Let’s dive into real estate investment strategies within a higher interest rate environment. Many investors are navigating today’s market using traditional approaches that were more effective two or three years ago. Here are some pointers on how to adapt your investment strategy.
Tip # 1 Borrow Less, More Down:
The first tip to consider is to reduce your borrowing by increasing your down payment. While it may seem straightforward, borrowing money in today’s market is more expensive compared to a few years ago. Buyers should think about putting more cash down to make some of these deals work. It’s important to remember that any property can cash flow with enough of a down payment but does it make sense to put a substantial amount of money down on a property? Perhaps not. It could lower leverage and lower your potential return, but some deals where they worked at a 15% down payment might need 20% or 25% for a down payment to make that deal work today.
Tip #2 Focus on Value-Add Opportunities:
Focusing on adding value to properties is when you improve the value of the property through renovation. To add value, you have to make sure you get the appraisal and the market value up on the property. This is a great way to gain equity on the property and reduce that net that you need to borrow.
Tip #3 Focus on Markets with Stable and Proven Demand:
Within the different areas and markets of Greenville, SC our recommendation is to focus on A/B class properties in areas with established demand, rather than attempting to be the first investor in an up-and-coming area or speculating on future growth. Remember high rates tend to cool appreciation so stick to the places with high demand.
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