What We’re Buying During The 2026 Multifamily Crash

Dave:
What the heck are you supposed to do with your real estate portfolio in the summer of 2026? It’s a question I’m asking myself. It’s a question every real estate investing is asking themself. Should you be buying? Should you be selling? What should your priorities be in your portfolio? Today on On the Market, me, Henry, Kathy and James are talking about what we’re doing in our portfolio and giving advice about what you should do in yours. This is On The Market. Let’s get to it. Hey everyone, welcome to On the Market. I’m here with Kathy, Henry, and James to try and figure out what the heck to do with real estate, right? It is simultaneously exciting and terrifying. I want to buy everything. I also want to sell everything. I don’t know if that’s how you guys are feeling, but I am all over the place.
So I’m looking forward to talking to you all about this. Today in the show, we’re going to be talking about what to do with your portfolio because I think everyone’s wondering, is it a time to buy? Is it a time to sell? What to prioritize? So we’re going to go around. Each of us are going to talk about what we’re prioritizing in our own lives and our own portfolios. We’re just going to talk about why you’re making these decisions and hopefully all of you can learn from the decisions we’re all making because as you know, each of us has a little bit different perspective on real estate. Each of us are at different stages of our investing career. And I think between the four of us, we represent a lot of what people are thinking about and going through in the market today. So I’m just going to pick Henry, you got to go first.
What’s your priority right now in real estate?

Henry:
Dollars.

James:
Make it rain.

Henry:
Yeah. I’ll give you the 10,000 foot view. So the market is kind of, I don’t know if stagnant’s the word, right? Prices are where they are, don’t see them going up a ton. Don’t see them coming down a ton. They may come down a little bit, but it’s just going to be kind of flat, if not a little bit of a decline. Rates are probably going to stay where they are, maybe go up. And to give some perspective, I’ve been doing this since 2017. So I got in when it was a good time to buy deals. I got to ride the post- COVID wave up with values and bought some stuff around then with lower interest rates. And then in 2023, as rates started to go up, I bought some deals in 2024, late 2023, 2024, maybe early 2025. And my thought process then was if I can get them and they’re breaking even-ish now at some point rates come down and there’ll be great deals.
And then, so what happened? Well, that didn’t happen. We saw rents. Rents actually came down. All the expenses went up, not just interest rates went up, but insurance costs went up. And then we also saw taxes went up. And all that leads me to say is what I’ve been doing with my portfolio is doing an analysis of what’s doing well and what’s not doing well. And then of the properties that aren’t doing well, do they meet the criteria for something that I want to spend the money on to get it to perform well? And so what that has caused me to do is to take a look at, okay, these properties that I bought post 2023, does it make more sense to sell them now, take any equity we have in them and reposition that equity in other places in our portfolio? Or does it make sense to give them the capital infusion they need to get them to the price point or the value that we want them to get to to produce the income?
And so that’s what we’ve been focused on. And I’ve sold a lot of properties and all of the properties that I’ve sold have been the ones that I’ve purchased post 2023. And we’ve been taking that capital and we’ve been either investing it in other properties that do meet the criteria for ones that we would want to keep that need capital to perform or investing them in paying off some of the properties. Because my goal over the next 10 years is to get a substantial chunk of my rental portfolio paid off. Now on top of all that, I am still doing deals. I’m doing more flips right now just because I’m pretty comfortable with the size of my rental portfolio. I’m a deal junkie, don’t get me wrong. If I get a good rental that comes across my desk today, I’d probably buy it and throw it in the portfolio, but it’d have to be an amazing deal.
And because I’m buying, we’re buying very conservatively. We’re getting great spreads on deals right now. I just closed a deal yesterday. It was a house I bought a month and a half ago. I paid $85,000 for it. I spent $3,000 cleaning it out. We stuck it on the market as a wholetal, didn’t do anything to it and sold it for $175,000 to a cash buyer and closed on it yesterday. So I made 70 grand on a quick turnaround flip. There’s deals out there right now. Nice. And now I can take that capital and I can apply it to my portfolio where I see fit either to throw cash at one of the properties that we want to keep in our portfolio that needs an injection or to pay off a property that we know we want to keep for the long term. So that’s the plan.
That’s what we’ve been executing and it’s helped because I’ve gotten rid of some properties that weren’t producing cashflow that we had a little bit of equity in and I could take some of that money. I’ve also been able to, I got rid of a property last week that I took a $20,000 loss on, but it’s going to help my portfolio in the long term because I’m not bleeding that money anymore. I don’t have the holding costs or the costs associated with feeding that deal anymore, plus the insurance and taxes of it all. So sometimes you got to take a little bit of an L. If anybody in this business tells you they haven’t taken a loss on a property, it either means they haven’t done it yet or they’re lying.

Dave:
So you’re not really changing strategies. You’re not really changing anything. It’s just kind of doing the same thing.

Henry:
Optimization.

Dave:
More flips, less rentals, I guess, but just trying to maximize current rentals.

Henry:
Yes, correct.

James:
But more flips like Henry, when you’re going into markets like this, right? I’m guessing that your buy box on your flip had … I mean, I’ll take the 10 of those $70,000 ones if

Henry:
You- Yeah, right. Yeah. Happy to send those to you.

James:
Line them up. We got them. But on your flips, that’s the hard part. When you’re in a volatile market, things shift around. What do you do on your buy box?What won’t you buy on the flip side? You want to do more, but is there

Henry:
Flips

James:
That you’re not buying right now?

Henry:
Absolutely. There’s flips that we’re not buying right now. I’m not doing singles anymore. That deal I just told you about, in my opinion, that’s a home run or a grand slam deal, right? Do nothing, make 70 grand, that’s amazing. They’re not all going to be like that. The deals that I’m doing though are where I am pretty much getting a one-to-one on my renovation to profit. So I am underwriting deals where like I have a property right now that we’re going to close on next week. I paid 140 for it. We spent 50 on the renovation. I’m going to make 50 in profit. That’s the kind of deal that I’m willing to do right now. I would not do that deal if I had to spend 50 on the renovation and make 25 in profit. Maybe I would’ve done that when the market was a little more favorable.
But right now it’s just so volatile that you can lose 20 grand in holding costs like that and not even expect it. Even if it’s a solid deal, it’s very hard to understand what’s selling and what’s not right now. Sometimes it doesn’t seem to have much rhyme or reason. I’ve got properties that I think should have sold in a heartbeat that have sat on the market and I’ve got properties that I’m like, “Man, I probably shouldn’t have bought this deal. I don’t think it’ll sell.” And it’s sold in like a couple of days. So all that tells me that I have to be super conservative in my underwriting to give myself enough cushion that even if I lose 20 grand in holding costs, that I’m still going to be profitable. And that means that I have to underwrite conservatively and make lower offers. Now what that’s doing for my business is we’re either going to do less deals because I’m getting less nos because not every investor is being conservative like me and they’re willing to make 20 grand on a deal that I’m not willing to make 20 grand on.
So it’s more about underwriting super conservatively and then I have to increase my volume of offers if I want to do the same volume of deals. It’s not that I can’t find deals, it’s that I have to underwrite them so conservatively and make lower offers that it’s going to take me a whole lot more offers to get to the yes that I’m accustomed to getting to because I’m being so conservative on my offers.

Dave:
That makes a lot of sense. I mean, let them do it. Let people go. I think that’s the hard thing. It’s like you just can’t have FOMO in

Henry:
These kinds

Dave:
Of markets.

Henry:
You got to let it go and not think about it again. Move on to the next one.

Dave:
I just think James is going to disagree with me on this, but I just think like patience is so … Well, you’re a patient too, James. I just mean you’re always doing such volume. But for me, where I’m at, it’s just like I would rather just sit and wait. As someone who works full-time, I don’t feel like I need to rush into these things and you do get FOMO sometimes, but it’s better than doing a bad deal.

James:
Boring. You got to wait. Watch the pay. What you said, Dave, is completely right. If you don’t know what you want, don’t go buy right now.

Dave:
That’s right. Or you don’t see what you want.

James:
Yeah. And don’t bend your metrics. I mean, everyone should redefine their buy box every quarter in a volatile market in a more stable market every six to 12 months. What will you buy? What won’t you buy? Stick to that. Don’t break your rules. Oh man. It’s so hard not to break the rules though.

Henry:
Every time I break the rules, I regret it, man. Well, not every time. But I would say eight out of 10 times, if I break my rules, I regret it. There’s those two times where I’m like, “Eh, I knocked it out of the park.” Then you get overconfident and lose money on the next time you break them.

Kathy:
You got to have rules so that you don’t break them.

Dave:
That’s true. Have rules.

Henry:
That’s right. That’s fair. That’s a fair

Kathy:
Point. I got to have rules.

Dave:
All right. Well, Henry, good luck. Sounds like a good plan. Kathy, let’s move on to you. What are you focusing on right now?

Kathy:
Oh my gosh, I’m having fun. I’m having fun, you guys.

Dave:
You’re the first investor I’ve heard say that in a while.

Kathy:
Oh my gosh. There’s a pocket right now and I’m in it and it’s just super exciting. Right now we know that multifamily is crashing hard. We know that it’s still hard to get deals because banks are now taking back properties. The extend and pretend is done and they are foreclosing. I think banks were waiting for rates to come down and that’s not happening and they can’t just keep playing this game. So foreclosures are way up. We timed it super well because we’ve got a multifamily fund and we’ve got the cash ready to deploy. So I just got back from Kansas City yesterday looking at, it’s like a 45 unit. We negotiated hard. They were not coming down on price and finally we’re like, “We’re done. We’re going to walk away.” And then that was enough for them to agree. So we’re in contract. I flew out to see it.
Sometimes I just don’t understand. This is a new building. This is only two years old and they didn’t put gutters in and it rains a lot in Kansas City. So we’re going to have to fix some things and fix the drainage because that was dumb. Please guys, just do the basics, protect. You never want water close to your property. This is so fundamental. This is a rule. Put that on in your rule book. You want to keep your property no matter how well built it is. It doesn’t do well with lots of water. So anyway, lots of drainage that we’re going to have to deal with, which means we’re going back and we’re going to negotiate harder again because we’re not going to cover that cost. They’re going to have to cover that cost for their stupidity of building a building without that.

Dave:
And you have the leverage.

Kathy:
We’ve got the leverage. So I know for a lot of people in multifamily, 45 units is not … Brian Burke kind of joked with me like, “Oh, we wouldn’t even look at something like that. They got to be 200 plus.” And I get it. But that’s why this pocket is so good for people, for smaller investors, because the bigger investors aren’t looking at this kind of thing. It’s too small for them. They can’t scale it. But for me, it’s perfect. So the smaller multifamily, anything under 50, anything really under 100, the institutionals are just not really looking at. And the smaller units are generally owned by individuals who messed up and this need to move on. The owner of this property’s in Hawaii. He’s over it. He’s just done. And it’s like such low hanging fruit because he left and because he dabbled in this project and he’s done with it, they just didn’t manage it properly.
And so we brought the lender to the property. We brought the property managers to the property and they’re all excited about it. The property manager’s like, “This is going to be so easy to raise rents.” So anyway, low hanging fruit out there, guys, don’t be too intimidated by small multifamily because it’s truly not that different.You do your inspections, you talk to lenders, make sure you’ve got your due diligence period. Generally it’s much longer than on a single family and financing’s a bit different, but not that different. So lots of opportunity. Don’t be depressed.

Henry:
And try to get fixed rate debt.

James:
Yes. Get fixed rate debt. Yeah, absolutely.

Kathy:
Fixed rate drop, but also a big, big … I think it’s going to be like 65% LTV. So plenty of cushion there.

Dave:
Yeah, that’s the other thing. Don’t max leverage and get adjustable rate debt. People

Kathy:
Were max leveraging. It was like 80 / 20 leverage and then they would get a bridge loan on top of that. Oh my gosh. It’s too risky.

James:
And Kathy, you got pocket aces right now. You pulled the takeaway. They caved in. They went mutual with you. That tells you that you can beat the crap out of them on the inspection. Well, I feel bad

Kathy:
Saying that on

James:
Camera. Because if they already caved once, they’ll cave again.

Kathy:
Trust me. I feel bad saying it on camera, but that’s it. I’ve taken losses, so I don’t feel so bad that they’re taking losses. You win and you lose. This is going to be my win their loss, but they’re going to win on the next one. It’s okay. But yes.

James:
They don’t care if you lose money on it when you buy it, so just give them the number works.

Kathy:
Well, and that’s it. We’re not trying to screw anyone. It’s just this is the number that’s going to work.

Dave:
If they had a better deal, they would take that. They don’t.

Kathy:
They don’t. They don’t. And once they’re in contract and you’re doing your due diligence, they’re already cashing out in their head. So when you come back and you got to like, “Here’s the deal. We got to fix this mistake you made.” What are they going to say? Now it’s public information. They have to disclose these things and next buyer would have the same issue.

James:
And they already showed they can’t stomach negotiating.

Dave:
This is James’s dream. All right. Well, good luck, Kathy. Let us know how it goes. Sounds like a really cool opportunity. We got to take a quick break, but we’ll be back with James and my priorities right after this. Welcome back to On the Market. I’m here with Kathy, Henry, James talking about our portfolio priorities right now. James, what are you, of all the things you do focusing on right now?

James:
Oh man, there’s so many opportunities out there you have to kind of narrow your buy box and it’s all about working smarter, not harder right now. Over the last 12, 24 months, I think all of us investors, liquidity has been slowly getting locked up. You got to leave a little bit here, you leave a litle bit here, you leave a little bit here, and all of a sudden you’re like, “Oh, I need my cash flow back.” And so for us right now, the focus is on not locking up cash for long term. We want to have it on hand as we go through economic downturns, because as you go through an economic downturns, you catch dips and you get really good buys. And so I’d rather keep the capital on the sidelines and buy stuff that we can make high returns on. One thing we’re definitely not doing is building houses anymore.

Henry:
Really?

James:
The amount of hours that has to go into that business for the amount of reward is just not there. And at some point you have to go, okay, well, this isn’t mathing out. And so what does math out? So right now what we’re trying to do is on the flip side, there’s really two metrics that I’m looking at. If it’s an expensive metric, I want to be buying this well below replacement cost. If you’re in a good neighborhood, good location and I’m buying it for less than you can build it for, that will always sell. Expensive deals in a bad market can be scary, but that’s why I put that metrics in front of me. Is this a good buy? There’s a house we just locked up for 2.8 million in Clyde Hill, great area of Bellevue. 2.8 million right now is not really what I want to be in because I got a lot of inventory, but we’re buying this house for like $500 a foo.
I mean, you cannot build this house and get the land for $500 a foot, period. And not only that, it’s a cosmetic fixer. There’s nicer appliances in this house than my house right now. So it’s a quicker deal and we’re buying below replacement. So the two things for Dispo, I want to be in and out quick with less roadblocks and construction, or if they’re longer projects, I want to buy deep. And deep means where we can buy it and we have an option to also we can refi it and still stomach it because I am trying to bring down that middle kind of acquisitions because I don’t want to buy a flip where there’s not multiple exit strategies. And so I’m kind of trying to focus on deals that, okay, me and Dave looked at a house, this really charming house with red rooms, might have been a massage parlor at one point tasted like mold.

Dave:
I am shocked you called that charming.

James:
The reason I like this deal is because we can go through the whole flip process and I can carve it up a couple different ways. And if the market keeps going bad, I can refinance that and disposition that to a different asset class and still break even. And so it’s about mitigating risk and then also if you are taking on risk, increasing your returns. So flipping, we are trying to get at least 10% more return right now. I’m not interested otherwise.

Dave:
Which is what, 45%? Because you’re at 35 normally, right?

James:
Yeah, 35 for six month basis. So I’m trying to get around 70% and right now I want to be at minimum 45% on a six-month basis. I’ll go a little bit lower on a cosmetic deal if I can also refi it and break even or just leave a litle bit of cash in, but I don’t want to be stuck in the middle right now. And so other things that I don’t want to buy, whether it’s multifamily, flipping anything with unknown timelines and weird permitting, no way. I’m not touching it.
I’m not going to wait for the city to dictate my timelines because what is beating up people’s profits right now is the debt. The debt is eroding deals, multifamily, flipping single family, short-term rentals. We’re getting beat up by debt. So you want to reduce that exposure by not buying the unknown. And those are the ways we’re really just trying to work smarter. We’re chasing bigger deals, more profitable deals. There’s less of them, so we’re doing less volume. So we’re focusing on the good ones. And then if we are going to get out there, if we have multiple exit strategies, I really like that play right now. If I can break even and create value, it will be worth that money later. So I’m good with those, but just trying to reduce risk and work smarter and harder because we have way too many projects and it is time to unload.

Dave:
So you’re changing a lot tactically what you’re looking at, but you’re not really changing the priority of the business. You’re still just trying to generate high cash on cash returns through flipping as much as possible.

James:
Well, but the principle goes in both. We will buy multifamily right now. We’re looking at three deals on our plate. We’ve actually bought more multifamily the last 12 months than we bought or 24 months than we bought in the last four years. And so we’re still buying that. That’s working for us, but we just have to be very, very selective. So what does that mean? Well, we don’t want to lock up capital. If I got to lead capital there, I’m out. If we can create the value and get most of our capital back out, then I’ll look at that deal. We have to create a minimum 20% equity because I’m not doing this to buy a property to get steady rent growth and appreciation. I don’t see a whole lot of that going on or it’s not going to move the needle from me. So it’s got to have a big impact.
Those Burr style properties, I would rather buy a Burr single family rental right now over any other type of rental because you can trade them later. And the other big strategy I got right now, load up on Dispo timeframe. If I can sell it in the spring, I’m going to be way more aggressive. If it’s not hitting the spring now, the seasonal slowdowns are huge. I’m backing those things way down. I want a better margin because I know if I miss that spring market, numbers are off by at least 5%.

Dave:
All right. Well, great advice and interesting adjustments here that you’re making, James. We got to take one more quick break, but we’ll be back right after this. Welcome back to On the Market. Today, Kathy, James, Henry, and I are talking about what our portfolio priorities are. Henry, James, and Kathy have gone, so I guess it’s my turn.

Kathy:
It is.

Dave:
My priority is James is going to vomit right now when I say this, but my- Please don’t.
My priority is just trying to simplify my portfolio a little bit. I just feel like I’m at a stage of life where I want to be in what our friend Chad Carson would call the harvest mode, where I am enjoying the benefits of passive investing. I really like it. I will still buy actively own deals that I own myself, but I’m actually selling one’s under contract right now and I’m preparing another one to sell to put into more deals like what Kathy was talking about. The big opportunity for someone like me is in buying multifamily at really low pricing, I think

Henry:
In the

Dave:
Next two to three years. And that aligns with what I think the market is giving us. And just personally, I am interested in investing in those passively and I’m also interested in acquiring them directly to sort of consolidate some of my assets. So rather than having a lot of single families or a lot of small multifamilies just focus on a couple bigger properties, I don’t want to buy hundreds or anything like that, but 12, 20, 30 unit kind of deals like what Kathy’s talking about, either through funds, either through syndications or individually, it just makes sense right now. It does feel in some ways that right now is for multifamily what 2010 was for single families. It is. The distress is there. People are being forced to sell. There are good assets in good locations being sold at good pricing. And I think hopefully a lot of syndicators, a lot of operators have learned their lessons and are now getting appropriate debt using appropriate leverage, either made it through because they were great or have learned enough over the last couple months that I think there’s good opportunity.
So that’s kind of what I’m focused on. I know that’s pretty contradictory because everyone on social media right now is talking about how syndications are scams and it’s crazy. But I think kind of there are scams out there and there were bad deals bought in

Kathy:
21 and

Dave:
22, for sure. But that does not mean the whole asset class or syndications as a deal structure are inherently bad. The combination of what some things people did in 21, 22, not great. Don’t write it off just because it didn’t go well in the past. That’s like people saying, “Oh, the market crashed in 2007. I’m not going to buy a house in 2010 that you wish you did.”

Henry:
Also, just because a syndication goes south doesn’t mean it was a scam. Right, for sure. It’s not a scam. Yeah. There are tons of factors that go into whether a deal goes well or not, whether it’s a syndicated deal or not. But just because it’s a syndication, you still have to buy the deal right. You still have to operate the deal properly. I think there’s great money to be made in passive investing just like there are bad syndicators. There are great syndicators. It’s your job as the investor to do enough due diligence to know which is which.

Kathy:
You need to be a professional investor. If you’re going to invest in syndications, you don’t just hand it to somebody like we were talking about, you don’t just hire a friend to list your house. You also don’t just invest with a friend because it’s their first syndication and you want to support them or … No, you’ve got to know the debt structure and a lot of people didn’t understand that and it was really obvious. This is over leveraged. You wouldn’t do this normally. This isn’t following rules of any kind. It was over-leveraged in some cases 100%. So we’ve been there. We did that with single family. That didn’t work well. So yeah, you got to understand the debt, the experience of the operator. If it’s their first deal, it’s probably, you don’t want to be their test monkey, right?

Dave:
Absolutely. And I mean, I could sit here and give you advice, but seriously just go read the hands-off investor. It’s a book by Brian Burke. It’s what I read. I’ve read it like two or three times before I did my first syndication and it really is just incredibly valuable to understand how to vet it. But the reason I’m bringing this up is just like don’t write off this entire asset class and this opportunity as an investor just because deals went bad in the past, study them, understand why deals did bad in the past, which ones did succeed, because plenty have succeeded in the same amount of time and figure out if it’s right for you. For me, where I am just in my stage of life, it does make sense for me and that’s why I’m focusing on it. That might change in a couple years.
I might go back to buying more prioritizing small multifamily, but that’s just not where I’m at and I’m excited about it. I actually think this is going to be a really good opportunity. I think Brian Burke said, what does he say? The multifamily market was fixed in 26 and heaven in 27. So
I think we’re just at the beginning too.

Kathy:
Just at the beginning.

Dave:
I think

Kathy:
We

Dave:
Got probably like a two year, maybe more period where we’re going to see all this maturing debt, all this distress and it’s going to be the time to buy.

Kathy:
Yeah. And maybe even early, but that’s okay. I don’t mind.

Dave:
It might be a little early, but not if you find the right deals. It’s like I don’t think we’ve reached peak distress. So if you want to say, is it a little early? Yeah. But are there some deals that are hitting the market at very attractive prices because there is already some distress? Yes, definitely both. The other thing I am looking at is I would also buy a portfolio. I’ve been interested and have underwritten two in the last couple of weeks just entire portfolios of like 15, 20 units from an existing investor because you can get them at a better cost per unit if you do that. So I’m just looking for an opportunity to just do more with less time or just put all of my effort into stabilizing a portfolio at once and then harvesting rather than just being in this constant onesie twosy kind of deal mode.
All right. Well, thank you guys so much. This was a lot of fun. We should do more of these shows. I think it’s really helpful. Let us know if you think it’s helpful. I find it helpful hearing what you guys are doing. So selfishly, this is fun for me.

Henry:
Join us on the next episode of Asking for a Friend.

Dave:
Well, James, Kathy, Henry, always great to have you here and thank you all so much for listening to this episode of On The Market. We’ll see you guys next time.