Is the interest ever going to come down?

[Cheza M.]

Hi BP Community,

I’m planning to buy my second turnkey property, but I’m a but hesitant because the lenders are on par for rates and no one is giving any fixed rates right now until they hit underwriting. The down payment would be 20-25% since it’s an investment property and I was given rates about 5.75-6.1. Are these the avg. rates for investment proeprties nowaways? Do you think the rates will ever go down again once inflation ends or are they still going to stay around those rates or climb up higher? Thank you guys in advance for your knowledge and suggestions!

[Steve Donovan]

Hello @Cheza M.  I agree with the others who have said that rates will remain high for the near future, in fact the Fed has suggested several more increases in the Fed Rate yet this year, so rates will likely increase from current level.  That said, when evaluating potential investments, find out when rents were last increased if tenants are already in place, and how the current rent compares to market rates in the area of the property.  Rents have been increasing so quickly and at such a high rate recently, that you may find out your property has some rent runway in front of it.  Knowing that you can increase rents can make a considerable difference when evaluating properties even in these times of higher interest rates.  A good place to determine appropriate rent level is www.rentometer.com where you can get a limited number of queries for free, or pay for the PRO version and get unlimited with additional information.  Best of luck in your investing future!