Navigating Current Interest Rates for Investment Properties: Your Thoughts?

Question

Hey fellow real estate enthusiasts,

I hope everyone is doing well and staying safe during these times. I wanted to open up a conversation about something many of us are dealing with right now—navigating the current interest rates for investment properties.

With interest rates having ticked up recently, I'm curious to gather insights and strategies from the community on how you're adapting. Are you finding that the higher rates are affecting your cash flow projections or acquisition strategies? Are there specific types of properties you're focusing on more or less due to these changes?

Personally, I've been looking into more fixer-uppers and value-add opportunities where the initial purchase price is lower, and the potential for appreciation is significant. However, I'm also weighing the pros and cons of possibly refinancing later if rates decrease.

What are your thoughts? Are you altering your investment strategies based on the rate changes? Any tips or lessons learned would be greatly appreciated!

Looking forward to hearing your insights and experiences.

Best,

DonandBubba.com

Peter Mckernan · Answer

Yes, with current market affordability, many things need to be analyzed. One is the value add situation, you might be in a situation where the values for rents are upside down. In that case you should go find something that you can add square feet to the place or something you need to convert to a second unit. Or if you can get into entitlements that is a value add play as well. The days of buying and cash flow are long gone(unless you are in the middle of the US). That is not a bad strategy, just need to know your market and what you need to get to a place of cash flow, and appreciation that makes sense with your numbers.

Bubba McCants · Answer

Yes totally agree, the price of everything has increased making it more difficult to rehab a property and make a decent profit. We need to get the properties at a good deal to make sense, and as you all we have them, just have to really search for the right property!

Bradley Buxton · Answer

@Bubba McCants

We have clients in the Reno Tahoe, NV area that are taking a bit of hit on the cash flow because of the above average appreciation growth boosted by tech jobs and people moving from CA. I'm also getting rate buy down concessions for clients to improve the interest rates. The reality is to get good properties in good areas it takes more cash than it did 5 years ago. There are still deals out there and we are very vigilant in finding them.

Bubba McCants · Answer

Hey Peter, I totally agree and thank you for the reply!

Navigating Current Interest Rates for Investment Properties: Your Thoughts?

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