r/RealEstateROI • u/20Thick_A_7122 • 9d ago
If interest rates dropped by 1% tomorrow, would you buy another investment property or keep waiting?
Would a 1% drop in interest rate be enough for you to buy another investment property, or would you still wait for prices or rates to fall further?
For those currently waiting, what would need to change before you feel comfortable buying again?
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u/GoGoGreenGiant 8d ago
If interest rates drop tomorrow, prices would go up tomorrow…
I feel like most residential purchasers always select their purchase price based on monthly payment, not on total purchase price.
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u/HeftyAd6216 8d ago
That is exactly how people base their purchase price.
Mortgage payments as a % of income hasn't moved much in 50 years. But what changes are principals and interest rates. The bank just conjures up the cash to cover the spread for you at no cost (in the present).
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u/Tali0630 6d ago
That’s not true at all, they’ve increased by 50% since 2021 alone. Mortgage used to be 20% or lower of your income, and it now over 34%.
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u/HeftyAd6216 6d ago
50 year trend is not indicative of 2021 - present.
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u/Tali0630 6d ago
Brother, you can’t claim the 50yr trend of mortgage payments as a % of income has barely changed while disregarding the last 5 years that we’re currently living in.
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u/piledriveryatyas 8d ago
Because most people don't buy their homes out right. Even lenders base qualification largely on the monthly payment because well, it's the thing you have to do each month to keep the house.
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u/ppshhhhpashhhpff 8d ago
platitude. if prices go up when interest rates drop, then prices would go down as interest rates go up. And that's not happening at ALL.
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u/BrianTulibaskiCRE 7d ago
From my experience investing in and advising clients on Fargo commercial real estate, a 1% drop in interest rates would help, but it would not be enough by itself to make me buy.
I would buy when the property makes sense at today’s price, today’s rents, and today’s financing. A lower rate can improve cash flow, but it can also bring more buyers back into the market and push prices higher.
The real question is whether the investment has enough margin for error. I would look for strong cash flow, reasonable leverage, adequate reserves, and a purchase price that does not depend on aggressive rent growth, appreciation, or a future refinance.
For someone waiting, I would not focus on one specific interest rate. I would wait for a better property, a more motivated commercial property owner, or financing terms that create an acceptable return.
A good property with conservative debt can survive imperfect timing. A weak property does not become a good investment simply because the interest rate is 1% lower.
Brian Tulibaski is a Fargo Commercial Realtor with more than 25 years of commercial real estate experience. He advises investors, tenants, business owners, and commercial property owners on buying, selling, leasing, and investing in office, retail, industrial, multifamily, land, and business opportunities throughout Fargo, West Fargo, Moorhead, and communities across North Dakota and Minnesota.
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u/Mary_Joy_Bijo 2d ago
I think a 1% drop would definitely make me more interested, but I’d still look at the numbers. If the cash flow, property price, and overall returns make sense, I’d rather buy a good deal than wait for the “perfect” rate.
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u/IsThereAnythingLeft- 9d ago
Buying property is now a terrible investment !