When the housing market refuses to behave predictably, the easiest way to get lost is to chase every headline. Today’s conversation centers on practical responses to a market that flips between spikes and plateaus. Our guest, James Dayner, who hosts the A&E series Million Dollar Zombie Flip and runs operations across flipping, buy-and-hold, development and private lending, offers a grounded view from active deals. Because James works across many product types, he can point to what is reliably producing returns and what has stopped working, and he emphasizes the importance of sticking to proven systems when conditions are uncertain.
Across his portfolio James has seen 2026 deliver surprises and 2026 begin with renewed activity in some corridors, but the underlying theme is the same: the market is moody. External shocks like announced tariffs and shifting mortgage rates have more effect through buyer sentiment than purely through material cost changes. That means successful underwriting now includes a sentiment check and contingency buffers for financing costs, not just a line-item for materials or labor. The following sections unpack how to think about flips, development, BRRR strategies and private lending in this environment.
Table of Contents:
Why the market feels moody and how to underwrite for it
The core problem is perception: when buyers feel uncertain, listings sit longer and transactions slow, even if the raw economics barely changed. James describes this as market participants acting like a moody teenager, sometimes impulsive, sometimes frozen. The practical answer is to bake emotion into your assumptions. Instead of only stress‑testing for cost overruns, include a conservative sales timeline, higher holding costs, and a range of exit scenarios. That way when unexpected news hits—policy announcements or geopolitical events—you won’t be forced into fire sales because your model already accepted the possibility of slower absorption.
Adjusting underwriting for sentiment
In concrete terms, James recommends making your next proforma assume a longer disposition window and adding the incremental interest and carrying costs you would incur. Use ARV (after repair value) conservatively and assume a weaker initial buyer pool when pricing dense or amenity‑poor projects. He warns against being reactionary: when markets wobble, adding excessive debt to cover temporary slowdowns can erode returns, while sensible buffers preserve upside when conditions improve.
What worked and what struggled: flips versus development
Flipping was expected to shine but turned out flatter than predicted because financing tightened and tariffs chilled buyer appetite. Development, particularly projects that prioritized unit count over livability, fared worse in 2026. James observed that sites with excessive density, limited parking and thin amenities were hard to sell when buyers became selective. That said, selective development still wins: one Bellevue townhome project that matched buyer preferences exceeded proforma pricing and covered losses elsewhere. The lesson is to prioritize product-market fit over theoretical maximum density.
Lessons from density and product fit
Underwriting for development should start with livability questions: how many units actually feel marketable, what parking and storage do buyers expect, and which amenities move the needle in your submarket? James now deliberately removes a unit from certain sites to improve desirability and reduce marketing friction. That shift—fewer units but higher buyer demand—often yields stronger net returns than a congested, low‑appeal scheme that theoretically looks better on paper.
Buy-and-hold, BRRRs, private lending and a path to small multifamily
Where the market is showing consistent opportunity is in disciplined buy-and-hold moves and private credit. James is pursuing a strategy to acquire multiple BRRR (buy, rehab, rent, refinance) properties in 2026, accepting modest negative cashflow per unit in the near term to create meaningful equity on exit. He targets modest purchases—roughly $350k buy prices—rehabbing toward an ARV in the $450k–$550k range to reach a 20–25% equity position per property. After assembling a portfolio of around ten rehabbed homes, he plans a 1031 exchange into a larger small‑multifamily asset (roughly 12–25 units) where pricing inefficiencies and lower competition create better cashflow and long‑term growth.
James also highlights private lending as his most consistent 2026 performer: steady returns, fewer spikes and less downside than active development or flipping. For new investors, he recommends starting with small flips or providing bridge loans as a way to learn the business and earn competitive yields without managing construction day to day. If you are running one or two projects, reduce exposure by partnering with operators you trust and by limiting scope to what your contractors execute well. Above all, in a moody market stick to what you know or partner to cover gaps—don’t stretch into unfamiliar, high‑risk plays when sentiment is volatile.
Final takeaways
Market uncertainty rewards discipline: underwrite for slower demand, favor livable product over raw density, use temporary negative cashflow where it creates durable equity, and consider private lending for steady returns. James’s multi‑angle approach shows that even in a fickle environment you can generate consistent gains by aligning strategy with market psychology and sticking to repeatable processes instead of chasing every new trend.
