57% of SFR Investors Expect Mortgage Rates Above 6.5%—What It Means for Your Strategy

The Q2 2025 LendingOne–ResiClub survey reveals that a majority of single-family rental (SFR) investors—57%—expect mortgage rates to stay above 6.5% in the next 12 months. This belief is shaping investment strategies across the board.

Key Takeaways

• 57% of SFR investors expect rates to stay above 6.5% in the next year.
• Only 23% believe rates will drop below 6%.
• Higher rate expectations are driving focus on cash flow and returns.
• Adjustable-rate mortgages (ARMs) and DSCR loans are gaining popularity.
• Investors are prioritizing markets with rent growth that offsets rising debt costs.

Investment Properties: Browse Turnkey Rental Properties For Sale in Our Online Portal

Survey Snapshot: Rate Expectations

🔗 Source: LendingOne–ResiClub Q2 2025 Survey

Related: The 7 Best U.S. Real Estate Markets to Buy Rental Properties in 2025

Why Rates Matter for Investors

High mortgage rates increase holding costs, which can squeeze yields—especially when financing is used. Yet investors continue to buy, signalling strategic shifts:

• Focus on cash flow: Properties now need stronger rent-to-mortgage ratios.
• Market selection: Investors are targeting metros with rent growth above 5% annually.
• Finance types: Adjustable Rate Mortgages and DSCR loans are gaining traction.

Related: U.S. Mortgage Rate Forecast and Expert Predictions 2025, 2026, 2027, 2028, 2029

Expert Insight: Changing Strategies

“With sustained higher rates, investors are smartly betting on cash flow and creative financing,” says Matthew Neisser, CEO of LendingOne. 🔗 Source

He points out that DSCR loans, which don’t rely on traditional income verification, are ideal in high-rate environments. ARMs offer rates 0.5–1% lower than fixed during the initial term.

“We’re negotiating seller concessions for mortgage rate buydowns on almost all of our client acquisitions right now. Sellers are motivated, and the improved cashflow helps us to meet sleer price expectations.“ said David Garner, General Manager of Cashflow Rentals 🔗 Source

Using strategies like mortgage rate buydowns allows investors to fix in a lower rate for the term of the mortgage, often saving many multiples of the upfront cost over the term of the loan.

Detailed Analysis: The Impact of Rate Expectations

1. Cash Flow First—Yield Over Appreciation

Investors are shifting from appreciation bets to cash-rich deals. At a 6.75% interest rate, a $250,000 loan carries ~ $1,700/month P&I. To maintain 8% cap rate on $200K property (~$1,333/mo net income), investors must:

• Push for rents above $2,500/month or
• Negotiate better financing terms or
• Buy deeper discounts or properties with value-add potential.

2. Financing Moves: ARMs & DSCR

ARMs: 5/1 or 7/1 arms can start ~0.75% below fixed. Good for short-hold investors planning refinance after rate cuts.

DSCR Loans: Rely on rental income, not personal earnings. They’re easier for 1031 exchange investors or foreign buyers. Read more: DSCR Loans: Everything you Need to Know

3. Targeted Market Strategy

With higher rates, market selection is critical. Investors are focusing on metros with:

• Population growth >1% per year
• Rising rents at or above 5% annually
• Moderate home prices ($200K–$300K range)

Where inventory is low but demand remains steady, investors command better pricing power.

4. Refinancing & Refinance Risk

Many investors will be locked into current rates for 5+ years before a refinance window. But when rates fall, those with ARMs or balloon loans could refinance cheaper—freeing up capital or enhancing returns.

Related: Why Only 32% of Real Estate Investors Plan to Sell Soon

What This Means for Your Investment Plan

• Stress test your models using current 6.5–7% rates.
• Seek creative financing like ARM, DSCR, or interest-only to improve cash flow.
• Analyze rent growth projections—rent increases are your hedge against high rates.
• Have an exit timeline with refinance in mind when the rate cycle turns.
• Shop diligently—use leverage in markets where inventory opens up.

Related: Why 8 Out Of 10 of Real Estate Investors Are Buying Now

Broader Market Context

While traditional buyers struggle at high borrowing costs, investor demand continues. That demand, when informed by rent growth and cash flow strategy, keeps markets healthy.” Investors with a long view are finding opportunity where short-term buyers can’t compete.

Related: Will Lower Mortgage Rates Spark a Housing Market Recovery?