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 in 2026.

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 (for now). However, when you examine year-over-year trends, a different picture emerges. Foreclosures have increased significantly up over 27%, and bank-owned properties are surging and are up 34% year over year. Another issue is that MLS inventory has risen substantially and more and more sellers are listing their homes for sale.

Let’s take a look at the inventory of homes for sale, because I think that is where you should be looking for clues as to where the market is headed. The change in inventory and the number of homes listed for sale paints a much clearer picture of what is going on. What you see is that during the pandemic years there was very low inventory, which resulted in prices increasing rapidly.

What caused this rapid increase in prices? Interest rates being below 3%, which were kept artificially low by the Federal Reserve in order to boost the economy while it was suffering from the effects of the pandemic. This stimulus worked and made housing affordable. With lower interest rates, monthly mortgage payments were manageable, and everyone rushed to buy real estate and refinance to a lower interest rate. The years 2020 to 2022 were like none I have ever witnessed before in my 23 years of investing in real estate. In some markets in Florida prices literally went up by 100% in two years. It is not normal for the price of a property to double in two years.

I was a net seller of real estate during these years and I sold properties at prices that were just ridiculous. As an example, properties that I had purchased in Fort Pierce for $25,000 were sold for $225,000. It made no sense. As an investor, you could not possibly cash flow on a rental property at that price in that neighborhood. But if someone was going to offer me $225,000 for a property I purchased just 7 years earlier for $25,000 then I was going to sell it to them. So I cashed out – and I cashed out in a big way selling millions of dollars worth of real estate. The market in 2022 reminded me too much of 2006. That is what turned me cautious.

I remember at my Coaching Event in July 2022 telling my students: “No one is going to ring a bell and tell you it’s time to sell”. And then I picked up a bell and told my audience of students “If you own property that you could sell at prices that don’t make sense to buy then sell now”. Imagine what it must be like for a guy who in his entire 23 year career of real estate investing has been telling people to only buy real estate to tell them to sell. But I had to tell them the reality of what I saw on the ground. Real estate had simply become overpriced. There was nothing worth buying. At this point we were functioning on what is called the “Greater Fool Theory”. The Greater Fool Theory is an idea in investing that explains how people can make money by buying overpriced assets — as long as they can sell them later to someone else at an even higher price (the “greater fool”). For me this is not the time to be buying. It is the time to be selling.

I had to tell my students that they were better off waiting for opportunities with lower prices and better cash flow. It was also the first time in my real estate investing career that I told my students that they were better off renting than buying at these 2022 prices. What I told them would happen actually happened.  If you bought real estate in 2022 at the peak, then your property is probably worth at least 20% less and you have most likely lost all of your equity. If prices move down further then you will be upside down on your mortgage and negative equity. That is the reality of the market today. One side note to mention is that I picked the bottom of the market in 2009 to buy and I picked the top of the market in 2022 to sell. Was that luck? Or was it paying attention to details and reading for hours and hours every day? You be the judge of that.

So low rates were very good for real estate from 2020 to 2022. Unfortunately, lower interest rates also contributed to inflation getting completely out of control, resulting in soaring energy and food costs, and most notably soaring rents. Inflation peaked at a 40-year high of 9.1% in June 2022. This coincided with the top of the market. If you zoom out, 2022 wasn’t just a real estate bubble — it was an asset bubble that signified that we were at the end of a  liquidity cycle. Assets that depended on cheap money and low interest rates had fueled speculation. This caused the prices of many assets to double. Rolex watches that were selling for $15,000 were suddenly selling for $30,000. All the stimulus money combined with the lower interest rates on cars, mortgages and credit cards had created an asset bubble.

In early 2022 it was more than residential real estate that peaked. Almost all asset classes peaked including SPACs and Venture Capital, NFT’s, Crypto, Rolex watches, sneakers, trading cards, commercial real estate, bonds and the Metaverse. It was the end of an era of cheap money.  It was also the beginning of an era of inflation. What asset classes have done very well since then? Gold has increased from $1,800 an ounce in 2022 to over $5,000 an ounce today. Silver has increased from $25 an ounce in 2022 to $85 an ounce today. As the asset bubble deflated, more and more investors became wary and flocked to the security of assets that perform well during inflationary times (gold and silver). Even bitcoin, which has recently lost half of it’s value is still today worth twice as much as it was in 2022. The world has changed. The perception of risk has shifted. What performs well during inflationary times? Single Family Rental properties!

As the Federal Reserve started raising rates, housing became much less affordable. The Federal Funds rate was raised from a low of 0% in 2022 to 5.5% by July 2023. Suddenly buyers had sticker shock as they realized they could not afford the monthly mortgage payment that their mortgage broker was quoting them. Buyers could not get approved for loans because their debt service coverage was out of whack because payments were so high.

As interest rates increased, the residential real estate market changed. Inventory on the MLS doubled and then doubled again. In my 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.

Look at these numbers for Inventory

2022      15,000 properties listed on the MLS

2023      30,000 properties listed on the MLS

2024     45,000 properties listed on the MLS

2025     60,0000 properties listed on the MLS

So what comes next? Where will inventory be in 2026 and 2027? Do you see how when looking at the data together with the rise in foreclosures and bank owned properties I see a problem? While these inventory numbers are not yet comparable to the levels seen during the 2008–2009 crisis, the market has clearly shifted. We are now very much 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 in Miami, Lighthouse Point, 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 Texas, parts of Nevada, Arizona, and Florida have experienced much 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. The housing crisis could turn into another financial crisis. And that is the opportunity for you as an investor. That is why you want to make sure you do not miss the Bank Owned Properties Boot Camp next weekend.

I am going to be teaching my students how to buy and bid on bank owned properties, foreclosures, pre-foreclosures, short sales, HUD homes, Fannie Mae Homes and online auction sites like Hubzu and Auction.com. More importantly I will be teaching my students how to flip these homes to other investors for huge profits without using any of their own cash. I only hold the Bank Owned Properties Boot Camp once a year in February. With what is currently happening in the market, with the surge in foreclosures, short sales and bank owned properties – do you really want to risk missing the boot camp that is coming up next weekend?

You need to know how to buy properties from motivated sellers. Banks are the ultimate motivated seller because when they foreclose on too many homes, and own too many REO’s they need to liquidate them quickly. That is where you as an investor can step in. That is where you can buy bank owned homes for pennies on the dollar.

That is what I will be teaching at this 3 day Bank Owned Properties Boot Camp which will be held in Deerfield Beach FL from Friday Feb 20 to Sunday February 22. That’s next weekend!

There is a Live Zoom option available which is streamed live for students that are in other States. If you need more information about this boot camp or any of our real estate training or coaching events call our Student Support Managers with the phone number at the top right of this page or use this link to book a call.

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. You need to seek out markets where prices are cheap relative to rents. These are markets where you can cash flow. You can use my HUD Section 8 Calculator to find rentals markets that could work well for you as a real estate investor.

Despite living in Boca Raton for 20+ years, I focused my investing on markets that were further north than where I lived. Early in my career in 2003, I began purchasing properties further north in areas like Port St. Lucie, Fort Pierce and Vero Beach where homes were significantly less expensive and the cash flow was much better. As prices increased there, I moved further north again into markets such as Brevard County, 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. That made the cash flow positive and the returns strong.

The old adage that real estate is about “location, location, location” is not as important to me as cash flow. As an investor, with no cash flow you don’t survive. I saw many of my friends and associates go out of business in the last financial crisis. I survived because I had strong cash flow. Their properties were in better neighborhoods but their cash flow was horrible. When rents declined their cash flow went negative. My properties were paying me enough cash flow to ride out the market cycle. Those lower income neighborhoods might not look pretty. But the cash flow supports the interest, taxes and insurance. And for a real estate investor that is all that matters.

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. The Space Coast in general is booming. Cape Canaveral and Vanderburg Air Force base are launch sites for Elon Musk’s Space X and Jeff Bezos’s Blue Origin. You have the United States Space Force along with all of the defense contractors like Northrop Grumman, Lockheed Martin, Boeing, Raytheon, and L3 Harris Technologies in Brevard County.

All of this Space Exploration is going to create jobs. And all of those jobs are going to have workers that need somewhere to live. I am positioning myself and my students ahead of this curve by buying cheap properties at the bottom of this cycle. Demand will explode as the population grows. I see Brevard County today the same as how Port St Lucie was 20 years ago. A massive opportunity. Houses with an ARV of $200,000 that we are picking up for $110,000 will be worth $400,000 in 15 years or less. That is the opportunity.

Over the last few months, I have purchased and flipped a few houses that illustrate the opportunities that I am already seeing. In one case, a property that was listed on the MLS for $100,000 was eventually sold for just $50,000 after the seller capitulated and gave up. The house had been on the MLS for over 1 year.  I purchased that property, and without making any improvements (did not even turn utilities on), I relisted the property on the MLS and sold it for $70,000.

Another example students of mine purchased a tax-delinquent property and flipped it to me for a price of $110,000. I cleaned out the property, painted it and listed it on the MLS and sold it for $145,000.  Opportunities to buy properties and flip them for good profits exist. And that opportunity is only going to get better as foreclosures increase and there are more short sales and bank owned properties. But the key is that you must buy them at the right price. And if you want to buy at the right price then pay very close attention to foreclosures, short sales and bank owned properties. Which is why you should be at the Bank Owned Properties Boot Camp next weekend.

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 real estate training program. If I could teach you how to pay $50,000 less for a $200,00 property how much is that worth? Remember that you don’t know what you don’t know. And what you don’t know could be costing you millions of dollars over the next 20 years. 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. It has worked very well for me and it has worked very well for my students many of whom are now multi millionaires.

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 and inventory grows, prices will come down. And they are coming down in some areas surprisingly fast. Some homeowners may face difficult financial situations 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.

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 cheaper prices. As long as Section 8 rents stay high (because of inflation) this is a golden opportunity for real estate investors. This is especially the case if you focus on affordable properties with strong rental demand. Inflation has created a situation where the government has increased what they are willing to pay for Section 8 rentals. at the same time, prices have come down substantially – by as much as 30% in some markets. So you have higher rents and lower prices. If you  find a cheap bank owned property at 50 cents on the dollar, and you turn it into a Section 8 rental, your cash flow will be very good. But it’s very important that you don’t overpay and you buy it at the right price. That is why you need to learn HOW to buy bank owned properties.

Cheap Bank Owned Homes + High Section 8 Rents = Positive Cash Flow. Buy these cheap bank owned homes with private lender money or hard money loans. Clean them up and then rent them out to Section 8 tenants. Then refinance your mortgage to a conventional mortgage with a mortgage lender. If you do this correctly you can buy these houses with no money down. This is the strategy to focus on in this market. It’s called Buy, Repair, Rent, Refinance and if you are my student you know it well.

Do not interpret my market caution as a reason to stop buying or that you should not buy. Instead, adjust your buying strategies 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 will materialize. However that does not mean you should not buy a good cash flowing property at a discount today if you see one. Prices may improve and get even better for patient and disciplined investors. But you should buy properties now that have substantial equity and good cash flow. Do not wait for the bottom. It’s very hard to time the bottom. Just start buying anything with equity that cash flows.

If you attend my real estate training events, I will tell you when I think we have bottomed. That will be the time to go all in and borrow as much money as possible to buy rental properties. We are not there yet. Not by a long shot. I expect further pain in the real estate market for 2026 and 2027. I also anticipate that more and more opportunities like the examples above will materialize. 2026 will be a great year to buy discounted properties – especially bank owned homes, foreclosures and shorts sales. You should capitalize on this opportunity.

Real estate has always rewarded long-term holding. Buying cautiously and conservatively and holding quality properties with stable tenants and long term fixed-rate mortgages will create significant wealth for you and your family over the year. As markets stabilize and recover from this housing crisis, 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 that you get by holding on to the properties. As the properties double in value and double again you will become wealthy and ultimately you will become a millionaire. Buying rental properties and holding them long term is the easiest and most certain way that I know of for you to become a millionaire. 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. You can click on the white triangle below to listen to the podcast episode.