Hey David, the challenge is making rentals work without relying on appreciation alone. Where I've seen this work out is using different creative strategies. buying with enough value-add to refinance quickly, targeting markets where DSCR leverage actually boosts cash flow, or using shorter-term plays (medium-term rentals, light rehab)
I am doing a DSCR loan on a paid-off rental. 6.5% 30-year fixed with 1.5 points, 5 year prepayment of 5%.
Looking to invest that money, but obviously need to get more than 6.5-7% to make it worthwhile.
Buying another rental is at best a break-even proposition.
Looking for better ways to use those funds.
Open to ideas. Anywhere in US or overseas.
No easy answer - to make it worth it you’ll need to either be willing to take moderate risk (or higher than moderate risk) or add active participation. Unless you’re already knowledgeable and experienced in areas of higher risk adjusted return , there’s a learning curve. That’s not necessarily a bad thing as it can lead to accelerating your net worth. I posted some investment strategies I’ve personally used as wealth accelerators. Here’s a reposting of them
Buy truly below market by offering a very fast close, all cash, without the need for financing. To implement this strategy you need to have the full purchase price in readily accessible funds, so it won’t work for the majority of investors. Further, only a minority of sellers will be interested or motivated to offer a significant discount for an immediate no contingency sale.
Sell a property with an existing low interest mortgage utilizing a mortgage wrap. You’ll receive a higher price for the property because by offering seller financing you open up the bidding to a greater number of buyers. You create a note with an ultra high yield because you capture the interest rate differential between the stated interest rate on the wrap note and the lower interest rate on the underlying note.
3. Substitute a note purchased at large discount for seller financed note at full value (substitution of collateral)
Buy a property with seller financing at a low interest rate and long term and a substitution of collateral clause. Buy a note with a interest rate similar to the seller financed note at a large discount due to the relatively low interest rate and long term - and “substitute” this note for the seller financed note. You’ve just decreased your purchase price by the difference between the principal of the seller financed note and the “discounted” price you paid for the substitute note. Further, you now own a “free and clear” property you can borrow against should you desire and probably get all your invested cash out.
Negotiate for ownership interest in a property, with good cash flow from operations, but suffering negative cash flow from a high interest hard money loan that the owner can't refinance due to his personal credit limitations. Refinance using your good credit at 50% LTV and no personal guarantee. Negotiate the lender allowing a one time note assumption.
5.Worknote
Purchase a low interest rate note at a significant discount to principal. “Work” the note by offering a smaller discount for payoff to the debtor, or by enticing an increase in monthly payments for a decrease in interest rate, which should if structured correctly increase you yield.
6.Business/Realestatecombination
Purchase a business property such as an automotive repair shop. Purchase all heavy equipment needed for an automotive service business such as lifts, cranes, etc. Find an experienced operator wanting to operate in your location and sell him the business and lease the real estate to him. You can charge a hefty premium because with the shop fully equipped the operator saves the cost of outfitting the shop and the time and effort required. You can obtain a 12 cap or better. on this type of situation.
7. Syndicate deal
Syndicate property or note acquisition and retain equity interest as “promote”.
Realtor · Lancaster, PA · Member since 2025 · 169 posts · 97 votes
7mo
Cap rates are lower due to the heightened cost of borrowing...
However, there are plenty of 8 caps or better locally that I can assist you with if you're interested in the Lancaster/York/Harrisburg/Lebanon areas of Pennsylvania.
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
7mo
Here's a different angle - use that money for wholesaling where you're turning it 2-3x per year. Even at lower per-deal returns, the velocity beats 6.5% easily. You thinking active strategies or staying hands-off?
