When Housing Markets Downshift, Wise Investors Should Do THIS, Not THAT!!

[Mitch Messer]

I ran an Internet marketing company just before the Dot-Com Crash of 1999. We watched in horror as our largest client's stock dropped from $75/share ... all the way down to seventy-five cents!

That was our first introduction to economic downturns. We never saw it coming.

Next we built a multimillion dollar real estate rental portfolio in Metro Atlanta. And, in 2007 the Great Recession sliced 25% in value off all our properties, while rents dropped by 20%.

But this time really WAS different, at least for us.

We actually started seeing signs of trouble in the summer of '06. More tenants started losing work shifts or entire jobs and then moving out. Re-renting took forever, and usually only after rent concessions.

We got better at reading the writing on the wall.

As of June 2026, we've enjoyed the longest period of economic expansion in U.S. history (and yes, I'm intentionally ignoring COVID).

It sure FEELS like the winds are shifting again.

But, whatever your views on what happens next, we can ALL agree that whatever THIS is won't last FOREVER!

So, for my real estate investor brethren and sistren who may NOT have seen this movie before, here are a few investment strategies that DO NOT work so well when housing markets pull back:

🔽 BRRRR (Buy-Rehab-Rent-Refinance-Repeat) - WHY: When interest rates remain higher, and banks become cautious, it gets harder to pull money out of each deal during the "Refi" phase so you can buy and rehab the next property for the "Repeat" step.

🔽 fix-and flip - WHY: Higher interest rates drive buyer demand down, reducing prices and increasing investor holding costs and days on market to sell.

🔽 new construction - WHY: Higher interest rates drive buyer demand down, reducing prices and increasing investor holding costs and days on market to sell. Also, tons of speculative risk.

Fortunately, when one door closes, another opens.

Here are some real estate strategies that work BEST in rough economic times:

🔼 pre-foreclosures (especially when purchasing subject-to the existing mortgage)

🔼 bank short-sales (fewer lenders willing to take back properties in an uncertain market)

🔼 tired landlords (more tenants can't pay rent)

🔼 seller financing (tax savings for sellers, along with ongoing cash flow to them)

🔼 lease-purchase (more homebuyers need help acquiring their first home)

Questions? Am I missing any? Let me know below.