Navigating the Changing Real Estate Market: How Investors Are Adjusting Strategies
Introduction
The real estate market is shifting, and many investors—both new and experienced—are struggling to find properties that cash flow under today’s conditions. With rising interest rates, high home prices, and fluctuating rent values, strategies that worked just a few years ago are no longer producing the same returns.
A recent discussion on an online real estate forum website highlighted the concerns of an investor, a real estate investor, who has been searching for cash-flowing properties in Tampa, Orlando, and St. Pete but hasn’t found anything that meets his expectations. He has $110K ready to invest but can’t even achieve a 3% cash-on-cash return, prompting him to rethink his entire approach.
This is a common theme in today’s market, and investors are responding with new strategies. Below, we’ll break down some of the top suggestions from experienced investors and lenders and provide insights from my own experience managing 32 properties.
What Investors Are Saying
1. Adjusting Expectations on Cash Flow
Many investors pointed out that if a 3% return is the best you can find, you might as well put your money in a high-yield savings account. But that’s not what most investors want—they want higher returns, appreciation, and wealth-building potential.
Some investors suggested moving away from markets like Tampa and St. Pete, where price points are higher, and instead looking into secondary or tertiary markets where rental yields are stronger. Others recommended considering long-term appreciation over immediate cash flow.
2. Exploring Out-of-State Markets
Exploring Other Markets in Florida Investors like Dennis McNeely and Charles Hoyer suggested looking beyond major metropolitan areas like Tampa and St. Pete and considering secondary Florida markets where cash flow opportunities still exist. Cities like Lakeland, Ocala, and Jacksonville have been mentioned as areas where better returns are achievable. Some investors have also found success in markets like Cape Coral, Palm Bay, and Gainesville, where home prices are lower, and rental yields are stronger. Expanding the search radius beyond primary markets may uncover better investment opportunities that align with cash flow goals. Investors like Dennis McNeely and Charles Hoyer suggested looking outside of Florida altogether. The Rust Belt and the Carolinas were mentioned as areas where better cash flow is still achievable. Some even pointed to Columbus, Ohio, where investors can find properties that meet the 1% rule, with purchase prices in the $120K-$180K range.
3. Focusing on Distressed Properties and Gentrifying Areas
Bruce Woodruff recommended shifting search criteria to include distressed properties, which can be acquired at a discount and offer forced appreciation through rehab. He also suggested looking into D-class neighborhoods that are moving up to C or B status, as gentrification can create opportunities for higher returns.
4. Utilizing Creative Financing Strategies
Cameron Valentine highlighted several strategies beyond traditional 20%-30% down rental purchases. These included:
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The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat)
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Seller financing to avoid high interest rates
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Subject-to deals, where an investor takes over the seller’s existing mortgage
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House hacking, where an investor buys a multi-unit property, lives in one unit, and rents out the others
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Short-term and mid-term rentals (Airbnb, traveling nurses, corporate stays) as alternatives to traditional long-term rentals
5. Becoming a Private Lender
Some experienced investors, including Chris Seveney, suggested an alternative approach: becoming a private lender. Instead of purchasing property, investors can lend their capital to other real estate investors, earning interest rates of 12-15% with relatively passive involvement. This strategy requires careful due diligence on the borrower and collateral but can provide strong returns without the headaches of property management.
6. Partnering with Other Investors
A few investors shared how they partnered with others to enter the market creatively. For example, one investor teamed up with a capital partner who provided funding while they handled acquisitions, rehab, and management. Through this strategy, they were able to scale faster and achieve strong returns.
My Perspective and What I’m Seeing in the Market
After managing 32 properties and actively tracking values, rents, insurance costs, and taxes, I’ve noticed some key trends:
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Rents are starting to rise again – After a 10% dip over the past year, the rental market is stabilizing, and demand is picking up.
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Insurance costs are dropping – The insurance crisis in Florida is settling, and I’ve seen my own rates decline significantly.
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Taxes are flattening out – While still high, property tax increases have slowed, reducing overall operating costs.
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Some properties are hitting the 1% rule again – With sellers panicking and assuming the market will crash, there are now deals that weren’t available just a few months ago.
My Advice for Investors Looking to Adapt
If you’re feeling stuck like Ivan, here’s what I’d suggest based on my 20 years of experience:
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Expand your search area. Instead of just looking in Tampa or St. Pete, explore surrounding cities where prices are lower, and cash flow is better.
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Look for distressed deals. Adding value through renovations can create instant equity and improve cash flow.
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Use creative financing. Avoid paying high interest rates by leveraging seller financing or subject-to deals.
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Consider alternative rental strategies. If traditional long-term rentals aren’t working, short-term and mid-term rentals could be a better fit.
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Be patient. Real estate investing works in cycles. Buying at the beginning of a new cycle, even if returns seem low initially, can set you up for significant gains in the next few years.
Final Thoughts
The market has changed, but that doesn’t mean good deals are gone. It just means investors need to be more strategic, flexible, and open to new ways of investing. Whether it’s looking out of state, getting creative with financing, or shifting from passive to active investing, there are still opportunities to build wealth in real estate.
If you’re serious about making the right moves in today’s market, let’s connect. I’ve been through multiple real estate cycles, and I’ve seen what works. Sometimes, it just takes a different perspective to find the right path forward.
Keep it consistent, stay patient, stay true—if I did it, so can you! Ready to learn? Let me guide you at propertyprofitacademy.com – Jorge Vazquez, CEO of Graystone Investment Group & its subsidiary companies and Coach at Property Profit Academy.