When Flexibility Matters More Than the Lowest Rate

Question

Lowest rate doesn’t always equal best outcome — especially for investors managing timelines and exits.

What factors do you prioritize most when choosing financing for an investment deal?

Kiernan LaFaver · Answer

Completely agree! Interest rates are only one small piece of the puzzle. Investors I work with are really hyper focusing on prepayment penalties with DSCR. Even with small scale BRRR (just cosmetic/slight functional updates), ability to refinance within a handful of years is extremely important to have enough equity to pull out and repeat the process. Aside from prepayment penalty, flexibility with down payment even on the same loan program. Local lenders to have some portfolio products that have lower down payments compared to the more big box regional lenders.

Scott Nachitilo · Answer

I agree with this. For investment deals, flexibility often matters more than chasing the lowest rate.

We usually prioritize terms that support the business plan, like closing speed, certainty of execution, prepayment flexibility, and realistic underwriting. A slightly higher rate is often worth it if the lender can close on time, understands investment properties, and won’t retrade the deal late in the process.

Exit options are also key. Being able to refinance, sell, or pivot the strategy without heavy penalties gives investors room to adapt when the market shifts.

The best financing is the one that aligns with your timeline and risk tolerance, not just the lowest number on paper.

Andrew Postell · Answer

@Kelly Schroeder this is a super important question and it doesn't just apply to lenders.  How do you know that a contractor is any good?  An electrician?  A title company?  Anything?  Even if they do have 20 years experience...how do you know really?  And while nothing is foolproof the most consistent method of finding good vendors is relying on OTHER real estate investors that have worked with those vendors.  This is why we network with other real estate investors - kind of like what you are doing here!  Especially if someone is new, having a referral is the best way to get started on the right foot.

When Flexibility Matters More Than the Lowest Rate

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