth while still maintaining affordability. For example, parts of Brevard County have seen strong growth and are attracting investor interest as prices in previously affordable areas have risen.
In recent months, we have completed several transactions that illustrate current opportunities. In one case, a distressed property listed on the MLS for $100,000 eventually sold after a lot of negotiation for $50,000. Without making any improvements, we relisted the property and sold it for $70,000. In another case, a tax-delinquent property was acquired for $110,000 and resold shortly thereafter for $145,000. Opportunities to buy properties and flip them for a profit exist when you buy at the right price.
This leads us to the question of what strategies are working in today's market. The Buy, Repair, Rent, Refinance strategy (BRRR) continues to perform well, particularly if you focus on lower priced affordable housing. Investors benefit from a clear exit strategy because rental demand remains strong, rents are up significantly and financing options such as DSCR loans allow investors to qualify based on rental income rather than personal income.
With rents remaining elevated since the pandemic, affordable rental properties—especially those eligible for programs such as Section 8—can produce strong cash flow when acquired at the right price. The key is to buy them at the right price. This is what I teach my students how to do in my training program. The Buy, Repair, Rent, Refinance strategy remains a very viable strategy in today's market. It is the easiest way I know to become a millionaire.
Wholesaling can still work, but it has become more competitive and more tricky. There are also increased risks when you market the property online. Increased exposure through investor platforms like Investor Lift and Investor Base and posting on Facebook Groups can lead to situations where buyers attempt to "go around you" by going directly to the seller. I think what works better in this market is to close on the property and then relist it for sale on the MLS. You get a much wider audience and you can make a higher profit. When you list on the MLS, your exposure to buyers and your reach are significantly greater. In many cases, we have found that we can make a lot more money with this approach. On your next deal try closing and then relisting on the MLS (instead of wholesaling). You will get better results. This is another strategy that works well in today's market.
I would be very cautious in this market with higher-priced fix-and-flips. In fact, I would be cautious with fix and flips in general. If you are going to buy fix and flips you must buy them right and you cannot overpay in this market. In today's environment, exit strategies must be clearly defined like for example if you buy a property can you have sufficient equity and rent it out and be positive cash flow if you cannot flip it for the price that you want? I would also be very wary of buying properties based on comparable sales from several months ago. Prices are going down and I would pay more attention to current listings on the MLS than what sold 3 or 6 months ago. You can see price cuts daily on the MLS. Buyers now have more options, and price reductions are becoming more common. You must build this into your ARV and establish a safety margin to protect yourself.
One of the more common mistakes that I see is when investors are forced to convert failed flips into rentals. They become "reluctant landlords." They never wanted to have tenants or own a rental property. This is never a good scenario. Build strong safety margins into your underwriting and focus on current active listings on the MLS rather than relying solely on past comparable sales. In a declining market, assume that comparable sales are too high and build in a safety margin (be conservative).
As for whether we are heading toward another financial crisis similar to 2008, I do not believe the circumstances are identical. Lending standards today are far stricter than they were during the era of no-income, no-asset loans. However, I do see growing denial among sellers who still believe their homes are worth peak-market prices like what they were worth in 2022 or 2023. As listings sit on the MLS longer and price reductions become more common, prices are coming down. And they are coming down in some areas surprisingly fast. Some homeowners may face difficult financial decisions and decide to walk away from upside down properties with negative equity, especially if they or their spouse lose their job. As the economy weakens and layoffs increase this is a more and more likely scenario. That part is very similar to the prior financial crisis. And if that gets worse then we could have a financial crisis on our hands.
In my opinion, we are already experiencing a housing crisis. Whether this evolves into a broader financial crisis remains uncertain (for now). What is important for investors to understand is that a declining market does not mean that you should not be buying real estate because prices are going down. In fact, it's the exact opposite. Opportunities increase because there are more opportunities to buy properties at good prices. And this is especially the case if you focus on affordable properties with strong rental demand - like Section 8.
Do not interpret market caution as a reason to stop investing altogether. Instead, adjust your buying strategies accordingly and get more conservative. Focus on lower-priced properties with strong cash flow, and use conservative assumptions for ARV. If prices continue to decline further, which I am sure they will, then opportunities for you to buy at even better prices may materialize. However that does not mean you should not buy a good cash flowing property at a discount today if you see on. Prices may improve and get even better for patient and disciplined investors.
Real estate has always rewarded long-term thinking. Buying cautiously and holding quality properties with stable tenants and long term fixed-rate financing will create significant wealth for you and your family over time. As markets stabilize and recover, investors that buy at the bottom or close to the bottom will benefit from both appreciation and increased cash flow. But the biggest benefit by far comes from the increase in your net worth. As the properties double in value and double again you will become wealthy. Remember, don't wait to buy real estate, instead, buy real estate and wait.
Thank you for listening. I appreciate your continued support, and I look forward to sharing more episodes with you soon. Make it a great day, and I will see you on the next podcast.
