Weekly Housing Trends

The big story

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When Jesse Wyatt buys a house in Jacksonville, FL, he goes head-to-head against institutional investors, who own over one in five single-family rentals there, among the highest concentrations in the country.

“We see all the major players: Opendoor, Offerpad, Invitation Homes, Progress Residential, and American Homes 4 Rent,” says Wyatt, an advisor at Real Estate Bees. He knows he can’t compete—at least not on price. In one recent deal, Wyatt offered $412,000, but was outbid at $424,000.

At that point, he knew all he had to do was wait.

Within days, that seller returned to Wyatt, saying the institutional buyer slashed its offer by $20,000 after an inspection. “This is a tactic I see all the time: They come in high to lock up the contract, then pull the rug out,” explains Wyatt, who agreed to close at his original offer. “I don’t play their game,” he says. “I can’t always promise the highest price, but I can build trust and rapport and close on my contracts without price reductions. That’s something my competition can’t promise or replicate.”

The mom-and-pop advantage

Institutional investors are the Bond villains of real estate, and the new federal housing law has cracked down on how big they can get. But plenty of small investors were already winning without the government’s help by leaning on their own strengths.

“You can’t out-scale a firm that can deploy $100 million overnight, and you shouldn’t try,” points out Alex Blackwood, who left Goldman Sachs to launch the real estate platform, Mogul. “What you can do is go where they won’t. Institutions aren’t paying an associate $400k a year to chase a one-off property. That’’s the space mom-and-pop investors should be playing in.”

Institutional investors tend to stick to well-maintained single-family homes in major metros. So, Blackwood focuses on fixer-uppers and workforce housing in the burbs. “This is where you compete less and earn more,” he explains. “The best opportunities come from properties that require more work than a large fund wants to take on.”

Another small-investor edge? They know the neighborhood, not just the numbers. “Large investors rely on data models and broad market trends. Mom-and-pops understand community dynamics, school districts, and upcoming developments that algorithms often miss,” says Christopher Duffy at Hummingbird Development. “Hyperlocal knowledge helps identify undervalued properties before institutional investors recognize the opportunity. We get our best deals by focusing on just 15 zip codes. We also know real estate agents in the area so they approach us first.”

Although large investors often get first dibs on the most lucrative opportunities, fractional platforms are starting to open up that world. Blackwood’s Mogul has let over 30,000 small investors buy into more than 80 institution-quality assets starting at only $250. Back during his Goldman Sachs days, “what got us was how walled off real estate was as an asset, open only to people writing seven- and eight-figure checks,” he says. “We wanted to knock down that wall and let regular people own a piece.”

      

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What's up this week

Realty check

Source: Realtor.com; Designer: Andrew Blockett.

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🛋️ Try this free design trick to make your living room look expensive.

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🚢 A home only a pirate could love: Hop aboard this ship-shaped home for $779,000.

You asked, we answered

Q: How will this week’s Fed meeting affect mortgage rates?

Chart: Realtor.com. Source: Freddie Mac/Federal Reserve Board of Governors. Created with Datawrapper.

The Federal Reserve held rates steady at 3.50% to 3.75% for its fifth meeting straight, but it was a far-from-unanimous “sloppy hold,” with three board members pushing for a hike. That’s fine by Chair Kevin Warsh, who relishes a “good family fight” among policymakers. After his second meeting as chair wrapped, markets put the odds of a rate hike over 50% at the Fed’s next meeting in September.

What this means for mortgages: Mortgage rates don’t follow the Fed; they trail 10-year bonds, and right now both metrics are climbing in lockstep. Surging inflation and oil prices have pushed mortgage rates to their highest levels in over a year. Although Trump had hoped Warsh would slash benchmark borrowing rates and bring down mortgage rates, so far, no dice.

What’s next: Although mortgage rates are tougher to predict than a Knicks game at halftime, experts are taking their shot anyway. Fannie Mae expects rates to average 6.3% in 2026 and 2027, while the Mortgage Bankers Association anticipates a slightly higher average of 6.5% through 2028. The National Association of Home Builders thinks rates will land around 6.18% in 2026 and maybe dip below 6% later on. Still, this could change based on inflation, oil prices, and more. And with Fed rate hikes likely in the cards, mortgage rates probably won’t freefall anytime soon.

The silver lining: Home prices tend to cool from summer to fall, with the biggest $15,000 discounts usually arriving in October.

Got a question about real estate? Ask it here, and we’ll answer it in a future issue.

Real talk

David Switzer

What do flowers, coffee, dogs, and Pilates have in common? They’re all part of a cottage commercial real estate portfolio owned by David Switzer and his wife, Andrea, in Jersey City, NJ. Here’s how they broke into this intimidating asset with zero experience, plus the surprising perks they’ve discovered.

Q: How did you get into commercial real estate? “My wife and I live a block from a flower shop, and in 2024 we noticed a ‘for sale’ sign. We called the broker who had sold us our house, who also does commercial; he said it looked like a solid investment. So we just went for it. We paid $315,000 for a 600-square-foot ground-floor unit. The florist pays us $2,200 a month. At first, we thought it was wonderful that the property already had a tenant with predictable cash flow, like acquiring a stock that pays dividends. But we soon realized that this is the opposite of what you want because you can’t add value. You’re just paying a premium.”

Q: What else have you purchased? “We bought an empty 1,300-square-foot ground-floor commercial condo for $550,000. To find a tenant, we reached out to every single business I thought could go there. A coffee shop owner came to see the space, loved it, and signed a five-year triple-net lease for $4,000 a month. The third is a 950-square-foot corner unit for $523,000 where my wife is opening a Pilates studio. The fourth is a $961,500 property with a yard where a doggy daycare pays $7,200 a month under a triple-net lease. I found that tenant before purchasing the property.”

Q: How did you finance these deals? “We tried a lot of banks and kept getting rejected. Empty commercial buildings are hard to finance. So we went to a hard money lender. Fast close, no income docs needed, just the lease. But the interest rate is 10.5%. On day 366, after the prepayment penalty expires, we’ll refinance with a local credit union at a better rate. With a tenant, lenders will be more interested.”

Q: How are the returns? “The flower shop breaks even. The coffee shop has roughly an 8.7% cash-on-cash return. The Pilates studio is predicted to generate an 11% return. Returns on the doggy daycare are tight right now with its hard money loan, but once we refinance closer to 6.5%, we’re looking at over $2,000 a month net.”

Q: What advice do you have for breaking into commercial real estate? “If you’re buying a space with a tenant in it, read the lease carefully. For new tenants, try for a triple-net lease where your tenant pays the taxes, insurance, and maintenance—that’s the model that makes commercial attractive. And here’s the key: You don’t make money buying cash flow; you make it by creating the value yourself. Most investors overpay for properties with existing tenants. The better opportunity is in vacant or new commercial builds where you find your own tenant. To lower your risk further, find the tenant first, then find a space they want to occupy, then make an offer. It makes it far easier to get a loan.”

Q: Any surprising perks? “Once on Valentine’s Day I went to the flower shop to pay for a bouquet, and she gave it to me for free. The coffee shop charges me; if they didn’t, I’d be in there every day getting an acai bowl!”

      

Housing market of the week

Alex Blackwood/mogul; Ixefra/Getty Images (beach).

A 13-bedroom Tampa house may scream “spring break,” but it’s actually a respectable cash-flowing rental strategy. Alex Blackwood at Mogul explains.

The pros: “Tampa is one of my favorite markets because the demand just keeps showing up,” Blackwood says. With nearly 400,000 new residents expected by 2030, “there’s also a shortage of affordable, flexible housing for people who staff the city. This is why we lean into co-living and rent by the room, which serves demand and produces more income.” In downtown Tampa, Blackwood’s firm recently bought The Brady: a 13-bedroom, four-bath house for $535,000. The property rakes in $84,000 a year in rent, amounting to a 7.7% first-year cash yield.

The cons: “Tampa is one of the most institutionally owned rental markets in the country, so on a plain-vanilla house you’ll bid against very large, very patient buyers,” Blackwood says. Then there’s the weather. “Hurricanes are a fact of life here, and that feeds into insurance, financing, and how much you keep in reserves,” he says. In storm-surge zones, expect to pay $4,000 to $5,800 a year to protect your property.

His advice: “Run your insurance and tax numbers fresh; don’t use last year’s: In Florida, those two lines make or break a deal,” he says. To find bargains, explore outside the core, which is how he found The Zephyr in Zephyrhills: an 11-bedroom, three-bath house for $462,500, which brings in $75,000 a year—an 8.5% first-year yield. “Suburbs like Zephyrhills are earlier in the cycle and often cash flow better,” he says. “The whole town has only 34 co-living rooms on Padsplit, and they’re all occupied. That’s exactly the supply-and-demand setup we look for.”

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