Are High Interest Rates Actually Killing Real Estate Deals?

Question

Not necessarily.

Higher interest rates change the numbers—but they don’t automatically kill the deal.

Successful real estate investors are adapting by looking more closely at the entire deal structure:

🔹 Leverage: Use the right amount of financing without overleveraging the property.🔹 Rehab Financing: Structure acquisition and renovation financing to preserve available capital.🔹 DSCR Refinancing: For qualifying rental properties, refinance based on the property’s cash flow rather than relying solely on personal income.🔹 Exit Strategy: Know your exit before you close—sell, refinance, or hold.🔹 Buy Based on Numbers: Don't buy because a property feels like a good deal. Buy because the numbers work.

The key question isn't:

“What is the interest rate?”

It's:

“Does the deal still make sense after financing costs, rehab, carrying costs, and my projected exit?”

In today's market, investors who can structure deals creatively and stay disciplined with their numbers may still find opportunities.

At JCREIG Capital Funding, we work with real estate investors to find financing strategies designed around the deal—not a one-size-fits-all approach.

What do you think? Are today's interest rates killing deals—or simply forcing investors to become better at structuring them?

#RealEstateInvesting #RealEstateInvestors #InterestRates #HardMoneyLoans #FixAndFlip #DSCRLoans #RealEstateFinance #InvestmentProperty #RealEstateMarket #JCREIGCapitalFunding

Alex Rodgers · Answer

High rates aren't killing deals, but sellers have been very slow to adapt. In the markets I'm looking at, many sellers are still thinking they can get the same prices for their properties based on homes that were sold months ago at much lower interest rates. Now, I'm seeing days on market creep up. There are still lots of deals to be had. It's been easier to try to get concessions and less competition has meant more opportunities on the buy side.

James Jones · Answer

Rates aren't killing deals. Bad math is killing deals.

I buy single-family in Memphis under $100K, put $30-40K into the rehab, ARV comes in $180K-$265K. I refi with DSCR at 70-80% LTV. On a $200K loan at 8%, the payment is about $1,466. My Section 8 rents run $1,395-$1,950 for a 3BR+. The 1% rule still holds.

I don't buy hoping rates drop. I buy when the rent covers the payment with room to spare. If a deal works at 8%, it really works at 6%.

High rates just punish buyers who were counting on appreciation. Buy on cash flow and the rate is a detail. Deal flow is my bottleneck, not the rate.

Ryan Thomson · Answer

Rates aren't killing deals. Bad math is killing deals.

The investors I see struggling right now ran the numbers at 3% and never updated their model. At 6.8%, a $400K loan costs about $2,625/month. That's just math. Either the rent supports it, the forced appreciation supports it, or you don't buy it.

The one place rates haven't caught up yet: assumable mortgages. There are still FHA and VA loans out there at 2.75-3.5% with assumable balances in the $300-400K range. I closed a deal last month where the buyer took over a $380K loan at 2.875%. Payment was $1,570/month. A new loan on the same property would've been $2,500+. That's a real deal in a 6.8% world.

For conventional buy-and-hold deals, I agree with the structured approach above. DSCR loans in particular make sense when W-2 income is a bottleneck. The math just has to work from day one, not in some projected future refi scenario.

The deals are still out there. They're just not the same deals as 2021, and that's fine.

Are High Interest Rates Actually Killing Real Estate Deals?

Are High Interest Rates Actually Killing Real Estate Deals?

Are High Interest Rates Actually Killing Real Estate Deals?

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