3 Pillars for Recession-Proofing Your Real Estate Portfolio
The real estate market has changed. Instead of the boom we experienced from 2020 to 2023, in 2025, everything seems quiet. Homes are sitting on the market longer, rent prices are lowering and inventory is slowly building. As inventory continues to build, investors need to understand there is a good chance of a price correction on real estate. During this time, you must reassess how your portfolio is positioned. I’ve spent the last two decades building and managing real estate assets through boom and bust cycles, and slowdowns and recessions are just part of the real estate cycle. It isn’t a time to panic, but it is a time to analyze your portfolio. It isn’t about playing defense; it’s about realigning capital to make sure your money is invested where it is getting the best return.
I’ve identified three pillars for recession-proofing your real estate portfolio:
Pillar 1: Cash Flow Over Appreciation
During bull markets, I see a lot of syndicators chase assets for their projected appreciation, but in recessionary periods, cash flow is king. If it doesn’t pay you today, don’t assume it will pay you tomorrow. Flipping homes, developing land, or an Airbnb might look good on Instagram, but they don’t cover your lifestyle or liabilities when markets correct.
Shift focus toward income-producing assets—multifamily apartments, build-to-rent homes or single-family long-term rentals. These are boring to most, but no matter what the state of the economy is, everyone needs a place to live. When inflation rises and consumer spending tightens, consistent rent checks are the quiet engine keeping the lights on, even if your property is depreciating in value.
In 2008, MC Companies had many properties that were underwater if we would have sold them, but we didn’t need to sell them because they were cash flowing monthly. Those same properties, fifteen years later, are worth significantly more than we bought them for and have been cash flowing the whole time. The point is you shouldn’t get wrapped up in the value of your property during slowdowns as long as it is cash flowing.
Pillar 2: Analyze Your Cashflow
Cash flow is the goal of every property, but knowing if a property cash flows or not is a very surface-level assessment. Sophisticated investors really analyze their return on capital, because even a property that cash flows can be a bad investment if the return on equity is weak.
Now is the perfect time to take a hard look at your portfolio. Ask yourself: What’s the actual rate of return on the equity trapped in your properties? If a rental is paid off and worth $800,000 and you’re clearing $1,200/month in net cash flow, that’s only a 1.8 percent annual return on your equity. Those are the weak returns that need to be analyzed and possibly moved around into properties that deliver better returns.
This market slowdown creates rare windows to sell underperforming assets and 1031 exchange into stronger cash-flowing properties. Properties are sitting longer, which means you have time to analyze the buy. Analyzing your cash flow is about unlocking trapped equity and moving it into vehicles that accelerate your wealth. Don’t just sit on properties out of habit. Sit on properties because they are giving you a good cash-on-cash return.
Pillar 3: Durable Demand
Even in a recession, people will always need a place to live. That’s why the foundation of a recession-proof real estate portfolio isn’t luxury beachfront villas or vacation rentals. Instead, it’s solid, long-term rental housing in areas with jobs and population growth.
The key is targeting markets with durable demand—places where employment is strong, businesses are hiring, and people are moving in faster than they’re moving out. If a city or neighborhood is seeing net-positive migration and offers a mix of industries, then that should spark your interest. These areas tend to hold up better when the economy contracts.
I’ve seen investors get distracted by aesthetics or status, but recession-resistant real estate isn’t about prestige. It’s about predictability. Simple, affordable units with manageable upkeep and steady demand are what carry portfolios through turbulent times. They’re not flashy, but they’re faithful.
Final Thought
In real estate, market cycles are inevitable, but how you respond to them determines your success. If you stay focused on cash flow, strong fundamentals and markets with real demand, you won’t just survive the slowdown—you’ll emerge from it stronger, smarter and better positioned for the next upswing.