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.

Jay Hinrichs · Answer

its really about the purchase price and rehab numbers.. houses that need extensive rehab ( most homes that are marketed for BRRR or from Wholesalers) meet that definition .. U cant pay what wholesalers want especially the ones that try to nip 10 to 20k out of a 60k deal.. thats the issue.. U need to go direct and or wholesalers have to lower thier fees or just do a lot of work for nothing as the math does not work.

Bre Norris · Answer

Short answer from the lending side: for a flip, the rate is rarely what makes or breaks the deal. You're usually holding the loan for 6 to 12 months, so a small rate change is a few hundred to maybe a couple thousand dollars on a typical project. Missing the buy, overspending on rehab, or sitting on the finished house for an extra few months costs far more.

What I'd focus on instead: buy at a price that works with today's financing, not the financing you hope for in three months. If rates do come down, that's a bonus at the exit, since your end buyer's mortgage gets cheaper. If they don't, your deal still works.

Happy to talk through numbers on a specific deal if it helps. (Bre, Apex Capital, private lender in Massachusetts)

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.

J Castro · Answer

Absolutely! The purchase price and rehab budget are the foundation of any successful BRRRR deal. Even with the right financing, if an investor overpays for the property or underestimates renovation costs, the numbers can quickly stop working.

Wholesale deals can offer great opportunities, but the assignment fee has to make sense within the overall deal structure. There needs to be enough room for the investor to cover acquisition costs, rehab, holding expenses, refinancing, and still achieve the desired return.

I believe the best approach is to evaluate the entire deal upfront rather than trying to make the numbers work after the fact. Whether sourcing directly, negotiating with wholesalers, or working with an agent, the key is buying right from day one.

Financing can help investors execute a strong strategy, but it can't fix a deal that doesn't make financial sense.

J Castro · Answer

Well said, @Bre Norris! I agree that with fix-and-flip projects, the purchase price, rehab budget, and timeline often have a much greater impact on profitability than the interest rate alone.

The key is to structure the deal conservatively from the beginning, account for holding costs, and have a realistic exit strategy rather than relying on future market conditions to make the numbers work.

At JCREIG Capital Funding, we work with real estate investors to find financing solutions that align with their project goals, whether they’re acquiring properties to renovate and resell or transitioning into long-term rentals through DSCR financing.

A well-structured deal in today’s market will always be stronger than a deal that only works if rates drop tomorrow.

Great insight!

J Castro · Answer

Excellent points! Real estate investing has changed, but the fundamentals remain the same: buy right, understand your numbers, and structure your financing around the investment strategy.

Assumable mortgages can certainly create opportunities when the existing loan terms and remaining balance align with the deal. For investors who don’t have that option, DSCR financing can be an effective alternative, allowing qualification to focus on the property's rental income rather than relying solely on personal income documentation.

We believe successful investors don't wait for the market to return to 2021. They adapt their acquisition strategies, evaluate realistic cash flow, and choose financing that supports their long-term goals.

The best deals aren't necessarily the ones with the lowest interest rates—they're the ones where the numbers work from day one.

J Castro · Answer

Great point! Many sellers are still pricing properties based on yesterday’s market rather than today’s financing costs and buyer expectations. As days on market increase, motivated sellers may become more open to price reductions, concessions, and creative deal structures.

For investors, this creates opportunities to negotiate better purchase prices, preserve cash for renovations, and structure deals with stronger potential returns. The key is to run the numbers carefully and make sure the deal works under current market conditions.

At JCREIG Capital Funding, we believe the right financing strategy can help investors take advantage of these opportunities, whether they’re acquiring properties to renovate and resell or building long-term rental portfolios.

A changing market doesn’t eliminate good deals—it rewards investors who know how to recognize and structure them.

J Castro · Answer

Well said! Successful real estate investing comes down to understanding the numbers and structuring the deal correctly—not simply waiting for interest rates to drop.

Cash flow, realistic rehab budgets, accurate ARV estimates, and a solid exit strategy are what separate a good investment from a risky one. Your Memphis strategy is a great example of why investors need to focus on the fundamentals and evaluate each deal based on its own merits.

At JCREIG Capital Funding, we believe financing should support the investment strategy. Whether an investor is acquiring and renovating a property or refinancing into a long-term rental loan through a DSCR program, having the right financing structure can make a significant difference.

The key is to make the deal work with today's numbers, not tomorrow's predictions. When the acquisition, rehab, rental income, and refinance all make sense, investors can continue building their portfolios regardless of where rates move next.

Great insights!

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?

Most Popular Reply

10 Replies