Stop Waiting for Lower Interest Rates

By Mark Hanna, CCIM

There are investors sitting on the sidelines, waiting for interest rates to drop before making their move. However, history has shown that those who wait often miss out on valuable opportunities. The market rewards action, not hesitation, and the reality is that deals are happening every day, regardless of where interest rates stand.
Here’s why waiting could cost you more and how to approach real estate investing with confidence:

1. Don’t Let Interest Rates Hold You Back

The truth is, waiting for rates to drop is a gamble. Rates could decrease—or they might not. Meanwhile, property prices and rents tend to rise over time, meaning the longer you wait, the higher the cost of entry.
Example: A property purchased today might appreciate by 5–10% in the next year, outpacing any savings from a lower interest rate.
Key Insight: Time in the market matters more than timing the market.

2. Focus on Cash Flow

Rather than obsessing over interest rates, prioritize finding a property that generates positive cash flow under current conditions.
Analyze the property’s income potential and expenses to ensure it produces a healthy return.
Cash-flowing properties create immediate value and provide a buffer against market fluctuations.

3. Leverage Refinancing Opportunities

One of the most powerful tools for real estate investors is refinancing.
Current Strategy: Buy a property with today’s rates and lock in terms you can afford.
Future Advantage: If rates drop, refinance to reduce your costs and boost profitability.
Refinancing gives you flexibility and allows you to adjust to changing market conditions.

4. Adjustable-Rate Mortgages Are Back in Play
Adjustable-rate mortgages (ARMs) with ceilings and floors are becoming a popular option for commercial investors.
What It Means: ARMs typically start with a lower interest rate, which can adjust over time. Caps on the rate provide protection against excessive increases.
Why It Works: Investors are betting on rates dropping in the future while benefiting from manageable terms today.

5. Deals Will Always Happen

Markets adjust to interest rate changes, but deals never stop.
Sellers adapt their expectations, and buyers find creative ways to finance properties.
Commercial real estate, in particular, thrives in every rate environment because of its intrinsic value and income potential.

Key Takeaway
Waiting for rates to drop is a risky strategy. Instead, focus on identifying strong opportunities that make sense now. By investing in cash-flowing properties, utilizing creative financing options, and preparing to refinance when rates fall, you can build wealth regardless of market conditions.
Conclusion: The Best Time to Invest Is Always Yesterday
Successful investors don’t wait for perfect conditions—they create opportunities in the present. If you’re holding off because of interest rates, you’re likely missing out on long-term gains.