Kevin O'Leary Says the Commercial Real Estate Crash Is Creating Opportunity— But This One Costly Mistake Can Wipe You Out: 'I've Learned the Hard Way...'
“Shark Tank” investor Kevin O’Leary said on Thursday that while he remains bullish on real estate, investors should avoid taking on excessive debt, warning that leverage can wipe out even strong investments during market downturns.
In a post on X accompanying a video interview, O’Leary wrote, “I’ve learned the hard way that debt can destroy even the best investment.” He added that the commercial real estate correction following the pandemic has created opportunities for patient investors willing to stay disciplined.
Commercial Correction Creates Opportunity
During the interview, O’Leary said office properties were hit particularly hard after the pandemic as capitalization rates climbed from roughly 3% to 4% before COVID-19 to between 5% and 9%, depending on the quality of the building.
“There’s been a collapse of 50% of value there, which means there’s opportunity,” he said.
Rather than chasing large commercial assets, O’Leary said smaller investors should focus on neighborhoods they know well by buying homes, keeping debt low, renovating properties where possible and renting them to reliable tenants.
“My preferred approach is simple, buy properties in neighborhoods you know, keep leverage low, take care of your tenants, and think long term,” he wrote on X.
He also suggested concentrating on five or six nearby rental properties, saying investors could benefit from long-term trends such as neighborhood revitalization. Using Brooklyn as an example, he noted that areas once viewed as undesirable later became some of New York City’s most valuable real estate markets.
Keep Leverage Low
O’Leary said excessive borrowing remains the biggest risk in real estate investing, recommending investors finance only about one-third of a property’s value instead of the roughly two-thirds many buyers use.
“The biggest mistake I see investors make is using too much debt,” he wrote. “When markets correct or unexpected events happen, leverage can wipe you out.”
He explained that lower leverage gives investors a much larger cushion during market declines, reducing the risk of losing properties during economic shocks such as a recession or another pandemic.
O’Leary’s comments come as the U.S. housing market shows signs of becoming more balanced, with buyers regaining negotiating power after years of seller dominance. They also build on his broader investment philosophy that real estate remains a powerful long-term wealth-building asset, provided investors avoid excessive leverage and remain disciplined through market cycles.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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