How to Invest Smarter in Real Estate in a High-Interest Market (2025 Edition)

[Marius Olbrych]

How to Invest Smarter in Real Estate in a High-Interest Market (2025 Edition)

By Marius C. Olbrych
Investor | Licensed Realtor® | Renovation Consultant | Coachella Valley Market Specialist

We’ve officially entered a new era for real estate investing.

With interest rates hovering around 5%–5.5% and affordability at decade-lows, the old strategy of riding easy appreciation is fading fast. In its place? A skill-based market that rewards smart acquisitions, renovation efficiency, and adaptable exit strategies.

Whether you’re a seasoned investor or just getting started, here’s a breakdown of what’s working right now—from boots on the ground in the Coachella Valley to broader trends across the country.

🏦 1. Cash Flow First: Appreciation Comes Second

In 2021, appreciation masked weak deals. Today, your margins need to pencil from day one. Investors are pivoting to:

• Under-market acquisitions

• Targeted, ROI-focused renovations

• Holding long enough to capture equity through cash flow instead of speculation

In short: If it doesn’t cash flow, it doesn’t go.

🛏️ 2. STRs Face Headwinds—MTRs Are Gaining Momentum

Short-term rentals (STRs) are getting squeezed by:

• Stricter city ordinances

• Permit caps

• Oversupply in tourist zones

That’s why more investors are embracing Mid-Term Rentals (MTRs)—furnished 30–90 day stays ideal for:

• Traveling nurses

• Relocating professionals

• Snowbirds and seasonal residents

• Insurance displacement tenants

In markets like Palm Springs, where regulation is tightening, an MTR strategy can outperform STRs in both returns and stability—especially near hospitals, downtown corridors, and event venues.

🧮 3. Creative Financing Is a Game Changer

Rising interest rates are pushing buyers to think like investors—not just borrowers. That includes:

• Seller carry (seller financing)

• Subject-to deals

• Wraparound mortgages

• Assumable loans

• Rate buydowns and delayed financing plays

Knowing how to structure deals creatively is becoming a core skill set—and it’s what separates pros from those stuck on the sidelines.

🛠️ 4. Renovation = Opportunity

Flippers and BRRRR investors, take note: Ugly homes with good bones are winning again.

In 2025, renovated properties that are turnkey and functional will stand out. Investors are:

• Buying distressed or outdated homes

• Renovating with tenant or buyer profiles in mind

• Creating value through design, energy upgrades, and layout efficiency

The best part? Renovation adds leverage to every exit strategy—whether it’s flipping, refinancing, or renting.

📉 5. Stop Waiting for Rates to Drop. Adapt to Reality.

Too many investors are sitting idle, waiting for “the pivot.” But in truth:

• Rate drops won’t restore affordability overnight

• Inventory remains low

• Smart deals are still out there—but they require skill and speed

Those who succeed in 2025 will be the ones who:

✅ Buy below market
✅ Operate lean and efficiently
✅ Adapt their strategy to the property and the local demand
✅ Use financing and renovations strategically

🔍 Final Thoughts

2025 isn’t about timing the market. It’s about being ready when the market gives you a window.

If you're flipping, holding, or building out a rental portfolio, the winning plays involve value creation, risk management, and strategic exits. The investors thriving this year are the ones who treat real estate like a business, not a bet.

Let’s keep the conversation going—how are you adjusting your strategy in 2025?