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

0:00Henry Washington: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. I'm definitely feeling it too. But I'm not sitting on my hands, holding onto cash and hoping everything will be okay. 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.

0:37Henry Washington: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 longstanding portfolio.

0:59Henry Washington:Hey, everyone. I'm Dave Meyer, Chief Investment Officer at PicklePockets. Here to try and make sense of these wild economic times is my co-host, Henry Washington. All right, Henry. So give it to me straight. How are you feeling about the economy? Good? You happy? You excited? On a scale of one to 10, I'm at about a fear factor of six. Okay. Yeah. I think that's right. It's not a disaster. It's just confusing, right? There's like weird signals going in every direction. So it's like hard to be at a one or a 10. I feel like the only logical answer is to be somewhere in the middle because one day I'm like, oh my God, the economy is going to crash.

1:39Henry Washington:And the next day I'm like, everything's great. It's totally hard. It's just hard to get a beat on and everything is changing so quickly. I couldn't agree more. It is very confusing. I'm just trying to stay fundamentally sound and pay attention to what's truly happening locally and not what's happening in the headlines. 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 I give an assessment of the economy very regularly here and on the market as well.

2:19Henry Washington:And I'll just say, like, I do think the economy is getting worse. I think that 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.

2:56Henry Washington: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. And I just think we're in for 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.

3:32Henry Washington:That's just how I see it. Not necessarily saying that means negative things for real estate. 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. 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.

4:14And that's probably why credit card debt is at an all time high right now as well. Yeah.

4:20Henry Washington: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, OK, 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 decisions. But I just I do get the sense just not even data like anecdotally. I don't know about you.

4:51Henry Washington: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 hard time making ends meet, you're 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. It does impact the economy. So I just generally think we're in for more difficult economic times. I agree with you. That doesn't mean you shouldn't invest.

5:28Henry Washington:And I actually think a lot of people would make the case that that means that you should invest. So I'm just curious, given the fact, Henry, that you have at least some nerves, you're at a six out of 10, you're not panicking, but you're above average. How does that impact your investing decisions? 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 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.

6:06That's when people buy. Crypto's down right now. And if you believe in it as an asset, this is when you should buy. Because you're betting on it going back up with 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.

6:49And 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 and the economy, people still need a place to live. you know 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.

7:31There'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 really, really good. It hasn't been like that in a few years. Are you buying more or less than you were like a year ago? Then 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.

8:09Historically, I'm probably on average compared to what I do each year. But last year was such a low for us that I'm definitely buying more, but not a ton more.

8:18Henry Washington: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 comes down to what else are you going to do with your money right now? Because it sounds like I know that's just such a lame thing to say, but it's true. Holding cash is OK, but there's inflation. So if you're going to just put it in a savings account, you're probably not going to make money.

8:58Henry Washington:If you put in a money market, you're about flat. That's OK, 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 So I'm just asking myself, where would I want my money?

9:36Henry Washington:If there's a recession, what do I want to do with my capital? And I just keep coming back to real estate. And I'm not just saying that because I host this podcast. I will admit to everyone, I am selling some real estate right now too. Yeah, me too. Yeah. So 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 a recession? I want it in something that is generally recession-proof. Real estate might not grow a ton during a recession, but it traditionally does not go down that much.

10:12Henry Washington: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 all of those things, even during a hard economic time, may 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. 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.

11:00I 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 sell these assets to some of these other investors who are less risk averse than I am and taking them on.

11:25Henry Washington: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 BRRRR, 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 a different BRRRR, 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.

12:05Henry Washington: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 I'm not rooting for that. But I'm just saying as an investor, if people are selling and there's more inventory on the market, there's more 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.

12:42Henry Washington:I'm basically sticking to this sort of upside era 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.

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16:26Henry Washington:Welcome back to the BiggerPockets podcast. Henry and I are here being honest about we're a little scared about the economy. I think 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, I'm wondering, with everything going on and all the uncertainty, is now the time to do it?

17:04Henry Washington:How would you advise someone thinking that? 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 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.

17:43and 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.

18:20We'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 outlier.

18:58So 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 cashflow and where you might get some appreciation as well.

19:32Those 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 storm. Now, you need to be financially capable to hold onto that asset because we don't know what's gonna 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 of the people who don't have the financial backing to be able to hold on to those assets.

20:12And 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 on to 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 rent support that asset. And that's just a good formula.

20:48Henry Washington:What you're saying tactically, I stand by. 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. 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 rental property or even better house hacking, you are probably lowering your overall 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.

21:36Henry Washington:Can you reduce your overall living expenses by house hacking? If so, you are reducing your risk during a financial downturn. 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.

22:15Henry Washington: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 to take additional risk, but find deals 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.

22:51Henry Washington: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. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they picked the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10 % below market value in top rental markets across the country.

23:28Henry Washington:Their local teams handle the build, the property management, and the details so you don't have to. In some cases, investors even receive 50 % to 75 % of their down payment back at closing, and their interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade. And if you want to learn more, visit biggerpockets.com slash retirement. Here's the truth about passive investing. If the strategy isn't right on day one, the returns won't save it. Multifamily real estate offers structural advantages. Many investors are overlooking, including depreciation that can help offset taxable income while cashflow continues.