Every turn of the market cycle, investors freeze. Rates go up, they freeze. A recession looms, they freeze. The market gets hot and competitive, they freeze. There's always a reason to wait.
Here's what I've learned in 17 years across multiple cycles: my strategy barely changes, because the fundamentals don't. Let me show you how to keep buying through rising rates, recessions, and red-hot markets alike.
Interest rates are temporary
This is the mindset that matters most. Rates go up, then they come down. They always have. So I don't let them dictate my strategy, only my tactics.
When rates are high, I lean on HELOCs and short-term funding, and I buy with a plan to refinance into long-term debt later. When rates drop, I lock in that long-term debt at the lower rate. The financing tool changes; the deal criteria don't. I cover both tools in how to finance a rental portfolio with other people's money.
When rates climb, a few predictable things happen, and each one is an opportunity:
- Luxury homes soften and prices drop in some areas.
- First-time buyers become long-term renters until affordability returns, which pushes rents up against already-low supply.
- Cap rates compress and commercial lenders pull back. Appraisers get conservative and stop using aggressive proforma numbers, so expect to bring more money down and prepare for low appraisals.
- Newer investors who've never seen a downturn pause for 3-6 months. That means less competition and better terms for those who keep moving.
So when rates rise, I double down. I underwrite at the higher rate, assume a higher vacancy, use average (not optimistic) rent appreciation, and keep making one to five offers a week on value-add deals in high-growth markets. A tool like DoorProfit makes it fast to underwrite each one at conservative numbers and check the neighborhood before I write the offer. Honestly, I enjoy the lack of competition.
Recessions are an opportunity, not a disaster
This sounds backwards until you've lived through one. Once you've survived a recession or two, you learn to buy quality assets while everyone else is fearful.
The proof is in my own portfolio: a property I bought in 2008, in the teeth of the worst downturn since the Depression, for $200,000 is worth over $400,000 today. Imagine what the properties you buy in the next downturn will be worth a few years out.
That said, I won't sugarcoat it. The last recession was harder than people remember. Banks didn't want to lend, nobody wanted to lend, and while prices were low, rents were stagnant, so it was genuinely tough to make deals cash flow. A recession is an opportunity and a test.
How to position for it: cut unnecessary expenses, keep a conservative loan-to-value so you're never forced to sell, and invest for the long term. Cycles turn. The investors who get hurt are the ones who over-leveraged or panic-sold; the ones who win are the ones who had cash and nerve ready. This is the same long-term, asset-manager mindset I describe in the BRRRR strategy.
Great deals exist in every market
"There are no good deals right now" is something I hear in every market, hot or cold. It's never true. Deals exist; you just have to be creative, know where to look, and know the right people. Recent examples of mine, one from each channel:
- MLS: a 7-unit listed at $799,000. I negotiated to $775,000 plus a $15,000 repair credit, with a plan to raise rents from $6,250 to $8,400 a month, which would push the value past $900,000.
- Wholesale: a duplex with a $126,000 ask, negotiated to $118,000, about $30,000 in renovations, renting at $700-750 a unit, with a projected $175,000 after-repair value.
- Off-market short-term rental: a $400,000 property running $200-300 a night.
The lesson: if you look the same way everyone else looks, you'll fight everyone else for the same scraps. I'd rather find deals where others aren't looking.
The 3 ways to source deals
You're only as effective as your deal flow, and there are three ways to get it, in roughly increasing effort:
- Investor-friendly agents. Free to you, because they already have systems for finding deals. The only "cost" is being ready to write an offer the moment they bring you one in your criteria, so have proof of funds or a pre-approval in hand.
- Wholesaler lists. A wholesaler finds sellers willing to sell below market. More deal flow, but more risk: deals often come with non-refundable earnest money and no financing or inspection contingencies, so you need to know the market cold. I break down how to evaluate one safely in wholesale and assignment deals explained.
- Source your own. Start a "farm" targeting specific owners by area and property type, using direct mail, texts, cold calls, or door-knocking. It's the most costly and time-consuming, but it's great for building momentum.
There's no single right answer. It comes down to your risk tolerance, how easily you want deals to arrive, and your experience level. The market and deal-screening side of this is in the out-of-state investing guide.
Build local bank relationships before you need them
One more lesson, learned the hard way during the 2020 disruption. When everything seized up, the investors with local banking relationships got served, and the ones relying on big banks waited and waited. My application at a local community bank was approved in 26 hours; investors at large banks were still waiting weeks later.
I'd been telling investors for years to build relationships with small, well-funded local banks, because that's where portfolio loans, lines of credit, and fast, flexible service come from. The moment you actually need fast capital is the worst possible time to start cold. So open the account and build the relationship now, while you don't need it.
The takeaway
Strip away the headlines and the fundamentals never move: buy cash-flowing value-add in growth markets, underwrite conservatively, make consistent offers, keep your leverage sane, and have relationships ready. Rates and recessions change your tactics, not your strategy.
So the next time the market gives everyone a reason to freeze, ask whether it's actually changed what makes a good deal, or just thinned out your competition. Usually it's the second one. Stay cautiously optimistic, keep making offers, and let everyone else sit on the sidelines waiting for a perfect moment that never comes.
This article is educational and reflects my own experience. It isn't financial advice, and every market and cycle carries real risk. Do your own conservative underwriting and consult the right professionals before acting.
