Market Shift? How to Adapt Your Real Estate Investing Strategy

“Open house cancelled.”

Reading the sign aloud on the door of a house my wife Alicia and I were going to put an offer on was like a dagger to the heart. The three bed one bath fixer-upper in a popular Boston suburb just blocks from the beach had all the makings of an amazing live-in flip opportunity. 

Turns out we weren’t the only ones who thought so. 

Back in 2021, bidding wars abounded on single-family houses as people looked to escape crowded cities. Case and point: this house. It sold for $100,000 over asking without hosting an open house!

After several similar experiences, my wife and I had an epiphany… Why not escape the competition altogether?

Instead of single-family fixer-uppers in the suburbs, we decided to buy a condo in the city of Boston. It turned out to be one of the best decisions we’ve ever made. This experience shaped three guiding principles you can apply right now.

The “C” word in real estate might as well be condo. Nobody wants to hear it.

HOA dues, condo politics, special assessments, limited control, and they don’t appreciate in value as much as single-family houses. On top of that, it was a 2017 build. No dated kitchen. No new flooring needed. No obvious way to force appreciation. 

So why would I buy it?

It was a fantastic opportunity. In Boston, most housing stock is decades, if not centuries, old. Finding a 2017 build with brand new systems, finishes, and infrastructure was rare. New construction combined with condo living also meant minimal maintenance. For what would eventually become my first rental property, that predictability was exactly what I wanted.

Conventional wisdom shits on condo investing. My results suggest otherwise.

After living in the condo for two years, we moved out and converted it into a rental property. Today, it rents for $3,900 per month, which is a $400 increase from the first time we leased it. 

Even with those rent increases, demand hasn’t slowed. The property has never been vacant, and whenever a tenant moves out, we are able to find another within a week of listing it online. 

The kicker? It cash flows roughly $1,300 per month after expenses, making it our cash cow.

Ever heard of a Dodo bird?

Probably not, it’s been extinct for hundreds of years. Despite being birds, Dodos never adapted to fly because they evolved on an island with no natural predators. When predators (humans) arose, they were out of luck because they couldn’t escape the threat. 

Refuse to adapt in real estate, end up like the Dodo.

If we’d kept chasing a single-family live-in flip in 2021, we would’ve kept getting smoked in bidding wars. Or worse, we would’ve “won” by overpaying…And that’s before renovations. That’s how you end up house poor.

Instead, we adapted our strategy to escape competition.

At the time, single-family property prices were inflated whereas the Boston condo market was undervalued. My wife and I got a condo for $5,000 under asking and the seller paid our closing costs. 

Buying this unit was a simple bet that COVID wouldn’t last forever. When things “normalized,” people would come back to the city for social life, college, employment opportunities, and proximity to work. All of this meant demand for housing– both renting and owning– would increase with enough patience.

Fast forward to present. The condo appraised for $50,000 more than we paid just five years ago. Instead of forcing a strategy that had worked before, we adjusted to the market in front of us. 

Don’t fixate on one strategy and miss the opportunity sitting right in front of you.

When you actually study your market, block by block, you have an edge that no spreadsheet can replicate. The investors who never leave Zillow miss what the numbers alone can’t show.

The condo we bought was in part overlooked due to its location. It sits at the cusp of a gentrified neighborhood and another where you probably wouldn’t want to hang out after dark. For many people, that was a deal breaker. For us, it was an opportunity.

Since location is just about the only thing you can’t remodel on a property, it’s important to choose wisely. There were new housing developments and a shopping center being built just down the street. In addition there are two train stations within a 10-minute walk and only 15 minutes from the beach. Development moves in paths. We were buying directly in front of it.

On top of the actual area, this condo came with two deeded driveway parking spots as well as a huge basement storage unit. In a city where parking is hard to come by, this alone was an asset. 

We’ve never struggled to rent it. It attracts the exact tenant we were when we bought it. Young professionals who want transit access, walkability, and upside. What made it attractive to us when we bought it, makes the condo attractive to tenants now.

Sometimes the smarter play is buying in the up-and-coming area and riding the wave instead of paying a premium in a fully established neighborhood. Walk the streets. Drive the blocks. Look for what you would want to live in. If you do, you’ll spot the gem others are too scared to touch.

Just because you hear about a trendy new investment strategy on a podcast doesn’t mean that you have to do the same. When everyone moves in one direction, competition rises and margins shrink. Sometimes the real advantage comes from stepping the other way and removing the competition altogether.

Opportunities always exist for buyers willing to think differently. That might mean purchasing while others sit on the sidelines waiting for rates to drop, or targeting properties with unfinished basements you can convert. The specifics will change, but the principle remains the same.