Buy the Deal, Refi the Rate: Why Waiting Can Cost You the Best Rentals

There’s a myth floating around: “I’ll wait for rates to drop, then I’ll buy.”
Here’s the problem—when rates fall, buyers flood back, competition spikes, and prices rise. Your advantage today isn’t the rate; it’s the quality of the deal and less competition.

What higher rates secretly do for you (right now)

  • Fewer bidders → more room to negotiate price, credits, and repairs.

  • Better cap rates → sellers are realistic; underwriting actually pencils.

  • More time → you can perform real diligence instead of racing to overpay.

Then what happens when rates drop?

  • Demand jumps → multiple offers, appraisal gaps, thinner yields.

  • Prices push up → the “cheap rate” gets eaten by a more expensive purchase price.

  • Tougher terms → sellers don’t need to give credits when buyers line up.

The smart move: lock the asset, fix the financing later

  • Use DSCR to size the loan to rents vs. payment (no tax returns for DSCR).

  • Take today’s price + normalized cash flow.

  • Refi later when rates improve (we’ll model break-even and rolled-in costs where eligible).

Quick example (simple math)

  • Today: $500k property, DSCR works; you negotiate $15k off list + $5k credits (low competition).

  • If you wait: Rates drop 0.5%, but price jumps $30–$40k in a bidding war.

  • Net effect: you paid more to “save” on rate—and you can’t refi your purchase price.

Buyer playbook for this market

  1. Shop for yield, not headlines. Cap rate > crowd sentiment.

  2. Stress test DSCR +50 bps and insure/tax assumptions realistically.

  3. Use IO (when appropriate) for year 1 cash-flow cushion; plan your refi window.

  4. Negotiate credits for true expenses (roof, HVAC, insurance gaps).

  5. Stay opportunistic. Good deals appear when others hesitate.

Bottom line: Don’t wait for a crowd to validate the deal. Buy the great rental now, let the cash flow work, and refi the rate later.

Want a same-day DSCR scenario on a property you’re eyeing?
Call 718-635-2377 or email george@loanfunders.com.

Business-purpose loans only. Not a commitment to lend. Terms, rates, and guidelines subject to change and approval.