Sarah is managing reduced cash flow by ensuring she always bought properties that were cash-flow positive from the start, giving her a cushion to absorb rate increases. She is also converting properties into multiple units and using midterm furnished rentals on rent-controlled units to increase rental income while placing long-term tenants in newly built non-rent-controlled units.
She isn't panicking because she invested for cash flow rather than speculation, avoided negative-cash-flow properties, and stress-tested her portfolio against potential rate increases. She believes market cycles are normal and that real estate is a long-term wealth creation vehicle, so temporary downturns do not change her overall strategy.
She sees opportunities in converting properties into more units, pursuing BRRRR deals with fewer competing offers, and negotiating terms like vendor take backs. She notes that the lack of bidding wars allows investors to include conditions, conduct due diligence, and potentially purchase below list price.
Her top tip is to take a step back, look at investments from a long-term perspective, and avoid making emotional short-term decisions. She advises against flipping in the current market and stresses the importance of ensuring every deal has cash flow, multiple exits, and a strategy for mortgage paydown over time.
Sarah explains that newly built units are not subject to rent control, while existing units are. Her strategy is to place long-term tenants in the new non-rent-controlled units where she can raise rents to market rates, and convert existing rent-controlled units into furnished midterm rentals for people staying one to three months, thereby achieving higher income.
