What in the World to Think About High Interest Rates — but How to Buy Investment Properties Anyway

If you’ve been eyeing investment properties recently, your thought process may

naturally arrive at a frustration with high interest rates. What should we think

about this? Interest rates are high when central banks, like the Federal Reserve,

try to control inflation by making borrowing more expensive. This helps slow

down spending and cool off the economy. While it can be frustrating, it’s part of a

bigger effort to keep prices stable over time. It’s not something we can control

individually, so rather than stressing over it, it’s better to focus on issues we can

control.

Yes, high interest rates do impact cash flow and affordability. But smart investors

know that opportunity still exists in every market. The key is to adapt your

strategy. Here are a few ways to move forward, even when borrowing is

expensive:

Look for Motivated Sellers Open to Owner Financing. One of the most

underrated tools in high-rate environments is owner financing. This is when the

seller essentially acts as the bank. You make payments directly to them instead

of a traditional lender. Often, these deals can offer more flexible terms, lower

interest, and typically you avoid the entire qualification and underwriting

procedures. It’s a win-win: you avoid steep lender rates, and the seller gets a

steady income stream.

Negotiate Price More Aggressively. Higher rates mean fewer buyers, which

often puts pressure on sellers. Use that to your advantage. If you can negotiate a

lower purchase price, you may offset the cost of higher interest payments. There

are sellers out there right now waiting for you to give them a reality adjustment

about what their property is worth right now!

Focus on Appreciation over Short Term Cash Flow. An investor should always

buy real estate for cash flow and appreciation. Don’t get me wrong - you should

always make money on a monthly basis above your expenses. But in

high-interest environments, shift your focus a bit. Look for properties that are

being poorly managed and being rented for under market rates. Once you take

control of the property, you can move those rents up. Even if it takes a year or

two to get the rents to where they should be, you will have owned a property that

is appreciating.

Get Creative with Partnerships and Private Money. If you can’t swing a deal on

your own with these rates, partner up! Bring in an investor with capital who gets

a steady interest rate and maybe even some of the equity. Joint ventures or equity

partnerships can allow you to get into deals that might be out of reach on your

own.

Bottom Line: Don’t Freeze... Get Creative. High interest rates aren’t ideal, but

they’re not the end of the road. The best investors adjust with the market. Owner

financing, better negotiation, and creative deal structures are all tools to keep you

doing investments in markets like these.