Not feeling so great about the state of real estate? Join the club.
Real estate investor optimism sank for the second straight quarter to its lowest level on record, according to the RCN Capital/CJ Patrick Company Investor Sentiment Index, which tracks how real estate investors across the country feel about the housing market. The Q1 2025 optimism score of 88 is down 36 points from last fall’s peak of 124.
More than one-third of survey respondents believe conditions are worse today than a year ago—a significant increase from last quarter’s one in four. Investors’ biggest beefs are spiraling costs (60%), supply chain disruptions (47%), and thinner profit margins on flips and rentals (40%).
“Investor sentiment is trending along the same lines as homebuilder sentiment and consumer sentiment, which recently recorded their second-lowest score in over 50 years,” noted RCN Capital CEO Jeffrey Tesch. “Our survey results suggest that enthusiasm among both rental property and fix-and-flip investors is being challenged by economic uncertainty, rising home prices and insurance prices, and high finance costs.”
Despite the bleak outlook, it’s not all bad news: Although 35% of flippers and 28% of landlords plan to buy fewer properties this year than they did last, many are simply adjusting their investment strategy to use the adversity as an opportunity. Here’s a sneak peek at their new plans.
Pivot from flips to rentals
“I am hoping to buy more properties this year but am moving away from fix-and-flips and focusing more on long-term rental properties,” says Jack O'Neill, who has renovated more than 250 homes in Virginia over the last decade.
The reason: “I’ve had 10 properties sitting on the market for 50-plus days with lower showing activity than in years past. I put these same properties up for rent and received over 20 applications in a week, and I rented them all above asking price. There’s a huge pool of qualified applicants looking at rentals; maybe fear of a downturn is keeping them from wanting to be homeowners. I have noticed a major uptick in sellers wanting to offload their properties, whereas in the last few years, sellers acted like they were sitting on gold with their homes.”
Wholesaling for fast cash
“I flipped a lot of houses in Pennsylvania in 2023, and this strategy worked well for a while, but as interest rates began to rise, the cash conversion cycle started to slow down,” says Austin Glanzer of 717HomeBuyers.com, based in Lancaster, PA.
“As a result, I’ve pivoted over the past year toward wholesaling and listing more houses. While I may be giving up the potential for higher profits on each deal, I’m able to generate cash much faster.”
Creative financing
“For 2025, I’m shifting toward creative financing like subject-to and seller-financing deals,” says Mike Wall, from Dayton, OH–based EZsellhomebuyers.com. “These allow me to acquire properties with built-in equity or below-market rates without relying heavily on traditional funding sources that are increasingly expensive. I’m also targeting distressed sellers and leaning into buy-and-hold rentals in undervalued Midwest markets, where affordability still exists and rents remain strong. So while I may do fewer flips, I’ll be doing smarter deals—ones with cash flow from day one and that hedge against the volatility we’re seeing in capital markets.”
Treat tenants like a stock portfolio
“I’ve noticed 2025 feels less like a slowdown and more like a sorting mechanism: The economic climate is forcing out the speculative players and giving room to those of us who think long-term,” says investor Ali Zane at iMax Credit.
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“I’m treating tenant screening like a financial portfolio. Economic volatility means that renters with strong payment histories and stable employment are an asset in themselves. The way I see it, real estate in 2025 is less about scaling fast and more about building quietly, using leverage wisely, and staying liquid enough to pounce when the math works.”
Build-to-rent
“This year, we’re not seeing investors pull back entirely, but we are seeing a real change to how and where they buy,” says Troy Evans, director of Investor Services at Marketplace Homes. “In certain markets, especially ones that had large population swings in the last few years, flipping has begun to slow down. Higher overall costs are causing investors to look into build-to-rent or long-term rental paths that may offer a bit more stable income. In the past, we saw many investors chase volume. In 2025, investors are being much more selective and targeting markets with strong fundamentals and year-over-year rent growth.”
Buy and hold until prices go up
“As a property investor and flipper in the Northeast, my plans are still to acquire, hold, and flip,” says Ralph DiBugnara, president of Home Qualified. “Higher home prices, property taxes, and insurance, as well as high interest rates, make it very hard to turn a profit with income from rent. But I believe when mortgage rates do come down, home prices will rise significantly due to increased demand and affordability. That is the reason I’m still very interested in buying: A house bought today will be worth more over the next few years and will prove to be a worthwhile investment.”
Play the long game
“Higher interest rates and uncertainty have cooled the market, but fewer buyers and sellers often create the very conditions that favor investors who are ready and well-informed,” says Dani Beit-Or, CEO of Simply Do It, who has been involved in more than 5,000 real estate transactions in over 40 US markets. “The best opportunities in 2025 won’t come gift-wrapped. They’ll require diligence, negotiation, and a clear investment plan. I’m being more selective, prioritizing strong markets with stable job growth, and leaning on creative funding options like self-directed IRAs. If history has taught us anything, it’s that the moments of greatest uncertainty often create the best long-term gains for those who act strategically.”