📈 The Impact of Interest Rates on Real Estate Investments
Why Interest Rates Matter in Real Estate Investing
If you're in the real estate game—whether flipping homes, building rentals, or developing ground-up—you already know: interest rates can make or break your bottom line. But understanding how rates affect your investments is where the real advantage lies.
Interest rates influence everything from your monthly cash flow to your return on investment (ROI). In today’s shifting market, savvy investors are staying ahead by adapting faster and structuring smarter.
How Interest Rates Affect Investment Strategy
1. Cash Flow for Rental Properties
Higher interest rates = higher mortgage payments. That means your cash flow (aka, monthly net income) takes a hit.
Example:
- At 6% on a $300K loan: ~$1,799/month (P&I)
- At 8%: ~$2,201/month — a $400 difference
In a DSCR (Debt-Service Coverage Ratio) loan scenario, this can affect your approval or loan terms.
MGM Capital Tip: Use our DSCR programs with flexible underwriting to maximize leverage—even in higher-rate environments.
2. Fix & Flip Holding Costs
For flippers, time is money—and so is interest. Most fix & flip loans are interest-only, and higher rates mean higher monthly holding costs.
Example:
- $250K loan at 10% = ~$2,083/month
- At 12% = $2,500/month — $417 more out of your profit
MGM Capital Tip: We help flippers minimize exposure with no prepay penalties and fast-draw processing to keep your timeline tight.
3. Exit Strategy Adjustments
Higher rates can impact resale by reducing buyer affordability. This means longer days on market, price drops, or added concessions—which affects your ARV assumptions.
MGM Capital Tip: We help run conservative numbers up front and fund based on accurate ARV comps and adaptable terms.
Should You Wait for Rates to Drop?
Waiting could cost more than the rate itself. While some investors sit tight, others are actively building long-term portfolios and acquiring wealth.
Smart investors don’t try to time the market—they learn how to structure smarter deals in any market.
How MGM Capital Helps You Win (Even at Higher Rates)
- ✔️ Programs built for investors – DSCR, Fix & Flip, Bridge, GUC
- ✔️ Creative deal structuring – ARV, LTC, flexible terms
- ✔️ Speed + Certainty – Close in as little as 48 hours post-clear title
- ✔️ Risk reduction – No appraisals or credit checks on select programs
- ✔️ Partnership mindset – We’re with you for the long game
Let’s Talk Strategy
Rates will move—but your goals don’t have to. Let’s create a custom funding plan for your next deal.
