How have higher interest rates changed your flipping strategy?

Question

I'm curious how experienced flippers have adapted over the past couple of years. Obviously higher mortgage rates have affected affordability on the resale side, but I'm interested in how that's changed your actual investment decisions.

From the investors I've worked with, one trend I've noticed is that more are choosing to hold properties for a year or two instead of selling immediately. We've seen an increase in investors transitioning into long-term financing, which makes me wonder if that's becoming a more common strategy or if it's just what I'm seeing locally.

Have you found yourself:

• Requiring a larger spread before buying?
• Negotiating deeper discounts?
• Reducing rehab budgets?
• Holding properties longer and renting them out instead of flipping?
• Lowering resale prices to move inventory faster?
• Changing the types of properties or neighborhoods you target?

I'd love to hear what's changed the most for you and what strategies have worked in today's market.

Jesus Suarez · Answer

What I'm doing now is really a combination of those strategies. I'm negotiating much more aggressively on the purchase price to make sure the numbers still work, and I'm being a lot more disciplined with my rehab budget.

Once the renovation is done, I'm usually refinancing into a DSCR loan and holding the property as a rental. Then, when interest rates come down enough, I'll either refinance again for better cash flow or sell the property if the numbers make sense.

I think the key in today's market is staying flexible instead of forcing a flip just because that was the original plan.

Caleb Brown · Answer

In my area rate hikes has not affected demand in many parts. Homes that are 200-350K are moving well. Suburbs are continued to be in high demand. I think the biggest factor to account for his higher holding costs and potential change orders (but you should account for that regardless).

Ryan Thomson · Answer

I stopped trying to time rate drops and started hunting specifically for properties with assumable FHA and VA loans.

Here's why the exit math changed: at 7%, a $400K house costs a buyer $2,660/mo. That same house with a 2.8% assumable mortgage at $350K remaining? The buyer steps into $1,450/mo on that balance. New loan on the same amount at 7% is $2,328/mo. That's $878/month in savings you can actually market at the exit.

Deals with assumable mortgages also see less competition at acquisition. Most flippers aren't hunting for them, so you're not fighting the same crowded pool when you're buying.

The hold-for-a-year strategy makes sense if you ran the rental numbers correctly on the front end. A lot of people I talk to are sitting on properties that don't cashflow at current rates, banking on rate cuts. That's a bet. The numbers should work at today's rates or don't buy.

Frank Pyle · Answer

Higher rates have made exit strategy and margin discipline much more important. Many investors are requiring a wider spread upfront, stress-testing both resale and rental scenarios, and avoiding rehabs that depend on aggressive appreciation. Having a solid backup plan to refinance into long-term financing can help, but the property still needs to cash flow at today’s rates. Feel free to DM me if you want to compare how different financing and exit strategies affect a deal.

Alan F. · Answer

After Dodd Frank was implemented I moved to in house, all cash. No need to borrow anymore so % rates have had no effect.

How have higher interest rates changed your flipping strategy?

How have higher interest rates changed your flipping strategy?

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