Real Estate Investor Changing Strategy in Anticipation of Recession

Jean J. Sanders
  • A real estate investor who owns over 100 rental units recently bought his first plot of land.
  • He’s anticipating a recession in early 2023, and figures the cost to build will eventually go down.
  • He’s also still buying properties, despite the rising mortgage rates.

A New Hampshire-based real estate investor who owns over 100 rental units across 36 buildings bought his first plot of land in April 2022. 

Matt, who goes by “The Lumberjack Landlord” for privacy reasons, has been building his rental portfolio since the early 2000s. After two decades of following his buy-and-hold real-estate investing strategy, his portfolio now grosses over six figures in rental income each month. Insider reviewed copies of his tax cards and payments from tenants that verified these details.

Buying land is a new type of investment for Matt. He likes to keep cash accessible in case a real estate opportunity arises — and when something came on the market “in an area where land just never becomes available,” he jumped on it, he told Insider. 

The process for a recent land acquisition was similar to buying a traditional property and “extremely straightforward,” he said. “We put together a purchase and sales agreement, and then the seller agreed to the price.” 

His plan is to eventually build on the land. He’s anticipating a


in the first quarter of 2023, and figures the cost to build property will eventually go down as the stress on the supply chain eases and as the price of commodities, such as lumber, finally decreases. 

“The way that I looked at it was: I can have my money sit in the bank and basically not grow at all. Or, if I really believe there’s going to be a market correction, and that commodities prices are going to come down, the cost of building will come down and there will be more people available to do building,” said Matt, who hasn’t started construction yet because of rising prices due to inflation. “So, the land, if I can get a decent price on it, is worth buying.”

Plus, building a property will allow him to create jobs for construction companies during what could be challenging economic times, he added: “I want to help people pay their bills when all of the other jobs stop.”

The particular plot that he bought is already zoned for redevelopment, and even had a building on it at one point. That helped him evaluate whether or not it’d be a good investment, he explained: “It wasn’t purely raw land — I knew what the zoning was and I knew what I’d be allowed to build there, so it really was just a matter of  looking at what my typical costs are for rehabbing and working backwards.” 

It was also helpful that the building that used to be on his plot was already torn down and he wasn’t “stuck with whatever house was there,” he said. The process of tearing a building down can cost tens of thousands of dollars, he noted.

When it comes time to start construction, he’ll simply apply for a building permit and present his plan to the town. 

Matt is still investing in properties, too. In the past three months, he’s bought seven more rental units across two buildings: a triplex and a fourplex. 

He doesn’t mind the rising mortgage rates, which are still elevated about 5%, as long as his return on capital — the profit he could potentially earn from his real-estate holdings after factoring in expenses — is what he considers to be “great,” he said.

“To understand what a great deal is, you have to understand what every other deal is,” he added. If duplexes in his market are returning an average of 7% annually, he’s looking for deals that will earn him at least 10%, he explained. His two newest properties are already returning over 20% in rents. “It doesn’t matter if the mortgage rate is 6% or 16%. All that matters is my return on that cash.”

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