Episode Summary:
In this Mini Breakdown, Craig Fuhr and Jack BeVier discuss the current state of the real estate market and predictions for 2026. They explore the sentiment among investors, the impact of interest rates, and the dynamics of seller capitulation. The conversation also delves into the rental market outlook and strategies for investors to navigate the changing landscape.
Episode Overview
Craig Fuhr and Jack BeVier open with a clear takeaway. Investors feel anxious about what comes next. The last half of 2025 felt noticeably weaker. Accordingly, many investors expect to do fewer deals in 2026.
Jack explains why. Rates stayed high, buyers grew softer, and pricing became harder to predict. If investors missed the spring selling season, then many had to pivot. For example, some shifted to DSCR exits instead of retail flips.
Why Late 2025 Was So Difficult
Jack describes the third and fourth quarters as frustrating for flippers. Sellers faced shrinking demand and weaker pricing. Additionally, investors holding private lender debt felt extra pressure.
If you had to sell during late 2025, then you likely had a rough time. Jack notes many investors now plan to “triple check” underwriting. They also plan to avoid comps from six months ago.
A Countercyclical Opportunity for Flippers
Jack offers a more optimistic angle. Investors are pulling back after a rough 2025. As a result, fewer flips should hit the spring 2026 market.
That shift could help flippers who stay active. They may compete against fewer renovated properties. Instead, they will compete with more “as-is” or well-maintained homes.
In other words, if you reload the gun and buy right, then spring 2026 exits could be strong.
Mortgage Rate Drop: A Short Window, Not a Guarantee
Craig points to early signs of rate relief. He mentions downward pressure on the 30-year mortgage. This relates to a proposed $200B mortgage-backed securities buyback.
Jack agrees the move could reduce mortgage rates. He estimates 25–50 basis points of improvement. Psychologically, buyers respond strongly when rates dip below 6%.
However, Jack adds a warning. This support may fade by June. Afterward, rates could rise again.
Dominion’s Strategy: Prioritize Flips Before May
Jack shares how Dominion is responding. They are pushing flips ahead of rentals. Specifically, he told the construction team to focus on retail projects now.
The goal is speed. Jack wants properties under contract before late May. That timeline matches buyer rate-lock behavior. Everything after that becomes a rental strategy.
Seller Capitulation Is Growing
Craig notes an important trend. Seller capitulation is starting to show up more often. This is happening in both single-family and multifamily markets.
Jack agrees. Investors are finally getting callbacks. Sellers who rejected offers months ago are returning. After all, the market has not validated their pricing.
This is where strong follow-up systems win. Investors who stayed in touch now have leverage.
Operational Excellence Will Separate Winners
Craig emphasizes discipline. He believes better operators will be rewarded in 2026. That means sharper acquisitions, tighter financing, and better contractor execution.
Jack’s view supports this. The easy-money years are gone. Investors need clean underwriting and conservative assumptions.
Rentals in 2026: Quietly Strong
Jack predicts a strong year for rentals. Rents may be flat in many areas. Some markets may even see slight rent softness.
Even so, purchase prices are adjusting downward. Therefore, cap rate math improves. Lower entry pricing makes rentals more attractive.
DSCR Outlook: Possible Tailwind
Jack also discusses DSCR pricing. He believes agency mortgage buying may indirectly help DSCR loans. If big capital gets outbid in agency markets, then it may move into non-QM products.
DSCR is the biggest non-QM category. As a result, DSCR spreads could tighten by 10–20 basis points.
Craig adds context from Dominion. DSCR rates are already about 125 bps better than a year ago. That change matters, especially when deals are tight.
Warning: Over-Leveraged Rental Investors May Crack
Jack gives a key risk for the 2026 Real Estate Market. Some investors built rental portfolios at high DSCR rates in 2023–2025. Many barely covered debt service.
Now turnovers are arriving. Repairs and vacancy costs create cash pressure. Additionally, prepayment penalties limit flexibility.
Jack expects a “quiet domino fall.” In other words, distress may rise slowly, not explosively.
Where Opportunity May Come From
Both hosts end on a constructive note. Tough markets create better deals. If investors stay disciplined, then they can benefit from seller capitulation and restructuring.
Craig frames it simply. The last few years trained investors to expect easy appreciation. However, 2026 may reward skill more than optimism.
