Whether you are looking to upgrade your summer vacations with a prime waterfront property, settle into a comfortable retirement residence, or want to add a rental property to your portfolio, Miami is an excellent destination for buying a secondary property.

And this isn’t just promotional narrative, but a real trend backed by data.

According to the latest residential real estate report by Altrata, Miami is the city in which the largest number of ultra-high-net-worth individuals own a second home in the world, with more than 13,200 such homeowners.

If you are planning on pulling the trigger and buying a second home in Miami, here are five top tips that can help you make a good investment.

Do your homework on Miami’s different neighbourhoods

While Miami is a city that has it all, including beaches and waterfront enclaves, leafy residential pockets, nightlife and entertainment districts, shopping corridors, and fine dining scenes, these lifestyle elements are highly fragmented across its neighborhoods.

Even though its geographical area is relatively compact, Miami’s neighborhood dynamics are very distinct. For this reason, it is key you have a clear motivation for buying a second home and match it with a neighborhood that is suitable for that specific purpose.

For example, if you are looking for a waterfront retreat to spend your summers in, lively beachfront and walkable neighborhoods like Brickell or Edgewater are a natural fit.

On the other hand, neighborhoods like Coconut Grove or Coral Gables would make a much better option for a quiet, residential retirement life than high-density urban areas.

Finally, if you are looking to capitalize on the high-demand short-term Miami rental market, you want to be looking at tourist-driven areas like Downtown or Miami Beach.

Don’t neglect the benefits of condo ownership

Beyond being careful when choosing the neighbourhood you want to buy a home in, another equally critical decision you need to make early in the process is to choose whether to invest in a single-family home.

Now, many buyers tend to naturally lean towards single-family homes by default, as this type of property offers some well-known and clear advantages, such as added space, privacy, and independence. And while they make sense for a primary residence, these advantages are not exactly what’s needed most for a second home.

The benefits of owning a condo, on the other hand, tend to align much better with second-home ownership, especially if you want to use it as a vacation house or a rental property.

If you don’t plan on living in your second home all year round, having someone else to maintain it, keep it secure, and manage any issues that arise can be a huge convenience and worth taking into account.

Understand the HOA rules before you commit

The HOA rules, or condo association rules, are a set of standards established by the unit owners with the aim of maintaining order in the building. While these rules are put in place for the good of the owners, sometimes they can be a bit restrictive and misalign with the plans a prospective buyer may have for the property.

For example, some condo associations place restrictions on using a condo as a rental property, or require owners to hold the unit for a certain number of years before allowing them to lease it out. Others may limit the number of days that a unit can be used as a short-term rental, or prohibit Airbnb-style rentals altogether.

If you are intending on buying a second home in Miami for the purpose of renting it out, you’ll need to check the condo’s HOA rules for any rules that may conflict with your intentions.

Don’t overlook the impact of travelling costs

Calculating the true cost of ownership is a fundamental practice that most of the successful investors rely on to figure out the real value of their investment.

As you can imagine, a property’s listing price is only the beginning, and buying a second home in Miami comes with a range of additional costs, including closing fees, taxes, condo association fees, insurance, utilities, and potentially other expenses that can affect your budget.

However, one cost that even experienced investors sometimes overlook or downplay is the cost of travelling to the property and back to your primary home. Depending on where you’re based and how often you plan on visiting your second home, travel costs can have a noticeable impact on your overall budget.

For this reason, you want to make sure you plan for these costs in advance and include them in your overall cost of ownership.

Buy a property that will appreciate in the long term

As we established earlier, there are many different motivations for buying a second home in Miami. However, regardless of whether you want to retire in Miami, want to make your vacations more hassle-free, or tap into its competitive rental market, you need to treat this purchase as an investment, and not just a lifestyle decision.

In other words, you need to look beyond the immediate appeal of the property and consider factors that can influence its long-term value.

One of the best ways to guarantee a stable performance and strong long-term appreciation for your second home is to look at branded luxury residences, such as the stunning Casa Bella Miami.

These condominiums hold the prime locations, are built and designed to the highest standards, and feature lavish resort-style amenities that retirees, vacationers, and renters love and enjoy.

The early 2020s housing market created a unique level of competition. Bidding wars, waived contingencies, and offers tens of thousands over asking were standard in 2021 and 2022. To avoid missing out on a deal, buyers often felt forced to compromise some of their core real estate fundamentals.

While the market has clearly shifted in 2026, cooling significantly from the aforementioned pandemic era, buyers still face plenty of challenges. Home affordability is at an all-time low, the average 30-year mortgage rate is in the 6.3 to 6.5% range, and the latest Consumer Price Index showed a 0.9 percent increase across all items.

While these conditions are challenging, the dynamics of an individual home purchase have changed in ways that also create opportunities. Listings are sitting longer, inventory has rebuilt in many markets, and a growing share of sellers are negotiating on terms they would have refused outright a few years ago.

The competition that defined the COVID-era market has thinned out, and that has reshaped how deals are getting done. On a recent episode of the BiggerPockets Real Estate Podcast, hosts Dave Meyer and Henry Washington walked through the practical implications, including one buyer-side advantage that has emerged inside this shift.

“Most people are getting leverage during the inspection period,” Meyer said on the episode.

Buyers’ new leverage in 2026 housing market

Just a few years ago, negotiating down a home price over an inspection report may not have been an option. Aggressive buyers were often waiving the contingency and agreeing to take properties as-is. Typically the last real chance for a buyer to renegotiate or back out, the inspection process was much less of a leveraging point in 2021 and 2022.

That dynamic has flipped entirely, according to Meyer, who pointed to the inspection period as one of the strongest negotiating tools available to buyers right now. With listings sitting longer and fewer competing offers per home, sellers are increasingly willing to absorb the cost of repairs or hand back credits at closing rather than risk a deal falling apart and starting over.

A standard residential inspection runs roughly $300 to $600. The concessions a buyer can negotiate from the resulting report, such as repair credits, price reductions, or seller-paid fixes, can frequently run into the thousands — making it a major opportunity to save money.

“You’re actually going to probably make money by having an inspection,” Meyer said. “It’s gonna cost you $500, but you’re gonna get $5,000 back in concessions from the seller. Or they’re gonna fix something you would have had to come out of pocket for.”

This is one of those tangible opportunities buyers face in 2026 that may not have been there, or at least not as prominently, a few years ago.

Washington, who buys most of his properties off-market and has the experience to walk a house himself, was clear that this step is especially critical for first-time homebuyers and newer investors. Without an exceptionally trained eye, skipping an inspection not only eliminates potential discounts, but creates unnecessary risk.

“I’m my own inspector at this point, but it takes a lot of looking at houses, buying houses, renovating houses, and dispositioning those houses before you can feel as comfortable as I do doing that,” Washington said. “So if you’re not in that position, you should absolutely be getting an inspection.”

He added, “There are things you can miss with an inexperienced eye that can price your deal out of being profitable and put you in a very tough financial position.”

How new housing market shift impacts homebuyers

The inspection leverage point is a byproduct of broader changes Meyer has been tracking for months across BiggerPockets coverage, including a meaningful drop in investor sentiment and a corresponding rise in motivated seller behavior.

In BiggerPockets’ Q2 2026 Investor Pulse Survey, the community’s forward-looking Pulse Index dropped from 150 in Q1 to 112 in Q2, signaling that even active investors are recalibrating expectations heading into the second half of the year. That same softening is what gives buyers more room to negotiate.

“What we’re seeing in the market right now is actually what a lot of people want, which is discounted pricing, better negotiating leverage, better quality assets on sale,” Meyer told TheStreet in an exclusive interview last month.

This reinforces the belief that while broader conditions feel difficult on the surface, they actually reward disciplined buyers. The inspection mechanic is one of the cleanest illustrations of that point.

While challenges remain for real estate investors and everyday homebuyers in 2026, individual deals can be negotiated more effectively than five years ago. Buyers who understand this are pulling money out of transactions that would have been take-it-or-leave-it propositions in 2021.

And even in cases where an inspection does not generate notable profit, it can still create peace of mind that is equally valuable to many buyers.

“I will pay $300 to $600 for peace of mind all day long,” Washington said.

Key takeaways for real estate investors and everyday homebuyers

• The inspection period has shifted from buyer liability to buyer leverage: During the 2021-2022 market, inspection contingencies were routinely waived to win bidding wars. With competition thinned out in 2026, sellers are far more likely to negotiate concessions rather than restart a deal, according to Meyer.
• The cost-benefit math now favors getting the inspection: A standard residential inspection runs $300 to $600. The credits, repairs, or price reductions buyers can negotiate from the report frequently total several thousand dollars.
• First-time buyers and newer investors should not skip inspections: Washington noted that experienced operators can sometimes assess properties on their own, but for buyers without that background, an inspection in 2026 is one of the cheapest ways to protect a purchase and recover money.
• Broader affordability has not changed, but individual deal process has: Mortgage rates remain in the 6.3 to 6.5% range, home prices are still elevated in most metros, the CPI has jumped, and the path to homeownership remains steep for many Americans. The inspection leverage point is a tactical opening inside an otherwise difficult buying environment.

Real estate is one of the most sought-after investment vehicles.

Whether it’s commercial, industrial, or multi-family residential, these investments offer considerable passive income and appreciation. The United States, being the largest economy of the world, where investments are traditionally among the most secure in the world, is one of the most sought-after markets in the real estate industry.

However, for investors seeking to invest from outside the United States, the country puts up considerable barriers which are challenging if you aren’t familiar with the laws. In many cases, international investors who find themselves ill-prepared for the task, or partnered with real estate brokers lacking the experience to navigate the complicated process, end up walking away, losing out on the benefits the U.S. market provides.

Listed below are just some of the barriers international investors encounter when going cross border to try to purchase American real estate.

Finding the right properties

One of the biggest barriers is that, if an investor doesn’t physically travel to the country and do their research, they are buying blind.

Many experts suggest it can be a six- to 12-month process to find the right property, make an offer, arrange financing, and close the deal. They recommend planning at least one cross-border trip to see the potential property before committing to buy.

Without a team working on an investor’s behalf to vet potential properties and find the right investment, a cross-border investor is at a considerable disadvantage when trying to enter the American marketplace.

As it will already cost the investor considerably in terms of fees and third-party contracts, it’s important the right property be found so the return on the investment is worthwhile.

A complicated and opaque process

Cross-border investing faces a number of regulatory and bureaucratic complications.

Deals might require U.S. bank accounts, U.S. credit scores, even representatives with U.S. citizenship. It’s important for an investor to know what hurdles they will encounter. Unfortunately, many American real estate agents themselves don’t know.

According to the North American Association of Realtors, 20 per cent of real estate agents have been in the business for less than a year. The overwhelming majority of deals agents have experience with are between Americans, so it is difficult to find an agent experienced in cross-border real estate investment.

This lack of transparency will mean more middlemen to ensure the property transfer occurs smoothly and legally, and this means increased fees. Other fees that could plague an international investor include currency exchange fees, bank transfer fees, attorney fees, investment fees and the traditional broker fees.

American tax surprises

Then, there is the issue of taxes.

It is complicated enough to go through the taxes related to property transfers and capital gains in one country, so one can imagine how the pain increases when a second country gets involved.

In recent years, American taxes have been notoriously in flux, with changes approved by the United States Congress suddenly afflicting ex-pats and individuals with cross-border investments. This is over and above the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), which withholds income tax on foreign investment, cutting into an investor’s bottom line.

Capital commitment and liquidity

With its considerable benefits, real estate investment comes with considerable risks.

One of the challenges is the limit to how fast an asset can be turned into cash. Unlike stocks, real estate investments can’t be listed on a public exchange. The overall supply of buyers is lower, which depresses prices, particularly if the investor needs to sell their asset quickly.

Cross-border real estate investment also requires significantly higher capital investment than at home. Whereas a 20 per cent deposit is usually sufficient to secure financing for an investment, cross-border investors often need to put down 50 or 60 per cent.

The problem is that investors don’t have an American credit history, and financiers are unfortunately less likely to trust such investors. As a result, many international investments are conducted in cash, locking in considerable capital in an investment that might be tricky to get out from, should the need arise.

All of these pressures slow real estate investment transactions to a frustrating pace.

A study by the Juwai Chinese Consumer International Travel Survey found 56 per cent of Chinese investors spend a year or more finding the right investment property in the United States and then closing the deal. Many other investors walk away.

About half the respondents in a study of international investors who decided not to purchase U.S. property cited not finding the right property as one of the key factors; 34 per cent cited the cost of their preferred property, and 32 per cent cited an inability to obtain financing.

Finding the right team to smooth the process

While these challenges exist, they can be mitigated, if investors turn to brokers experienced in cross-border investments.

International agencies like SVN and its affiliates have built up years of experience in dealing with American tax law, third-party fees, financial arrangements and managing closing costs.

They have become adept at linking cross-border investors with properties that meet their immediate and long-term needs, and they’ve built up a network of contacts who can navigate the rough waters of cross-border bureaucracy and connect the investors to sound properties with a strong return on investment.

The real estate market in the United States is too valuable to be ignored. By connecting with an experienced brokerage team that understands the unique challenges of cross-border investing, international investors can reap the benefits of the American market, without running afoul of the obstacles.

SVN Rock Advisors’ cross-border investing approach involves a multi-tiered ownership structure in order to avoid excessive taxation or liability.

A new poll from the Royal Bank of Canada has put hard numbers to something many mortgage brokers already sense in client conversations: Canadians are curious about United States real estate, but largely confused about how to pursue it.

The RBC survey found that 37% of Canadians say they do not know enough about the cross-border buying process. That’s a knowledge gap that, for brokers positioned to guide clients through it, represents an underserved and potentially growing segment of the market.

That figure sits alongside a broader trend in which Canadian interest in US real estate has cooled significantly amid tariff tensions and political friction, yet a committed minority remains drawn south of the border.

Knowledge gap drives hesitation

According to the RBC data, nearly three in 10 Canadians, or 29%, believe purchasing US property is either too complicated or too expensive. A further 27% say the tax implications feel overwhelming.

These concerns are not entirely unfounded. Cross-border property transactions require navigating both US and Canadian tax obligations simultaneously.

Under the Foreign Investment in Real Property Tax Act (FIRPTA), for instance, the IRS applies a 15% withholding tax on the gross sale price when a Canadian resident sells a US property, a rule that catches many buyers off guard long after the purchase is made.

Canadian residents selling US property face obligations in both countries, with only half of the capital gain taxable in Canada due to the 50% inclusion rate, though currency conversion adds another layer of complexity.

Financing is a parallel challenge. Traditional US mortgage lenders often have strict requirements that can be difficult for Canadians to meet, and may charge a higher interest rate for foreign nationals, though cross-border programmes from Canadian banks have emerged to bridge that gap.

Working with a cross-border lender allows Canadians to use their Canadian credit history for US mortgages, though a minimum down payment of 20% is generally required for primary residences and vacation homes, rising to 25% for investment properties.

These are precisely the conversations that brokers, with the right training and lender relationships, are well placed to lead. There has been a growing complexity of cross-border mortgage options and specialist expertise now available to facilitate them.

Who is still buying — and why

Despite the hesitation, the RBC poll shows that 11% of Canadians are either looking to own or already own US property.

Among that group, the motivations are telling: 35% cite quality of life as their primary driver, while 28% are motivated by retirement or long-term planning.

The data suggests these are deliberate, considered buyers, not speculative ones, and they are sensitive to economics.

US property prices are the top purchase influence at 27%, followed by exchange rates at 25% and the cost of maintaining a second property at 24%.

The National Association of Realtors has noted that Canadians remain among the top two foreign investors in US real estate, though transactions have declined significantly in recent years compared to the 2010s.

The political environment has accelerated that decline. A RAM Development Group survey found that 81% of Canadians now prefer to keep their investments at home, and real estate professionals have noted a sharp uptick in Canadians listing their second homes in the US as tariff uncertainty continues.

Yet even within this environment, the retirement and lifestyle-driven segment identified in RBC’s data is unlikely to disappear entirely. Florida and Arizona, long the preferred destinations for Canadian buyers, retain their appeal for those planning their post-work years.

US Private real estate has also provided diversification benefits, durable income potential, possible inflation protection, exposure to private markets, and, depending on ownership structure, potential tax advantages.

These are all reasons why we believe US private real estate can potentially serve as a complementary allocation for private wealth investors seeking to broaden traditional stock and bond portfolios.

Here’s a look at seven historical benefits.

1. Competitive long-term return potential

US private real estate has consistently emerged as either the highest or second-highest performing asset class compared to US stocks, bonds, and Treasury yields across every 10-year rolling period for the past 29 years.

2. Competitive long-term risk-adjusted return potential

Risk‑adjusted returns capture the relationship between long‑term return potential and the volatility experienced along the way. Historically, US private real estate has delivered long‑term returns that have been closer to US stocks than US bonds. At the same time, the volatility of US private real estate returns, measured by the standard deviation of annual total returns, has been closer to that of bonds than stocks. This combination has resulted in attractive long‑term risk‑adjusted returns for private real estate investors.

3. Diversification

A key investing rule of thumb is diversification, which involves including a variety of investments that don’t move in lockstep in a portfolio. One way to measure an investment’s diversification is correlation. Over the past 30 years, US private real estate has historically shown a low correlation to US stocks (0.06) and US bonds (-0.12), which means it has provided greater portfolio diversification.

4. Private market exposure

As an alternative to US stocks ($69 trillion market capitalization at year-end 2025) and US fixed income ($67 trillion), US private real estate ($19 trillion) provides the potential for meaningful exposure to private markets.

5. Potential inflation hedge

A concern for investors is that inflation can erode the purchasing power of income from stock dividends or bonds. The income generated by private real estate is different — it’s tied to rents, which historically have increased when inflation has risen. Real estate income growth has kept pace with inflation over long-term historical periods.

6. Durable income potential

When yields are low and there’s economic uncertainty, investing in US private real estate may provide durable income potential. Over the past 20 years, average income returns have been stronger in US private real estate (5.12%) than in US bonds (3.26%) or US stocks (2.12%).

7. Tax advantages

Investing in real estate may provide tax benefits for investors.7 For example, a real estate investment trust (REIT) can potentially offer these benefits:

Deductions and depreciation

Investors may benefit from a REIT’s ability to deduct certain expenses, such as mortgage interest, property repairs, and depreciation.

Capital gains taxes instead of income taxes

REITs may realize any profits from a property sale as a capital gain, and the tax rates are typically lower than ordinary income tax rates.

Taxes

REITs aren’t subject to corporate income tax on earnings distributed to investors, and dividends are taxed at an investor’s individual tax rate. Certain investors benefit from a 20% deduction for REIT dividends that are characterized as ordinary income. Tax reporting is also more straightforward on a 1099-DIV (no K-1s).

Real estate can be owned through other structures besides REITs, so before investing in real estate, consult a tax advisor about your options.

Consider US private real estate

The track record of US private real estate highlights why investors may want to consider adding an allocation to it in a traditional US stock and bond portfolio. Over time, US private real estate has exhibited competitive long-term and risk-adjusted return characteristics, low correlations with public stocks and bonds that can contribute to diversification, and features that may help mitigate inflation. US private real estate has also historically generated durable income potential, offered potential tax benefits, and provided exposure to private markets, positioning it as a meaningful consideration in broader portfolio construction.

For much of the 2020s, the Sun Belt has carried the American housing market’s growth story. Austin, Phoenix, Tampa, and similar metros became the destination markets, drawing migration from higher-cost regions and producing the kind of appreciation and rent growth that dominated real estate coverage. People were moving south and west, demand was outpacing supply, and prices kept climbing.

That dynamic has shifted. Austin home prices have been falling, and rents in several Sun Belt rental markets are softening. The cause isn’t a drop in demand, as people are still moving to these metros.

The cause is on the other side of the equation, where new construction during the boom years has finally caught up with the migration wave, and in some cases overshot it. The result is a shift that runs counter to almost everything Americans have absorbed about where the housing market is heading.

In an exclusive interview with TheStreet, BiggerPockets Chief Investment Officer Dave Meyer detailed exactly what’s happening across major Sun Belt markets, and why the supply side has quietly become the variable doing the work.

“You take Austin as an example, huge demand. Tons of people moved there, but they overbuilt,” Meyer told TheStreet. “And so that’s why prices are coming down. That’s why rents are coming down in those markets. We are seeing that in a lot of Sun Belt markets.”

Real Estate dynamics shaping Sun Belt housing markets

While Austin is a major U.S. market at the center of this shift, Meyer’s argument doesn’t start there. Instead, he cites a variable many analysts miss when they project where housing markets are heading.

Demand is the part of the equation almost every piece of real estate coverage focuses on, but Meyer’s view is that supply is doing more of the work in 2026 than people realize.

“The most overlooked metric that people miss is the supply side,” Meyer told TheStreet. “People really focus on how much demand is in a market, if people are moving, if there’s net migration, if there’s population growth. Super important. Got to look at that. But as everyone knows, there is another side to markets. Demand is one, supply is the other. And how much housing supply is existing and is coming online through new construction is hugely important.”

The Sun Belt is the clearest illustration of what happens when the supply side gets ignored. During the COVID era, the migration wave into Austin, Phoenix, Tampa, and similar metros produced demand that outpaced what those markets could supply at the time. Homebuilders responded the way the data told them to respond, and built accordingly.

Several years of aggressive new construction later, the inventory is on the ground, and in some metros it’s now arriving faster than even the elevated demand can absorb. Prices and rents are softening as a result.

This isn’t uniform across the entire region. Some Sun Belt markets are still appreciating, particularly those where construction stayed measured. The concerning shift is concentrated in the metros that did the most aggressive overbuilding, with Austin as the most visible example and similar dynamics showing up in parts of Florida and Arizona.

The same demand that made these markets stars from 2021 to 2023 is now competing against a supply pipeline that, in some places, has overshot it.

What this means for homebuyers and investors in 2026

The Sun Belt’s pricing softness doesn’t make the region a bad bet, but it does mean buyers and investors planning around the 2021-to-2023 narrative are working with outdated assumptions. The markets that delivered the easiest appreciation wins during the migration boom aren’t necessarily the markets producing the same wins now.
For anyone shopping homes, evaluating rental properties, or relocating with capital in tow, the new reality could require a different read on what’s driving market performance.

“Personally, one of the major things I think has played a major role in which markets perform over the last three, four years, and will going forward, is the concept of affordability,” he told TheStreet. “That has been my personal thesis for investing for four or five years now, and it’s been a strong thesis. Housing sells fastest where the average person in the average market can afford the average home.”
Applied to the Sun Belt, the affordability thesis helps explain both the boom and the current shift. Austin, Phoenix, and similar metros were affordable relative to coastal markets when the migration wave started. The wave drove prices up faster than local incomes could keep pace, impacting the affordability that attracted the migration in the first place.

The contrast Meyer points to is the Midwest, where affordability has stayed intact through the same period. Markets where the average person on the average salary can still buy the average home haven’t seen the same demand spike, but they also haven’t seen the same supply overshoot or the same pricing volatility. They’re producing slower, steadier returns instead of the boom-and-cool pattern playing out in the Sun Belt.

For buyers and investors planning the next move, the takeaway is that the Sun Belt’s recent track record is not a reliable guide to its near-term performance. The shift unfolding right now is troubling for anyone operating on the old narrative. For those watching supply and affordability, it’s a signal that the markets producing the easiest wins in 2026 may not be the same ones that did from 2021 to 2023.

Key takeaways on the Sun Belt housing shift

• Sun Belt prices and rents are falling in major metros: Per Meyer, Austin is the leading example, but the pattern is showing up across the Sun Belt. The mechanism is overbuilding during the boom years now flooding supply faster than demand can absorb.
• Supply is the most overlooked variable in housing analysis: Meyer says most coverage focuses on demand-side signals like migration and job growth. The supply side determines whether that demand translates into price growth or price softening.
• The COVID-era boom dislodged markets from fundamentals: Stimulus, low rates, and unusual migration drove demand that supply couldn’t match at the time. New construction caught up, and in some Sun Belt metros it has now overshot.
• Affordability remains Meyer’s core investing thesis: Markets perform where the average person can afford the average home. The Sun Belt’s outperformance during COVID stretched that relationship, and the current shift is partly a return to it.
• The narrative buyers absorbed in 2021 is outdated: Buyers and investors planning around the Sun Belt’s recent appreciation story are operating with assumptions that don’t match what the supply data is showing now.

A financial advisor could guide you in making real estate investment decisions during a recession.

Is Real Estate a Good Investment in a Recession?

A recession is marked by a shrinking economy. People spend less money on discretionary purchases, focusing instead on essentials. Companies may slow down hiring or begin laying off workers to bolster their bottom lines. Stock prices may drop in the face of uncertainty about the economy.

While it’s not exactly a rosy picture, real estate can offer some stability for investors when the economy slows. There are three primary factors that can make real estate a good buy if you’re looking for an alternative to the market in a recession:

• Low correlation to stocks: Historically, real estate has a low correlation to the stock market. That means that even if stocks are experiencing increased volatility because of a recession, there’s very little carryover to the real estate market.
• People still need housing: Even when the economy is in a downturn, people still need a place to leave. If demand for rental properties remains steady or even rises during a recession and there’s a limited supply of housing to go around, property investors are better positioned to be able to count on a steady stream of rental income.
• Recessions create bargains: A recession doesn’t automatically precede a drop in home values. But if a recession causes a hot housing market to cool off, that could open up opportunities for investors to purchase rental properties at a discount.

Real estate can also act as a hedge against inflation in the event that a recession leads to stagflation. Stagflation is marked by high inflation and high unemployment. Real estate prices tend to keep pace with rising consumer prices, making them a more inflation-proof investment.

Next Steps: Managing your investments can be overwhelming. We recommend speaking with a financial advisor. This tool will match you with vetted advisors who serve your area.

Here’s how it works:

• Answer a few easy questions, so we can find a match.
• Our tool matches you with vetted fiduciary advisors who can help you on the path toward achieving your financial goals. It only takes a few minutes.
• Check out the advisors’ profiles, have an introductory call on the phone or introduction in person, and choose who to work with.

Best Real Estate Investments for a Recession

If you’re interested in getting started with real estate investing during a recession, the first thing to consider is what types of properties might work best for you. Buying a rental property might be an obvious choice. As long as you’re able to keep tenants, renting out property can generate income through a recession.

There are different types of rental properties you might consider, including:

• Single-family homes
• Tiny homes
• Duplexes, triplexes and quadplexes
• Apartment buildings
• Condos

The more units you’re able to rent out, the more rental income you can generate. But more units can mean higher maintenance costs and more responsibilities overall. You can higher a property manager to oversee your rentals for you but you’ll have to pay them a fee, which can detract from your profits.

If you’re not interested in owning rental property for the long term, you might try flipping real estate instead. Flipping means finding a property, fixing it up, then reselling it for more than what you paid. Flipping properties in a recession can be tricky since the pool of ready homebuyers might shrink.

The longer the home sits on the market, the more you might pay toward the mortgage if you took out a loan to purchase it. But if you’re able to find a qualified buyer relatively quickly, flipping homes could allow you to pocket significant profits if you’re buying homes at rock-bottom prices.

It’s not just residential real estate that can be a good buy during a recession either. Certain types of commercial property, such as warehouse space and farmland, may continue to do well during a downturn. As with housing, people still need basic commodities like wheat and corn products during a recession, which are things farmland investments can be used to produce.

Student housing and senior housing can also be good investments since students still need a place to live while attending school. The aging population in the U.S. means that demand for senior housing isn’t likely to go away any time soon, whether there’s a recession going on or not.

Investing in commercial properties can be attractive since you don’t need to get a loan or buy property. Instead, you could invest in a real estate investment trust (REIT) or through a real estate crowdfunding platform. REITs and real estate crowdfunding can offer the benefits of property ownership without having to actually own it. You can also invest in real estate stocks or exchange-traded funds (ETFs) without having to buy any property

Example of an Investment Portfolio During a Recession

A balanced portfolio during a recession can include a mix of REITs, stocks, bonds and cash reserves to focus on steady income and minimize losses. Below is an example of how an investor with a $100,000 portfolio might allocate funds during a recession.

1. Real Estate Investment Trusts (REITs): 40% ($40,000)

REITs provide exposure to real estate without directly owning property. These investments can generate dividend income and remain relatively stable in downturns:

• Residential REITs ($15,000): Focus on apartment buildings and student housing, where demand remains steady.
• Healthcare REITs ($10,000): Invest in medical facilities and senior housing, sectors that remain in demand.
• Industrial/Warehouse REITs ($10,000): Support logistics, e-commerce, and storage, which tend to perform well.
• Retail REITs ($5,000): Select grocery-anchored or discount retailers that remain essential.

2. Defensive Stocks and ETFs: 30% ($30,000)

Defensive sectors provide stability and steady returns during a downturn:

• Consumer staples ETF ($10,000): Companies that sell essential goods like food and household products.
• Utility stocks ($10,000): Electricity, water and natural gas providers that generate consistent revenue.
• Dividend-paying blue-chip stocks ($10,000): Large, stable companies with strong balance sheets and reliable dividends.

3. Bonds: 20% ($20,000)

Bonds offer stability and consistent income, making them a safe choice during recessions:

• Government bonds ($10,000): U.S. Treasury bonds provide security and predictable returns.
• Municipal bonds ($5,000): Tax-advantaged investments that support public projects.
• Corporate bonds ($5,000): Bonds from well-established companies with strong credit ratings.

4. Cash Reserves: 10% ($10,000)

Holding cash provides flexibility and protection against unexpected expenses or investment opportunities:

• High-yield savings account ($5,000): Earns interest while keeping funds easily accessible.
• Money market funds ($5,000): Low-risk, short-term investments that maintain liquidity.

This portfolio example balances income, stability and long-term growth with REITs for real estate exposure, defensive stocks for market participation, bonds for security, and cash reserves for flexibility. By focusing on dividend-generating investments and recession-resistant sectors, investors could position themselves strategically to weather economic downturns and set themselves up for future growth.

Other Ways to Invest in Real Estate With a Small Budget

You can also diversify your portfolio with additional real estate investments. Besides REITs, here are five common ways you can invest in real estate without making a large downpayment:

1. Real estate crowdfunding: Platforms like Fundrise or RealtyMogul allow investors to pool money with others to buy properties. Investments can start with as little as $500 to $5,000 per project.
2. Real estate syndications: Private investment groups allow investors to contribute funds to buy rental properties or farmland. Minimum investments range from $10,000 to $50,000.
3. Tenant-in-common (TIC) investments: This allows multiple investors to co-own a property while keeping separate shares. Some TIC investments require as little as $25,000.
4. Partnerships and joint ventures: Investors can team up with others to split the down payment and costs of owning a rental or multi-unit property.
5. Farmland investment platforms: Services like AcreTrader allow people to buy fractional shares of farmland, providing passive income from crops or land appreciation. Minimum investments start around $10,000.

Instead of buying a property alone, these options can help you get real estate exposure with smaller amounts of money.

Tips for Real Estate Investing During a Recession

Investing in real estate during a recession can feel risky, but downturns often create unique opportunities for disciplined investors. Property values may decline, competition can ease and motivated sellers may be more willing to negotiate. Success, however, depends on preparation, patience and a strong financial foundation. If you’re interested in exploring real estate investments in a recession, here are three helpful tips to keep in mind:

• Consider location: Location is always an important factor in choosing real estate investments. If you’re looking at rental properties, get to know the area and take the temperature of the overall market. Ideally, you should be looking for rental property investments in areas where demand is high and rental rates would allow you to maintain the kind of profit margin you’re seeking.
• Weigh cash flow: Cash flow refers to how much money you pocket after deducting expenses from rental incomes. In a recession, it might be necessary to keep a larger amount in cash reserves to cover expenses as they come up, especially if inflation remains high.
• Compare financing options: If you need to finance an investment property, pay close attention to interest rates and loan options. Rates may start offer higher at the beginning of a recession and then drop as the Federal Reserve adjusts rate policy to encourage spending and borrowing. The timing for when you borrow can make a big difference in the cost of the loan overall.

It’s also important to do your due diligence and research any properties you’re interested in thoroughly. You don’t want to get into the buying process and find out the property has a sizable lien or the area where the property is located is scheduled to be rezoned.

If you’re looking at REITs and real estate crowdfunding instead of rental properties, consider the fees you might pay and the return potential for each one. Also, remember to take the holding period into account. With real estate crowdfunding, for example, your money might be tied up for five to seven years in a single property or handful of properties.

When investing in real estate stocks or ETFs, pay attention to commission trading fees and expense ratios, respectively. Also, consider the overall performance history of a stock or ETF and its risk profile to determine whether it’s a good match for your goals and risk tolerance.

Investing in real estate during a recession can offer attractive opportunities, but it requires discipline, due diligence and a long-term mindset. Prioritizing cash flow, maintaining liquidity and focusing on strong markets can help reduce risk in uncertain economic conditions. While downturns may create favorable pricing, not every discounted property is a smart investment.

I got my start with real estate investing in 2016 with the purchase of a run-down 1970s split level with four bedrooms. My W-2 income was less than $23,000 at the time. I lived with a rotating cast of three other short and long-term renters for years while slowly renovating it. Deals like that are much harder to find today, but that doesn’t mean you’re shut out of the market entirely if you’re in the same income bracket I was.

Here are five proven ways to invest in real estate, ranging from hands-off approaches that take minutes and minimal funds to set up, to more involved strategies that could become your full-time occupation.

1. Real Estate Investment Trusts (REITs)

What they are: REITs (Real Estate Investment Trusts) are companies that own, operate or finance income-producing real estate across various sectors like shopping malls, apartment buildings, offices, warehouses and hotels. They work similarly to mutual funds, allowing you to invest in real estate without actually buying or managing physical properties.

If you’re looking to invest in real estate immediately with limited funds at risk, REITs offer the most accessible entry point.

REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends, which typically makes them excellent income-generating investments. Many REITs pay higher dividend yields than what you’ll find with many stocks. Keep in mind that dividends from a REIT will be taxed at your income tax rate, not the lower capital gains tax rate you’d get with other investments, so you’ll need to prepare for a larger tax bill or hold them in a tax-advantaged account.

The beauty of REITs lies in their simplicity. You don’t have to worry about finding tenants, fixing toilets or dealing with property taxes as the REIT management team handles all those headaches. You just invest your money and collect dividends when they do well.

How to get started: You can buy shares of publicly traded REITs through any brokerage account, just like you would purchase stocks. If you’re new to investing or don’t have much capital, many investing apps like Robinhood, M1 Finance and Stash offer fractional shares of REIT ETFs (Exchange-Traded Funds), allowing you to start with as little as $5.

Expert tip: Consider diversifying across different types of REITs. Residential, commercial, healthcare and mortgage REITs each respond differently to economic changes, providing better portfolio protection. Since REITs pay through dividends, holding your REITs in a tax-advantaged account like a Roth IRA or Health Savings Account is a smart money move.

2. Crowdfunding Real Estate Platforms

What they are: Crowdfunding real estate platforms are online services that connect investors with real estate developers seeking funding for specific projects. Rather than investing in diversified portfolios of several properties like REITs, these platforms let you select individual properties or development projects to invest in.

For investors who want more control over their real estate investments without the hassle of direct property ownership, crowdfunding platforms offer an intriguing middle ground.

These platforms typically fund commercial or residential developments, apartment renovations or other real estate projects. The returns can potentially be higher than REITs, but so is the risk since you’re often investing in a single property rather than a diversified portfolio.

Consider that most crowdfunding investments lock up your money for several years. While some platforms offer early withdrawal options, they typically come with penalties or depend on another investor buying your shares.

How to get started: Popular platforms include Fundrise (which allows investments starting around $10) and CrowdStreet (which focuses on commercial real estate but typically requires larger minimum investments, often over $25,000). Be aware that some platforms only accept accredited investors—individuals with a net worth over $1 million (excluding primary residence) or annual income exceeding $200,000.

Expert tip: While crowdfunding is increasing in popularity, I don’t recommend it for beginners. The fees are substantially higher and less transparent, plus they aren’t diversified enough for people new to the industry. A REIT is a much better starting point until you better understand real estate investments.

3. Invest in Your Own Home

What is it: Perhaps the most common real estate investment most people make is purchasing a primary residence. By making mortgage payments, you gradually build equity in your home while potentially benefiting from property appreciation.

If you continue to slowly climb the property ladder during your working years and then downsize in retirement, you’re likely to benefit from a stable place to stay and a large check at the end of it.

However, the financial returns might be less impressive than you’d expect. Even with the wild market recently, home prices have only averaged a 4.29% increase in value annually since 1987, according to data from the Federal Reserve.

By comparison, REITs have historically delivered average annual returns around 11.28%, according to Nareit, while even a basic S&P 500 index fund has averaged roughly 10% returns long-term.

That doesn’t mean buying a home is a bad investment, it just means you should think of it as both a lifestyle choice and a financial one. Government programs for homebuyers, along with favorable mortgage terms, make homes much more accessible than other real estate investments.

You can even follow my playbook and rent rooms out while living in your home for extra cash flow for renovations, to build equity faster or to reduce your housing expenses.

How to get started: If you’re considering buying a home, first assess whether you plan to stay in one location for at least three to five years (to offset transaction costs). Research first-time homebuyer programs in your area, which might offer down payment assistance or reduced interest rates. Make sure your monthly mortgage payment is well within your budget, as you’ll be on the hook for maintenance as well as regularly increasing property taxes and insurance premiums.

Expert tip: Don’t rush to pay off a low-interest mortgage if you can earn higher returns by investing that extra money elsewhere. While a paid-off mortgage is an emotional win, it’s rarely the smartest money move. Let’s say you have room in your budget and can either pay off your 3% mortgage earlier or invest more in your 401(k) and you’re in a 30% total tax bracket. Paying off your mortgage saves you 3% in interest, but investing in your 401(k) will give you an immediate 30% tax savings, and grow at an average rate of roughly 10% a year if investing in something like an S&P 500 index fund.

4. Invest in Rental Properties

What is it: Purchasing residential or commercial property to rent out to tenants is perhaps the most traditional form of real estate investing. This approach can provide both ongoing income and potential appreciation.

Rental properties come in two main varieties:

• Long-term rentals: These properties are typically leased for at least a year, providing consistent monthly income (assuming reliable tenants). Options range from single-family homes to multi-unit properties.
• Short-term rentals: These cater to travelers and temporary residents through platforms like Airbnb and VRBO. While they typically generate higher nightly rates, they also require more active management and face more volatile seasonal and economic fluctuations.

The appeal of rental properties lies in their wealth-building potential. A well-chosen rental property can provide monthly cash flow while it potentially appreciates, and your tenants essentially help pay down your mortgage.

The downside? Becoming a landlord involves significant work. Finding tenants, handling maintenance, addressing emergencies and dealing with potential vacancies. Additionally, financing investment properties typically requires larger down payments and comes with higher interest rates than primary residences.

I’ve been a landlord for most of the last nine years, generally living with or near my tenants. The vast majority of my tenants have been fantastic people, but the few bad ones were so bad that I stopped renting out my house entirely. Carefully consider if you have the stomach to deal with a nightmare scenario before you start investing in rental properties.

How to get started: Research rental rates and property values in your target market. Many successful investors start with a small, manageable property like a duplex or condo. Consider “house hacking” by living in one unit of a multi-unit property while renting out the others, which can qualify you for better financing terms.

Expert tip: Factor in at least one to two months of vacancy per year when calculating potential returns, along with setting aside 1% to 2% of the property value annually for maintenance and repairs. Many new landlords underestimate these costs and overestimate their cash flow.

5. Flip Properties for Profit

What is it: Property flipping involves purchasing homes or buildings, renovating them and selling them at a higher price. This strategy can deliver significant returns but requires substantial knowledge, capital, risk tolerance and ability (if you DIY your renovations).

Despite what you might see on HGTV, flipping houses isn’t a guaranteed path to quick profits. It requires identifying undervalued properties, accurately estimating renovation costs, managing contractors (or doing the work yourself) and understanding local market trends.

The financial risks are considerable. Renovation costs frequently exceed initial estimates, permits can cause unexpected delays and market conditions might shift while your money is tied up in the project. Most flippers need to account for financing costs, realtor commissions, closing costs and capital gains taxes, all of which eat into profits.

For those with construction experience or strong contractor relationships, flipping can be highly profitable. The key is buying properties at a sufficient discount to cover all expenses while leaving room for profit.

How to get started: Before diving in, spend time learning your local market: attend open houses, track property values and build relationships with realtors specializing in distressed properties. Consider partnering with an experienced flipper on your first project to learn the ropes.

Expert tip: Use the 70% rule as a starting point: Never pay more than 70% of a property’s After Repair Value (ARV) minus renovation costs. For example, if a renovated home would sell for $300,000 and needs $50,000 in repairs, you shouldn’t pay more than $160,000 ($300,000 × 0.7 – $50,000).

Which Real Estate Investment Strategy Is Right for You?

The best approach depends on your financial goals, risk tolerance, available capital and desired level of involvement:

• For passive income with minimal effort: REITs or real estate crowdfunding
• For building equity while meeting a basic need: Your primary residence
• For ongoing income plus appreciation: Rental properties
• For active income requiring significant effort: Property flipping

Real estate investing can provide portfolio diversification, potential tax advantages and protection against inflation. But physical properties also come with illiquidity risks. You can’t sell a house as quickly as you can sell a stock.

For most investors, a balanced approach works best. Start with REITs to gain exposure to real estate while learning more about the market. As your knowledge and capital grow, you might consider adding a rental property or exploring more active strategies.

Whatever approach you choose, remember that real estate—like any investment—requires research, patience and a clear-eyed assessment of both potential returns and risks. Talk with a financial advisor about how real estate fits into your overall investment strategy before making any major decisions.

The path to real estate wealth is rarely a sprint; it’s a marathon. But for those willing to put in the effort and make informed choices, it remains one of the most reliable routes to long-term financial security.

But homeownership has its own troubles, like a hefty price tag — and for LaZette, the responsibility of maintaining a place on her own at age 87.

Instead, LaZette found a way to avoid both apartments and ownership. She rented a brand-new house that was specifically built not for sale, but for tenants like her.

“I share no walls with anybody, and it’s like having my own private little house that I just rent,” LaZette said.

About 7% of new single-family houses hitting the market are now for rent, not sale. More than 10 times as many “build-to-rent” homes were completed in the U.S. in 2024 as compared with a decade earlier.

Many of these are being constructed by firms that specialize in build-to-rent housing, like NexMetro, which develops and owns single-family rental homes in the Sun Belt, a hot market for these properties. That’s where populations are growing and there’s plenty of land. Ohio and Utah have also seen a boom.

When NexMetro CEO Josh Hartmann started building these houses in 2009, in the aftermath of the financial crisis, he expected to get homeowners who had faced foreclosure and could no longer afford owning but still wanted the same home lifestyle.

Instead, Hartmann said most of his residents have been young professionals, who were more likely to be pet owners than parents. Many wanted to live in a single-family home but either were not ready or were uninterested in homeownership.

“It’s just a lifestyle choice,” said Hartmann. “They’re kind of figuring out where they want to live. They don’t want to buy a house yet.”

Others are older residents unwilling to buy and maintain a house late in life.

Supporters like Hartmann say these new constructions help make both renting and buying more affordable. They drive down housing costs for both by boosting housing supply.

“Homeownership has gotten so far out of the reach of most people,” said LaZette, who rents a NexMetro home. “This trend, I think, is a godsend .”

A bigger supply of available homes

The U.S. is in a housing affordability crisis. An American family needs to make $110,000 a year to own a typical home, according to the real estate broker Redfin. That’s about 29% higher than what the median household makes.

The biggest problem with the American housing market is a lack of supply, said Laurie Goodman, founder of the Housing Finance Policy Center at the Urban Institute. New U.S. households are forming faster than new units — from apartments to houses — are being built, according to realtor.com, which estimated the overall housing shortfall at just over 4 million in 2025.

While speaking at the World Economic Forum in January, President Trump said that the U.S. will not become a “nation of renters” and called for Congress to ban large investors from buying up single-family homes and turning them into rentals. But his own executive order restricting those purchases has language to ensure that investors can keep developing new build-to-rent homes.

Last week, the average rate for a 30-year, fixed-rate mortgage dipped below 6% for the first time since 2022, which could make buying more affordable for some home-seekers. But if more buyers enter the housing market without an uptick in supply, prices could shoot up and erase any affordability gains, according to a recent report from realtor.com.

That is why Goodman believes build-to-rent is a boon, since these houses would have otherwise not been built. More supply — be it for rent or buying — lowers housing prices for both groups.

“Build-to-rent is a win-win all around,” Goodman said.

Build-to-rent can turn “not in my backyard” into a “yes”

Homeownership has long been a central part of American culture; it’s a way to put down roots in a community. and one of the main ways people build wealth.

But that may be changing as more people embrace long-term renting. A recent survey of 1,000 Americans renting single-family homes conducted by the Center for Generational Kinetics, a research center studying the different mindsets between generations, found that only 8% of those renters defined the American dream as owning a home.

Still, the real estate world is short on supply for renters too. In 2024, the U.S. had about 800,000 fewer single-family houses for rent compared with a decade earlier, according to the National Association of Realtors. Some of that is due to investors selling off their rental houses to homebuyers.

“ Do we need more homes for sale? Absolutely,” said Jay Parsons, a rental housing economist and independent consultant. “ But that shouldn’t come at the expense of renters. We need more rental homes too.”

One of the biggest barriers to building more rental units can be local opposition to apartment construction.

“Everyone wants attainable housing, just not near their house,” said Hartmann.

Hartmann said residents often push back on a company’s plans, fearing the company will build tall apartment buildings that they worry will ruin the charm of their neighborhood. But the homes NexMetro builds are stand-alone, each a single story and half the size of a traditional home. Hartmann calls them “cottages.” He said a lot of worries go away when neighbors come to local meetings and see the plans.

“They see our little homes, our cottages, and they’re like, ‘Oh, yeah. I like that,'” Hartmann said.

Homebuying builds equity, but for tenants, choosing not to buy isn’t necessarily a bad financial move.

In fact, renting is cheaper than owning in the country’s 100 largest metros, according to LendingTree. Renters who invest what they save on housing can also build wealth.

Plus, some like Mona Gass just prefer the ease of renting. She has the money to own, but why? She has rented for half her life and enjoys being able to just call maintenance.

“Am I throwing my money away? Maybe,” said Gass. “But I don’t have to fix anything.”

She’s currently renting a three-bedroom NexMetro home — brand-new when she got the key in 2019 — with her mother in Mesa, Arizona. In a way, renting has become part of her identity.

“I’m gonna rent,” Gass said. “That’s what I do.”

Spring is usually when the U.S. housing market heats up, as potential buyers start shopping ahead of desired summer move-ins. But the 2026 housing market has gotten off to a rough start, as affordability concerns continue to weigh down activity and disrupt the industry’s seasonal rhythm.

Defying historical norms, home sales fell last month, according to data published Monday by the National Association of Realtors (NAR). Existing home sales for March dipped 3.6% compared with February, and were down 1% from a year prior. The drop—which pulled the annualized sales pace below 4 million for the first time since June—suggests high mortgage rates and weakening sentiment among homebuyers are already bleeding into spring.

“March home sales remained sluggish and below last year’s pace,” Lawrence Yun, NAR’s chief economist, said in a statement, attributing the falling numbers to shrinking consumer confidence and a lower job creation rate.

The traditionally hot spring buying season has coincided with a souring economic environment impacting the decisions of many homebuyers. Mortgage rates, which nationally are averaging between 6% and 6.5%, remain the biggest obstacle, according to NAR, and might be unlikely to fall significantly this year. An uneven jobs landscape and disrupted energy markets owing to the war in the Middle East has made the Federal Reserve more sensitive to inflation in recent months, resulting in a pause on rate cuts.

Mischa Fisher, chief economist at Zillow, put it similarly in an analysis last month, arguing that higher unemployment and persistently high mortgage rates were likely to act as a “slight drag on the spring season.” Zillow’s outlook for 2026 changed drastically depending on how long high rates and unemployment weigh down the housing market. If the numbers normalize by May, home sales for the year would rise 3.48%, a percentage point less than Zillow’s previous estimate. But if the same conditions persist for the whole year, home sale numbers are more likely to decline compared with 2025, a significant signal pointing to an economic slowdown.

Besides high loan rates, prospective buyers are saddled with exorbitant home prices. NAR’s Yun noted that housing stock in the U.S. remains limited, with demand outstripping supply in part because the vast majority of homeowners still hold relatively low rates and have decided to stay put rather than put their house on the market. The shortage means the median home price last month was $408,800, a record high for March. The environment for prospective homebuyers was stark enough for NAR to revise its expectations for home sales growth this year to 4%, down from its earlier projection of 14% released last fall.

The regional picture is mixed. The Midwest and parts of the northeastern U.S. have seen modest activity gains, while affordability constraints have been most acute in Western states. Yun said that adding between 300,000 and 500,000 homes for sale would help return the market “closer to normal conditions.”

But because many homeowners are unwilling to swap out their relatively low rates, that shift might not happen this spring. Recent research has already pointed out how the housing market’s traditional seasonality has become an outdated norm since the pandemic. Factors like remote work and improved online real estate offerings have made it easier for prospective homebuyers to enter the market year-round. With mortgage rates stubbornly high and affordability still top of mind for shoppers, the traditional sweet spot for homebuying might be losing the last of its seasonal charm.