IS NOW A GOOD TIME TO BUY??

Why Interest Rates and Inflation Make This a Pivotal Time to Buy Real Estate.

With inflation driving up costs across the board and interest rates sitting at levels we haven’t seen in years, many potential buyers are questioning whether it’s a good time to invest in real estate. The reality is that while the market dynamics have certainly changed, this could be a pivotal time to buy real estate if you approach it with the right mindset: “Buy the real estate, date the interest rate.” Focus on securing valuable assets now and remain flexible with financing strategies later. Here’s why this approach could set you up for success in the current market.

Rising Interest Rates: Why They’re Not a Dealbreaker
Interest Rates Aren't Permanent:

While today’s mortgage rates are higher than they were a few years ago, it’s important to remember that rates can change over time. When people say “date the rate,” they mean you can refinance your mortgage when interest rates come back down. By securing a property now, you lock in ownership of a valuable asset, and if rates drop in the future, refinancing can help reduce your monthly payments.
Waiting for rates to drop before purchasing could mean missing out on the opportunity to buy at today’s property prices, which might continue to rise due to inflation and low inventory levels in many markets.
Inflation and Real Estate: A Strong Hedge:

Real estate is widely considered a hedge against inflation. As prices rise across the economy, the value of tangible assets like property tends to increase as well. Rental income often keeps pace with inflation, which can protect investors’ purchasing power over the long term.
By buying now, you can benefit from appreciation over time as inflation pushes property values up. Meanwhile, rental income can increase, helping to cover mortgage payments, taxes, and maintenance even as other costs rise.
Underwrite for Cash Flow: The Key to Success
Focus on Cash Flow, Not Just Appreciation:

In this higher-rate environment, it’s crucial to underwrite for cash flow. This means that when you’re evaluating a potential investment property, you should focus on whether the rental income will cover your monthly expenses, including mortgage payments, taxes, insurance, and maintenance.
Cash flow-positive properties generate income that can help you weather market fluctuations. Even if property values dip in the short term, having positive cash flow means your investment remains sustainable while you wait for the market to recover.
Investing for the Long Term:

Real estate has always been a long-term game, and this is even more true today. Instead of aiming for a quick flip, focus on properties that will serve as income-generating assets over the next 5, 10, or even 20 years. Over this time, the combination of amortization (paying down the mortgage) and appreciation can significantly build your wealth.
As time passes, you gain more control over your financial future. If rates drop, you can refinance. If rents increase, you can improve your cash flow. By investing for the long haul, you give yourself the flexibility to adapt to changing conditions without relying on short-term gains.
Why It’s a Pivotal Time to Buy: Key Takeaways
Limited Inventory Keeps Prices Stable:

Even with rising interest rates, many markets still have limited inventory. This lack of supply has kept home prices stable or even rising in many areas. If you wait too long, you could find yourself paying higher prices down the line as competition remains high for quality properties.
By purchasing now, you lock in your investment in a market where prices are likely to continue appreciating due to demand and inflationary pressures.
Rents Are Increasing:

With inflation impacting the rental market, rents have been rising in many regions, creating opportunities for investors to secure properties with strong rental income potential. Higher rental rates can help offset the increased cost of borrowing and ensure that your investment remains cash flow-positive.
This can be especially advantageous if you’re buying multifamily properties or short-term rental properties (like Airbnbs), where demand remains high. Being strategic about location and rental demand can help you maximize your returns even in a tighter financial environment.
Leverage Still Works—Just More Carefully:

Real estate investment has always been about leveraging other people’s money (the bank’s) to buy appreciating assets. With higher rates, the leverage is more expensive, but that doesn’t mean it’s no longer effective. It just means you need to be more precise with your numbers and strategic about where and what you buy.
The key is to analyze deals conservatively—assuming higher interest rates and slightly lower appreciation. If the deal still makes sense under these conservative assumptions, you’ve found a solid investment. And if rates drop or the property appreciates faster than expected, that’s a bonus.
Conclusion: Make Your Move with the Right Strategy
So, is now a good time to buy real estate? The answer is a resounding yes, if you’re willing to adjust your strategy to the current market conditions. Rising interest rates and inflation mean that you should focus on buying for the long term, ensuring cash flow, and keeping an eye out for opportunities to refinance down the road. By adopting the mindset of “buy the real estate, date the rate,” you can position yourself to build wealth even in a challenging market.

Don’t wait for the perfect time or the perfect conditions—they may never arrive. Instead, focus on finding properties that make financial sense, that will grow in value over time, and that align with your long-term financial goals. With this approach, you can turn today’s challenges into tomorrow’s opportunities.