8-Week Strategy Series: Lowering the Cost of Money Beyond Rate Shopping

[Gia Hermosillo]

Most new investors fixate on the interest rate—and miss the real levers that move their bottom line. Rate matters, but structure often matters more.

There’s a world of tools beyond rate shopping that can dramatically change your deal’s economics:

• Buydowns: Temporary rate reductions (like a 2-1 buydown) that ease you into full payments.

• Seller credits: Negotiate to have the seller cover closing costs or fund your buydown.

• Adjustable-rate mortgages (ARMs): Useful if you plan to refinance or sell within a few years.

• Interest-only periods: Boost cash flow early, especially on value-add projects.

Example:

Let’s say you take a $300,000 loan. A 2-1 buydown drops your rate by 2% in year one and 1% in year two. That’s roughly $350/month saved in year one, $175/month in year two—real cash that can fund repairs or reserves.

If you plan to refinance in 18 months, that buydown could more than pay for itself.

The Catch:

Every lever has a trade-off.

• Buydowns require upfront funding.

• ARMs can cause payment shock if rates climb.

• Interest-only loans delay principal paydown.

• Some loans penalize early repayment.

But for an investor who understands their timeline and exit plan, these tools are strategic—not risky. The key is aligning your financing structure with your investment horizon.

Action Step:

Pick one property today. Run the numbers with and without a buydown. Compare effective monthly costs.
Sometimes, the cheapest rate isn’t the lowest cost of money.

Question: Would you trade a seller credit for monthly savings?