Are Better Operators Simply Adapting Faster Right Now?

Question

Curious what others are seeing.

Do you think the investors still active today are:
• More disciplined
• Better capitalized
• Or simply more adaptable?

Steve Garthe · Answer

I agree that adaptability is a huge part of it.

One thing I've noticed is that many investors who are still actively acquiring have become much more disciplined with underwriting and are willing to pass on deals that don't meet their criteria.

The opportunities are still there, but the margin for error feels much smaller than it did a few years ago.

Appreciate you sharing your perspective.

Garrett Crosby · Answer

All three honestly, but I'd weight adaptability first and capital second.

What I've noticed in my own market is the investors still transacting aren't necessarily smarter or better capitalized than the ones who've gone quiet. A lot of them just made the mindset shift earlier. They stopped trying to force 2021 math onto 2024 and 2025 deals and started accepting that the underwriting had to be different, the hold period had to be longer, and the exit had to be underwritten more conservatively.

The capitalization piece is real but it's almost downstream of mindset. When you've accepted that returns are thinner and timelines are longer, you naturally reserve more, you don't overlever, and you build in more cushion. The investors who got into trouble were often well-capitalized but hadn't reset their expectations.

I'd also push back slightly on the "passing on more deals" framing, not because it's wrong but because it can become an excuse for paralysis. The active operators I know aren't just passing on bad deals, they're also sharpening what a good one looks like and working harder to find it. Discipline without continued deal flow eventually means no deals at all.

The operators doing best right now have a clear strategy, realistic expectations on returns, and enough reserves to not be forced into bad decisions by timeline pressure. Those three things together make almost any market workable.

Steve Garthe · Answer

I think adaptability is a major factor, but I'd also add discipline.

A few years ago, a lot of deals worked simply because the market was moving up. Today, investors need to be more selective, underwrite more conservatively, and execute with fewer mistakes.

The operators I see doing well right now aren't necessarily doing more deals—they're passing on more deals and focusing on the ones that truly fit their strategy.

Curious what changes others have made over the past 12-24 months that have had the biggest impact on their results.

Henry Clark · Answer

OP.  We have sat out for the last 2 years.  Re- aligned our Non REI investments.

I wasn't paying attention but talking with another investor and realized Commercial Interest rates had gone down.  Say 8.5% down to around 6.5% if you have a solid Lendor relationship, which we do with 3 banks.

We are now back at it.

Made an offer on some land to develop another Self Storage site.  But price was a little higher than I want.  Actually, we should do this deal, I'm just being stingy.  It is a good deal even if we pay more for the land.  Land is only about 1/5 of the Deal Analysis.

We had a Country Subdivision just come to market last June. Already sold 5 of 18 lots which we are very happy with.  We don't build.  Took 2 years to come to completion, due to various Entity dragging their feet.  Will set out doing our third one of these until we have sold 60% of the lots.  This was a Cash deal, so each lot we sale, we pull 100% cash out other than commissions.

Land we already own at one of our locations, getting quotes to add another run of storage units.  Held off due to interest rates.

World Outlook:

I think most investors don't look at their World economic outlook, Inflation, alternate investment exposure and returns, etc.  Depending on your views and situation, now is a GREAT time to invest even on a negative or low return investment.  If you can lock in interest rates, if you expect interest rates to skyrocket, inflation to skyrocket, Alternate investments take a dump.  Then investing now is a good Cash flowing asset, even if Negative overall is a great deal.

I'm not saying I'm a Better Investor, but have been an Active one until the last 2 years.

It's your money, your Right, even if you're Wrong.

Eric Fernwood · Answer

Hello Linda,

The people still closing deals today have shifted their focus from the property to the city, and from day-one cash flow to long-term financial independence.

Discipline Looks Different Now

The investors I see staying active aren't more disciplined about deal structure. They're more disciplined about where they invest. In slower or declining markets, it's easy to find a property that pencils on day one. The harder discipline is passing on it because the city's population is flat or the rent growth trajectory doesn't support long-term income growth.

Adaptability Is About the Framework, Not the Deal

The most adaptable investors adapted their city selection criteria, not just their financing strategies. They stopped asking "does this property cash flow today?" and started asking "will this city's rents outpace inflation for the next 20–40 years?" That's a fundamentally different question — and it requires evaluating population trends, job creation, operating costs, and business environment before ever underwriting a specific property.

Why the City Matters More Than the Property

Rent growth is a city characteristic, not a property characteristic. Think of a city as a harbor and rents as boats. When population grows and demand increases, all boats rise. When population stagnates or declines, even the best property in the harbor sits in the mud.

Consider two properties in two different cities:

Property A

Property B

Monthly Rent

$1,800

$2,000

Monthly Expenses

$1,900

$1,800

Annual Rent Growth

7%

2%

Annual Inflation

5%

Initial Cash Flow

-$100

$200

Based on day-one cash flow, Property B looks like the clear winner. But after 15 years, the real purchasing power of each property's income tells a different story:

• Property A: approximately $2,389 in purchasing power
• Property B: approximately $1,295 in purchasing power

Property B's rents never kept pace with inflation. Over time, its income bought less and less. Property A started in the red but its city's rent growth compounded into substantially more real income.

The Takeaway

The investors still active today aren't necessarily smarter or better capitalized. Many of them simply stopped letting short-term cash flow be the primary filter. They're disciplined enough to pass on markets where the population tide is going out — no matter how good the property looks on paper.

Are Better Operators Simply Adapting Faster Right Now?

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