Reality of todays investing

[Steve Reutzel]

I’m seeking insights from those actively involved in current-day real estate deals—not those in the planning or preparatory stages, and not from those who are trying to sell me anything. The current market environment is markedly different from five years ago, and while many of us wish we could go back to 2019 and purchase beachfront properties, that's not possible. With today's inflated prices, higher interest rates (which may fluctuate over the next year or two), and the likelihood of slower property appreciation in the coming decade, is profitable real estate investing still feasible for the average investor with no insider connections?

Specifically, I'm curious about which market segments, if any, offer opportunities for building cash flow and equity that can break even immediately. For context, we recently purchased a beachfront short-term rental condo for around $350k, and while we're hopeful to break even, it's going to be a challenge in the short term. We also own a couple of small commercial properties purchased in 2017 and 2019 that are generating solid cash flow. With around $100k to invest, I’m struggling to find opportunities that appear breakeven or better over the next few years.

I'd love to hear from anyone who is achieving immediate positive cash flow without relying on extraordinary insider deals. Are there viable opportunities out there, or am I simply missing them? If so... what market segments are best with today's circumstances: STR, LTR, small commercial, small apartment... I look at all the above and nothing feels good to me.

[Drago Stanimirovic]

Hi Steve,

The real estate market today is undeniably tougher for average investors, but profitable opportunities do exist. With higher interest rates and inflated prices, immediate positive cash flow is harder to find, especially in prime markets like beachfront properties. However, long-term rentals (LTRs) in secondary markets offer better cash flow potential, as demand for affordable housing remains strong. Small commercial properties, which you’ve had success with, continue to be reliable cash flow generators, especially in local markets with stable demand.

Short-term rentals (STRs) are riskier due to market saturation and regulatory issues. Breaking even on STRs today often requires targeting less saturated areas with year-round demand, but they generally offer less stability than LTRs or commercial properties.

Success in this environment requires careful market selection, solid underwriting, and perhaps shifting focus to smaller multifamily or commercial properties where rents and demand are more predictable. 

If you need help with financing or strategy, give me a call, I’m happy to assist.

Best,

Drago