If You're Scared About the Economy, Listen to This

Summary

BiggerPockets Real Estate Podcast
Episode: If You’re Scared About the Economy, Listen to This
Date: March 27, 2026
Host: Dave Meyer (BiggerPockets Head of Real Estate)
Co-Host: Henry Washington

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Episode Overview

In this candid and timely episode, Dave Meyer and Henry Washington tackle the anxiety gripping investors amid uncertain economic times—rising inflation, increasing unemployment, and unpredictable global events. They share both their personal feelings and practical advice, focusing especially on how real estate investing fits into a landscape of market risk, recession worries, and rapidly shifting fundamentals. The discussion moves organically between macroeconomic sentiment, risk mitigation, asset selection, and tactical advice for new and experienced investors, with both hosts highlighting why—despite their fears—they remain committed to (and even opportunistic about) real estate.

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Key Discussion Points & Insights

1. The Current Economic Vibe: Confusion and Caution

• Economic Anxiety Abounds: Both hosts address how the economy feels “less predictable” (A, 00:20), with inflation and unemployment up, and AI-induced labor shifts adding to uncertainty.
  • Quote: “It’s hard to get a beat on and everything is changing so quickly.” – Henry (C, 01:42)
• Sentiment Impacts Behavior: Dave notes that “sentiment, whether it’s accurate or not, does impact behavior and does impact the economy” (B, 05:04).
• Deteriorating Finances for the Average American: "The average financial position for the average American, it does seem like it's deteriorating…spending patterns, savings rates, you look at consumer sentiment, it's starting to deteriorate." – Dave (B, 01:59)

2. Why Invest Now? Navigating Risk and Opportunity

• Risk-Off Investing: Both hosts are more conservative, but see opportunity as prices soften.
  • “Wealth is created when there’s pain in the market…pain creates an opportunity to buy assets at a discount.” – Henry (C, 05:44)
  • “I am pruning and just keeping the stuff that is really good that I know I want to hold through a recession.” – Dave (B, 09:51)
• Single Family & Small Multifamily as Resilient Assets
  • Focus remains here because “people still need a place to live,” making these assets more recession-proof. – Henry (C, 06:36)
• Buy at a Deeper Discount
  • “The last three deals we put under contract, I mean, I’ve gotten them at 50 cents on the dollar, some even lower.” – Henry (C, 07:42)

3. Asset Allocation: Real Estate vs. Other Asset Classes

• Cash Loses to Inflation; stocks are “frothy,” and crypto is volatile.
  • “If you’re going to just put it in a savings account, you’re probably not going to make money. …I just keep coming back to real estate.” – Dave (B, 08:43)
• Why Real Estate Now?
  • “Real estate might not grow a ton during a recession, but it traditionally does not go down that much. …It is a great inflation hedge.” – Dave (B, 10:22)

4. Tactics for Multi-Stage Investors

For New Investors: Emphasize Fundamentals

• How to Start in Uncertain Times
  • “This is the time when you need to really focus on the fundamentals.” – Henry (C, 17:34)
  • Start with single family or small multi-family, select markets with steady population/job growth, and buy the highest quality asset you can afford.
  • Be sure you have the financial stability to “hold onto that asset…because we don’t know what’s going to happen.” (C, 20:24)
• Risk Reduction with House Hacking/First Rental
  • “If you can buy a rental property that brings in an extra $500 a month…that can actually reduce your overall risk.” – Dave (B, 22:11)
  • Even if some markets decline a few percent, cash flow, tax benefits, and amortization insulate you.

For More Experienced Investors: Portfolio Optimization

• Trim the Fat, Reallocate Risk
  • Review your properties at least quarterly; assign “green light/yellow light/red light” ratings to assets. (C, 29:00)
• Sell Underperformers, Reallocate to Stronger Opportunities
  • “If it’s not [an asset I want for 10 years], I’m heavily considering selling it.” – Henry (C, 28:29)
  • "I am not selling it because I am panicking...I'm selling because the numbers just aren't working as a buy and hold." – Dave (B, 30:20)
• Creative Strategies with Proceeds
  • Consider using sales proceeds to pay off strong properties (reduce risk) or “recast a mortgage or pay off a different mortgage.” (B, 34:40)
    • “My goal is to pay off two more assets this year.” – Henry (C, 35:39)
  • “I actually just kind of like the idea, especially in a down economy, of less risk on that rental property.” – Dave (B, 35:05)
• Be Patient Rather Than Chasing 1031s
  • “I think the number one value of an investor right now is to be patient. And a 1031 does not allow you to be patient.” – Dave (B, 33:32)

5. When to Panic or Exit: Warning Signs

• When to 'Throw on Your Life Vest'
  • “If my market is doing the opposite of the advice I gave to new investors…population decline year over year, jobs decline, rents go down, [then] you probably need to pull the plug sooner than later.” – Henry (C, 37:33)
  • “Sometimes you just buy a turd, guys.” (B, 38:22). If there’s no viable turnaround for a property, sell it—even at a loss.
  • Best feelings in real estate: “One was paying off an asset. Two was selling a turd. Even if I take a loss. Oh, feels so good.” – Henry (C, 38:40)

6. The Power of Real Estate in Tough Times

• Financial Buffer & Psychological Comfort
  • “Real estate has provided me a little bit of a buffer, an insurance policy…That doesn't mean every asset I own is going to perform great if there is a recession. But it does mean that...I'm at least probably inflation hedged.” – Dave (B, 38:50)
  • “I would encourage people to just figure out ways to use real estate to make you feel better, have less risk, not feel like you're going out there and taking some massive swing during a risky time.” – Dave (B, 39:33)

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Notable Quotes & Memorable Moments

• On Economic Uncertainty:
  • “On a scale of one to ten? I'm at about a fear factor of six." – Henry (C, 01:15)
  • “It's not a disaster. It's just confusing, right?” – Dave (B, 01:20)
• On Opportunity in Adversity:
  • “Wealth is created when there's pain in the market.” – Henry (C, 05:44)
• On Fundamentals:
  • “Start with a single family or a small multi and be pretty choosy about the market that you do that in.” – Henry (C, 18:02)
• On Portfolio Review:
  • “I've gone through my entire rental portfolio and I've given everything a green light, a yellow light and a red light.” – Henry (C, 29:00)
• On Letting Go:
  • “Sometimes you just buy a turd, guys.” – Dave (B, 38:22)
  • “Two best feelings I ever had in real estate. One was paying off an asset. Two was selling a turd.” – Henry (C, 38:40)

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Timestamps for Key Segments

• 00:00–03:45: How the hosts feel about today’s economy
• 03:45–05:28: Personal finance struggles, household sentiment
• 05:28–07:58: Investing amid uncertainty; why they’re more conservative
• 07:58–10:50: How their tactics shifted from last year; why they're still buying
• 16:53–23:33: Advice for new investors, tactical steps, market selection
• 27:33–38:40: Advice for experienced investors: pruning portfolios, when to sell, using proceeds strategically
• 38:40–39:43: Psychological reassurance in tough times

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Summary Takeaways

• Stay Conservative, But Stay Investing: These are confusing times, but by focusing on sound fundamentals and “buying at a discount,” investors can reduce risk and even lower their personal financial exposure.
• Review and Prune Regularly: Both new and experienced investors should periodically review their portfolios and have the discipline to sell underperforming or high-risk assets and redeploy capital for lower risk and better future growth.
• Avoid Extreme Moves: Don’t panic-sell unless your market is showing sustained decline in fundamentals; patience and risk-management are more crucial than ever.
• Let Fundamentals Be Your Guide: For new investors, focus on cash flow, market health (steady population and job growth), and buy quality assets, not just “the cheapest thing you can find”—especially amid economic turbulence.
• Real Estate as a Buffer: Even in uncertainty, real estate can offer stability, inflation hedging, and long-term resilience—provided you manage your risk and don’t chase wild swings for big returns.

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End of Summary

Transcript

[A]

If you're scared about the economy, listen to this. Inflation is up, unemployment is rising. World events are feeling crazier than ever. If you're feeling uncertain about your financial future, you are certainly not alone.

[B]

I'm definitely feeling it too.

[A]

But I'm not sitting on my hands

[B]

holding onto cash and hoping everything will be okay.

[A]

I'm still investing. The economy feels less predictable than before, and that makes me more motivated to put my money to work. But I need to own assets that I control, not just stocks or crypto that feel like they just go up and down almost randomly these days. For me, that means single family and small multifamily real estate. I am still finding ways to make those deals work today. And you can too. Maybe you even need to make those work these days, whether you're looking for your first deal or optimizing a long standing portfolio. Hey, everyone, I'm Dave Meyer, chief investment officer at Bigger Pockets. Here to try and make sense of

[B]

these wild economic times is my co host, Henry Washington. All right, Henry, so give it to me straight. How you feeling about the economy? Good? You happy? You excited?

[C]

On a scale of one to ten? I'm. I'm at about a fear factor of six.

[B]

Okay. Yeah, I think that's right. It's not a disaster. It's just confusing, right? There's like, yes, weird signals going in every direction. So it's like hard to be at a 1 or a 10. I feel like the only logical answer is to be somewhere in the middle. Because one day I'm like, my God, the economy is crashing. The next day I'm like, everything's great.

[C]

Right?

[B]

It's totally hard. It's hard to get a beat on and everything is changing so quickly.

[C]

I couldn't agree more. It is very confusing. I'm just trying to stay fundamentally sound and pay attention to, like, what's truly happening locally and not what's happening in the headlines.

[B]

I think that makes a lot of sense and I wish I could do that, but man, I just read the newspaper all day, every day, just freaking out about everything I read. But I will just say this. I want to be honest with people that, you know, I give like an assessment of the economy very regularly here and on, on the market as well. And I'll just say, like, I do think the economy is getting worse. I think that just generally speaking, if you're talking about the average financial position for the average American, it does seem like it's deteriorating now. There are good things going on with the economy as well. The Stock market continues to do well. GDP is growing. If you're the owner of some sort of AI startup, you're probably crushing it right now. But I think the average American, if you just look at the data, you look at spending patterns, you look at savings rates, you look at consumer sentiment, it's starting to deteriorate. And I don't really see how that turns around in the short run. I think that's the thing that kind of worries me about the economy, is that like unemployment starting to go up. If the Fed cuts rates, I don't really think that's going to change that much. I think it's like an AI induced labor shortage.

[A]

And I just think we're in for

[B]

what a lot of people have been calling for, which is sort of like a transitionary time in the economy. We have this brand new technology. We're sort of at the end of an economic cycle. And whether they call it a recession or not, I think we're in for like a shift in the economic vibe. That's just how I see it. Not necessarily saying that means negative things for real estate and we'll get to that in just a minute. But I just think if you're looking at the macro picture, it's slowly deteriorating in my perspective.

[C]

Yeah, I find it hard to see how people who only depend on one income stream are going to continue to be able to afford to live comfortably with the rate, which things are going up in price. I mean, everything costs more money, groceries, rent. And if you don't have some sort of plan to bring in more income to supplement that, then you end up supplementing with credit card debt. And that's probably why credit card debt is at an all time high right now as well.

[B]

Yeah. And defaults are starting to go up, which is the stuff that's, you know, you see credit card debt going up and up and up and you're like, okay, that's, that's going to end someday and that's going to end badly. And maybe that time is soon. And usually when credit cycles like that end, that's when you start to see a recession. That's typically how it happens. Now. I don't know if we're going to call this a recession or whatever. I think that, you know, that's up to some academic people who make those, those decisions. But I just, I do get the sense, just not even data, like anecdotally, I don't know about you, like everyone I talk to, this is just constant source of conversation. It's just like how Expensive everything is. People are having a hard time making ends meet. And even if you're not currently having

[A]

a hard time making ends meet, you're

[B]

worried that AI is coming to take your job. Like, it just feels like there's so many risks or threats to financial security right now. I think it's on people's minds. And sentiment, whether it's accurate or not does impact behavior and does impact the economy. So I just generally think we're in for more difficult economic times.

[C]

I agree with you.

[A]

That doesn't mean you shouldn't invest.

[B]

And I actually think a lot of people would make the case that that means that you should invest. So I'm just curious, like, given the fact, Henry, that you have at least some nerves, you're at a 6 out of 10, you're not panicking, but you're. You're above average, how does that impact your investing decisions?

[C]

It impacts my investing decisions in a way that helps me be more conservative with what I'm investing in. But I mean, the truth of the matter is, no matter how uncomfortable it is to say is that, like, wealth is created when there's pain in the market, right? Pain creates an opportunity to buy assets at a discount. Whether that's real estate, stocks, crypto, like, that's when people buy. Crypto's down right now. And if you believe in it as an asset, this is when you should buy. So because you're betting on it going back up, if the stock market tanks because we are in a war or some crazy decision is made that causes fear and stocks go down, I mean, historically we've seen that stocks will come back at some point. And so the opportunity to build wealth is built during times like this. But that doesn't make it any less scary to spend money on those assets during times like this. And so the way that I battle with that fear is with being very picky about what it is that I'm buying. And so this is another time when I feel strongly about single family and small multifamily as an asset class A, because it's more affordable than buying a multifamily asset class B, because regardless of what's going on with AI in the economy, people still need a place to live. People have to have four walls and a roof. And so I can afford the single family asset class. If things go terrible, I think demand for this single family asset class will continue to rise. I mean, we're still, historically, we still don't have enough inventory to supplement the demand that we have, even though in Some markets, it seems like real estate's going down this. There's just a need for housing, both for rentals and for owning. And so I'm just buying less risky assets. I'm buying at deeper discounts, and there's actually more opportunity right now, it seems, to buy at a discount. The last three deals we put under contract, I mean, I've gotten them at 50 cents on the dollar, some even lower than that. Which is. Which is really, really good or just. It hasn't been like that in a few years.

[B]

Are you buying more or less than you were like a year ago then?

[C]

A year ago I'm probably buying more, but we were down so much last year versus what we've done in the past that it's not that much more. Historically, I'm probably on average to what I do each year, but last year was such a low for us that I'm definitely buying more, but. But not a ton more.

[B]

Yeah, last year was just rough. I feel like last year we still had no inventory, but things were incredibly unaffordable. That was like just a tough year in 2025 where things are getting a little bit more affordable and there's better deal flow now. So I do think things are getting better. But I guess the question about whether or not to invest in real estate

[A]

comes down to what else are you

[B]

going to do with your money right now? Because sounds like. I know that's just such, like a lame thing to say. But it's true. Holding cash is okay, but there is inflation. So if you're going to just put it in a savings account, you're probably not going to make money. If you put in a money market, you're about flat. That's okay. But I would like my money to earn some money. The stock market. I have a good amount of money in the stock market, but I am not putting new money into the stock market right now. If it tanked like Henry said, I would put more money into it right now, but it is at very frothy valuations historically, and I have a hard time seeing how it's going to go up much more. I think there's just. It could go up more, but I think there's more downside risk to upside potential right now in the stock market. I don't bet a lot on. On cryptocurrency. And so I'm just asking myself, like, where would I want my money if there's a recession, what do I want to do with my capital? And I just keep coming back to real Estate. And like, I'm not just saying that because I host this podcast. Like, I will admit to everyone, I am selling some real estate right now too.

[C]

Yeah, me too.

[A]

Yeah.

[B]

So like, I am, I am pruning and just keeping the stuff that is really good that I know I want to hold through a recession. But generally I just feel like everything that Henry said is true. Where do I want my money in recession? I want it in something that, that is generally recession proof. Real estate might not grow a ton during a recession, but it traditionally does not go down that much. And rents really don't go down that much. It is a great inflation hedge. You're still getting amortization, you're still getting tax benefits. And so like all of those things,

[A]

even during a hard economic time, may

[B]

be the safest place to keep your money. And so you said you were being conservative. I have felt for the last year or so that it's like a quote unquote, risk off time for investing. I'm more focused on modest returns and not losing money than I am on taking big swings and getting great returns. And to me, real estate is the best asset class to do that still.

[C]

Yeah, I agree with you. I mean, where a lot of investors are willing to buy at the same margins they bought at last year and the year before last, I'm not. I am buying at much deeper discounts. And if that means I do less deals, it means I do less deals. But I'm actually finding the opposite right now. That people are taking the offers that we're making right now. It's creating opportunity for us for the future. Either opportunity to hold on to some of these assets that we're getting at deeper discounts as rental properties or opportunities to turn around and, and sell these assets to some of these other investors who are less risk averse than I am and taking them on.

[B]

Yeah, I think that is the flip side of this, that there is going to be additional opportunity. And that is the main reason I said I was selling some stuff. It's not because I want to get out of real estate, it's because I want to reposition into different real estate because there are certain times deals sort of peek out at their usefulness. You know, you do a burr, you do the renovation, you get the equity kicker, you stabilize it and it's good. But like, you know, if you sell that property and put it into the different burr, you might make more money. And so like, that's kind of what I'm thinking about because I just, I think the deals are starting to be there, at least in the places I invest. But I think more are coming. Is my expectation for better or worse, when the economy does poorly, people sometimes freak out and just sell stuff that maybe they shouldn't even sell. Or there is unfortunately some financial hardship. And like, I'm not rooting for that. But I'm just saying as an investor,

[A]

like if people are selling and there's more inventory on the market, there's more

[B]

deals on the market, there's going to be more opportunities for you to find the kinds of assets that you like. And to me, that's the upside to this whole situation. I'm not expecting, though, these deals to be grand slams in the first couple of years. I'm basically sticking to this sort of upside error that I've been talking about for a long time here, is that I'm going to buy deals now knowing that they might be flat in terms of value for a year or two or three, but they will recover. And I'm just treating this more as an opportunity to get my portfolio in place for like the next era of growth, whether that comes in a year or two years or five years from now. So that's a little bit about what Henry and I are doing and how we're feeling about the economy. But we want to talk a little bit about you and what investors at different stages of their investing career should be thinking about, how they should be adjusting their strategy and tactics if they are fearful about the economy. We're going to get into that, but first we got to take a quick break. We'll be right back.

[A]

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[A]

Welcome Back to the BiggerPockets podcast. Henry and I are here being honest

[B]

about we're a little scared about the economy. I think that's, that's, that's, that's the general vibe. I think we're feeling a little better maybe than the average person because we own some real estate and have some secondary sources of income and some control over our finances. But I think we need to address that. This is going to be an uncertain time economically. But, Henry, I'm curious what you think for people who are fearful about the economy, haven't done their first deal, thinking about doing a deal and wondering, with everything going on and all the uncertainty, is now the time to do it? How would you advise someone thinking that,

[C]

again, there is opportunity right now to enter the market. And yes, it's going to feel scary, but this is the time when you need to really focus on the fundamentals. And one of the things that you've said on previous episodes is that people should buy the best quality asset that they can in, in a particular market. And I think that there's some truth to that. So if you're looking to enter the space right now, especially if you've never done a deal, I think there's a lot of value in learning how to do this business with a single family or a small multifamily to start off. And this isn't the time to search for the cheapest market where you can buy the cheapest asset. But I do think starting with a single or a small multi and being pretty choosy about the market that you do that in. So if you live in a market where you can generate cash flow or buy a deal that you can afford that's going to produce the return you're looking for, that's great. You probably should invest in your backyard. There's advantages to that. But that doesn't. That's not everybody in the United States. So if you have to invest out of state, I think that you want to be pretty selective in the market that you do that in. We've had several shows where we've talked about what areas of the country real estate is doing well in right now. The Northeast and the Midwest are both performing fairly well. They both have assets that are affordable. But also there are several markets within the Northeast and within the Midwest that have rents that are performing above the national average. I'd be choosing a market where population growth has been steadily improving. You don't want to see a big hockey stick in population growth, but you want steady, steady population growth. I'd look 10 to 20 years and remove the outliers. So don't look at the COVID years. Don't look at the real estate 2008 crash year. So you want to look for median and not average population growth. And then I'd be coupling that with job growth. So what markets in maybe the Midwest or in the Northeast that have positive population growth, positive job growth? I'd be looking for markets where the average cost of a home is less than the median for the nation. And I'd be looking for markets where the average rent is somewhere around the median or higher than the median, because that's where you can probably find cash flow and where you might get some appreciation as well. Those are just good market fundamentals. If you can buy a single family asset in a semi decent neighborhood in a market where people are moving to that has the jobs for people who are moving to that market where the home is somewhat affordable and where rents are going to supplement that, that's just a formula for an asset that you can probably hold onto through the stor. Now you need to be financially capable to hold onto that asset because we don't know what's going to happen. There can be some black swan event that causes something terrible to happen in the real estate market. But the people who lose when that happens are the people who don't have the financial backing to be able to hold on to those assets. And so first and foremost is you got to get financially stable enough to be able to afford an asset. And then the second is you want to buy an asset in a market where it has great fundamentals and then you just try your best to hold onto that asset and let it produce some income for you. I know that sounds very rudimentary and basic, but that's in my again, primal, easy, easy brain. Like that just seems like the safest way to get into this space. Because worst case scenario, you have an asset in a market that people want to live in and where rents support that asset. And that's just a good formula.

[B]

What you're saying tactically, I standby, I want to say something about the mindset of this for people. Because if people feel that it's risky to get into real estate right now, I don't blame you for thinking that.

[C]

Yeah.

[B]

But I would say this. Find a deal that lowers your overall risk. And I know that might sound impossible, but I actually think for a lot of new investors going out and buying

[A]

a rental property or even better, house hacking, you are probably lowering your overall

[B]

financial risk as opposed to doing nothing. Just say you're sitting on $50,000 right now and you're worried about whatever your stock portfolio going down or that something bad is going to happen in the market. Can you reduce your overall living expenses by house hacking. If so, you are reducing your risk

[A]

during a financial downturn.

[B]

You're actually improving your financial situation in the short run and giving yourself that upside if the market actually goes well. If you can buy a rental property that brings in an extra 500 bucks a month and you're worried about inflation or childcare or whatever it is that's causing you stress, that can actually reduce your overall risk. The thing I want to remind people is that even though there is risk in the housing market, I think certain markets are going to see 5% declines this year. Austin's seen a 10% decline. You know there's going to be declines in the market. That's why you need to do what Henry's saying. Buy at a discount. Buy in a market with good fundamentals. But even in markets that go down 2%, you're still going to be improving your financial situation because you're going to get tax benefits, you're going to get cash flow, you're still going to get amortization. And so I just encourage you not

[A]

to take additional risk, but find deals

[B]

that lower your overall risk in the big picture because that absolutely can be done right now. So that's for newbies. And I totally agree with what you were saying, Henry. I think low risk, figuring out the ways to buy with good fundamentals don't need to take a big swing. Just find a way to conserve your capital and let it grow consistently over the next couple of years. Despite what happens with everything else.

[A]

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[E]

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[B]

I mean, we've talked a little bit about what you and I are both doing, but like, what's your general mindset for, for people who maybe own, you know, two to 10 units out there,

[C]

there, if you own 10 assets around that, you need to be assessing the performance of the assets. And I would encourage you, you probably need to be doing this on a quarterly basis because things are, things are changing so rapidly. What I'm doing is I'm looking at the assets, I'm seeing the ones that are performing the best and I'm seeing the ones that are underperforming and then I'm taking an assessment of the ones that are underperforming and figuring out how much capital do I have to throw at them to get them to perform.

[B]

Yeah.

[C]

And before I even make that decision, I am asking myself, like on its surface, now that I've been operating this asset for a while, is this asset truly one that I want to maintain in my portfolio for the next 10 years?

[B]

Yeah.

[C]

If it's not, I'm heavily considering selling it. And selling it means what's the tax implication if I sell it and what can I do with that cash if I sell it? Because right now what we are seeing and what Dave and I talked about earlier is there are a lot more opportunities coming up to buy at better discounts than when I bought some of these assets a couple of years ago. And so now I'm at a pretty prime position in terms of like, the market's still giving me a good value for selling assets. Selling assets are still selling and trading for, for higher prices. And so now I can sell something maybe that isn't producing like I hoped it would produce and I can take that money and capitalize on new opportunities that are in the market now where I can get a better discount or I can trim the fat in my portfolio and just not purchase another asset. I can Put that money towards the assets in my portfolio that are performing well, pay them down a little more and get them to perform better. So for me, it's all a math problem. But you've got to take the time to assess your portfolio and have some honest conversations to give people a picture of what I've done. I've gone through my entire rental portfolio and I've given everything a green light, a yellow light and a red light. And the green lights are the things that are performing well I want to keep for the long haul. The yellow lights are things that are performing well, or okay, I'd keep them if I have to, but I'd be okay selling them if I need to. And the red lights are the things I that, that aren't performing that I don't want to put money into making them perform because I can get a better opportunity cost with that money. Either investing back into my current portfolio of green and yellow lights or buying an asset at a deeper discount that's going to give me a better cash on cash return than that one property is getting me at the moment.

[B]

I am doing the exact same thing. And it's, it is difficult. I think that that is true. It's kind of frustrating. Got to be like that one didn't work out the way I was hoping that it did. But that's just part of being an investor. Literally, you take risks to make reward. I do think though, what Henry's saying and what I am doing as well is selling some stuff. But I want to be clear that I'm not selling it because I'm panicking. I'm not like, oh my God, there's going to be a crash. I need to get out before some crazy thing happens. In certain markets I might do that. If I was, you know, in Austin two years ago, I might have done that. But you know, like, I think, you know, I live in Seattle. I think Seattle is going to be in for some tough years. But I'm just saying in general, I am not selling stuff because I'm panicking. Ims in Denver being one of the biggest corrections in the country right now. I'm not selling there because I'm panicking. I am selling because the numbers just aren't working as a buy and hold hold. It's. That's the difference. I'm not saying, like, I'm trying to time the market perfectly. And in fact, I'm holding on to most of my stuff in Denver because they are performing actually. And I'm just going to ride out the Declines in appreciation. I just think that there are times when you look at an asset and you say appreciation is probably done. I've done what I can for this property. I've forced enough appreciation and the market's not taking it any further. Rents are what they are. Maybe they haven't grown as much as I wanted them to. Maybe the tenants are, you know, difficult or whatever. I can't find the right people to be in this home. And it's just time to move on. Like, I just think that makes a lot of sense. I'll just give you an example. I was doing a slow burr in this duplex. I renovated the first one went great. Time to do the second one. Getting quotes right now. And it's going to be like 30 grand to do this unit. And with the way things are going, it's going to raise my rents like, like 200 bucks. And I'm like, that's just not worth it, you know? And I'm looking at the ARV and it's like, I'll spend 30 grand. It'll maybe increase the value. 40. Yeah, 45. And I'm like, that's just not worth it to me. That's not worth the risk.

[C]

Yeah.

[B]

So I'm gonna sell it instead. I'll actually make some money off of it. But, like, it's not what I wanted it to be. That's not why I bought this property, you know. But this is a house. I've been telling you. I'm trying to shed my, like, turn of the century Civil War era properties

[C]

and like, getting r all your Robert E. Lee's.

[B]

Yeah, yeah, exactly. This is built in, I think it was like 1910.

[A]

Right.

[B]

Like, Woodrow Wilson was president when this was built. I think I'm getting rid of it.

[C]

Is there still a post out front where people would park their horse and buggy?

[B]

Yes. I should put one back out there. But, like, I just don't want it. I would rather sell it. I probably won't. 1031. I'll just pay the tax. I know I've done a lot of 1031s. I'm a fan, but I just don't want to right now. I have said repeatedly on this show that I think the number one value of a investor right now is to be patient. And a 1031 does not allow you to be patient. And so I'm going to pay some tax. And I think I will more than make up for that by buying the right deal that I'm going to hold to for 10 years.

[A]

So like that's just an example.

[B]

If I don't sell it, if I

[A]

can't get the price, if I whatever,

[B]

I'll just hold on to it.

[A]

It's not like I'm freaking out, it's not going to be terrible.

[B]

But I just, this is kind of the calculus that I'm doing because, you know, I look at this economy, I think people are fearful. I think the market's going to stay slow for a long time. I'd rather be acquiring new things at discounts than holding onto mediocre assets.

[C]

If you're going to trim the fat, it makes sense to do it at a time when values are there for you to do that. If something terrible happens and the market crashes and people are forced to sell, well, now you're not getting rewarded for doing it it right now I can trim the fat and get a small reward for doing it because the market is allowing us to sell, sell when values are up. So trim the fat when you can. So that way if the market turns now, at least I'm sitting on a portfolio of assets I know I want to hold on to. And I, I've positioned myself well in a time of crisis.

[B]

Can I, can I tell you something I'm thinking about doing?

[C]

Yeah.

[B]

I'm thinking about like, if I sell this property, right, take this money and like either recasting a mortgage or paying off a different mortgage. Not because I'll probably do it forever, but I think it's actually a good way to hold cash right now. Instead of like putting it in a savings account, I'm going to basically put my extra money into a rental property because it will earn me 7, 8, 9% cash return. Right. By paying that down.

[A]

And then when I find a deal,

[B]

I'll just refinance that mortgage and that will cost me a couple grand or I'll take out a HELOC or you know, a line of credit on a rental property and go buy something opportunistically. But I actually just kind of like the idea, especially in a down economy of like less risk on that rental property. So I'm take reducing my overall risk, but I'm not like limiting my options. I can still go refinance that anytime I want to go buy something else. And I just been thinking about doing that rather than sticking money in a money market account or a savings account because it just makes, it's just a better return.

[C]

That's 100% what I'm doing. That's. Yeah, my, my goal is to, my goal is to pay off two more assets this year.

[A]

Oh, that's awesome.

[B]

Like you're going to sell and then pay off to whatever single families or

[C]

two of my green light rental properties. Yep. Boom.

[B]

That's just like, I love that. That's just like, now you're good. Those are just forever properties, right? It's just. Doesn't it feel good, man?

[C]

I paid off when I paid off my first one this past year, like, it just felt good. It just felt good. I ended up having to refi a property and pull some cash out and I took that cash that I pulled out and I paid off another one and it just, it was perfect. It was a perfect time. So then we ended up, we paid off two last year. I want to try to do two this year.

[B]

That's awesome. Good for you. I love that goal. All right, this is great advice. I think, again, this is just risk off fundamentals investing. Take care of any risks that you have. Don't limit yourself in terms of upside and maneuverability. I think that that makes a lot of sense. Question though, Henry. Do you think there's like any situation you think people should be selling or panicking or freaking out? Like, are there any situations that you would just really avoid right now?

[C]

Like, what are the signs to throw on your life vest?

[B]

Yeah, exactly. Like, I think there are certain markets where if you have assets that aren't performing and the market itself, the fundamentals aren't good. I would sell all of it if it were me. Like, the reason I'm holding on to endeavor because I believe in the long term term fundamentals of that market and those assets are performing, which is fine. But if I was in a market where I bought in, I'm just going to throw out markets. Some markets in Florida, those markets might have years of declines to go. And if you're not performing now, I wouldn't hold on to it. To be honest, even if I was selling at a loss. If it were me, I would cut bait. I was curious if you have any thoughts on, like, where you might just need to bite the bullet and live to see another day.

[C]

For me, the signs would be if my market is doing the opposite of the advice I gave to new investors. If you're starting to see population decline year over year and not do the opposite. If you're starting to see jobs decline year over year and conversely, if you're starting to see rents go down, like you're unable to raise rents because of those things, you probably need to pull the plug sooner than later. Unless you know something that other people don't know. Maybe infrastructure or something is coming that people don't know. But typically if population. Population's declining, rents are declining, and there aren't jobs, then. Then you need to pull the plug that the town is starting to. To die, the economy's dying.

[B]

Yeah, agreed. And I think there's also just. You probably know in your heart, certain assets, you're like, this thing is just. It's just a turd. Like, I gotta get rid of it. I think there's just times sometimes you

[C]

buy a turd, guys.

[B]

Yeah. Like, sometimes if you're just struggling with an asset, trying to figure it out, and you're like, oh, if I just hold on or just hold on. Like, to me, it's not the time to do that. Like, unless you have a solid plan to turn it around. If you're questioning is this going to turn around or not, those are the ones I would get rid of.

[C]

The two best feelings I've ever had in real estate. One was paying off an asset. Two was selling a turd. Even if I take a loss. Oh, feels so good.

[B]

All right, well, thanks for being honest. Honest with us, Henry. I appreciate it, and I hope you all appreciate this, because I will be honest. I am sort of obsessive about following the economy. I am a little bit worried about it, but I am not freaking out about real estate. I'm more concerned just about average people being able to, you know, afford their lives. But I think real estate has provided me a little bit of a buffer, an insurance policy, if you will, against downturns. That doesn't mean every asset I own is going to perform great if there is a recession. But it does mean that I know that I'm at least probably inflation hedged. It knows I'm going to get tax benefits, I'm getting cash flow that I'm not worried about going away. And that makes me feel a little bit better. And I would encourage people to just figure out ways to use real estate to make you feel better, have less risk, not feel like you're going out there and taking some massive swing during a risky time.

[C]

Couldn't agree more.

[B]

All right, well, thank you all so much for listening to this episode of

[A]

the Bigger Pockets podcast.

[B]

He's Henry Washington. I'm Dave Meyer there. We'll see you guys next time.

[A]

Thank you all for listening to the Biggerpockets real estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, Content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, Active phone calls, Active stress? Here's a better question. What if you could buy brand new construction homes 10% below market value in the best markets across the country without making real estate your second job? That's exactly what Rent to Retirement does. They're a full service turnkey investment company handling everything for you. In some cases, investors get 50 to

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