At the beginning of the year, a lot of investors expected interest rates to come down.

Now, Bank of America is predicting three rate hikes. Deutsche Bank is also predicting higher rates.

On last week’s Not Your Average Investor Show, Pablo and I broke down what these rate headlines actually mean for investors, why positive cash flow is harder to find today, and how JWB’s new 3.99% rate can help investors stay on their buying plan.

Can your rental properties still cash flow if rates stay high… or go even higher?

Let’s dive in.

The Headlines We’re Watching

Earlier this year, the expectation was that interest rates would come down. Now, major banks are pointing in the opposite direction.

• Bank of America is predicting three Fed funds rate hikes, totaling a 0.75% increase.
• Deutsche Bank is close behind, predicting a 0.50% rate hike.

Why?

Because inflation is still a concern. The job market is still strong. Energy prices can move quickly. And when people are working, spending, and costs are rising, the Fed has fewer reasons to cut rates. 

But the Fed funds rate and your mortgage rate are not the same thing.

The Fed can raise or lower its rate, but mortgage rates are usually more closely tied to what investors can earn from similar investments, like the 10-year Treasury. If those investors are worried about inflation, they usually want a higher return. That can push mortgage rates higher.

And when mortgage rates go up, borrowing costs go up.

That affects almost everything in the economy. But for rental property investors, it hits one place especially hard: Cash flow

How This Hits Your Pocketbook

Higher interest rates do not affect every investor equally. Depending on where you are in your investing journey, this news looks very different:

1. If You Already Own Rental Properties (with Fixed-Rate Mortgages)

If you already have properties in your portfolio with fixed-rate debt, you can breathe easy. Your largest monthly expense (your mortgage payment) is completely locked in. Meanwhile, as inflation persists, your rental income will rise over time. Your cash flow is protected.

The Indirect Effect: Elevated interest rates can temporarily suppress buyer demand, slowing home price appreciation (the “coil effect“). Demand isn’t disappearing; it is simply being compressed. The longer rates stay high, the bigger the eventual rebound in home values when rates finally ease.

2. If You Are Trying to Buy or Scale Today

For those looking to buy a first property or aggressively scale a portfolio, today’s ~6.5% interest-rate environment poses a massive hurdle.

• The Cash Flow Squeeze: A property that easily generated positive cash flow at a 4% interest rate can quickly slip into negative cash flow at 6.5%.
• The Scale Killer: For passive-income investors, negative cash flow is a deal-breaker. Paying out-of-pocket every month destroys peace of mind and makes it much more difficult to scale to 5, 10, or more properties.

To bypass this, some investors resort to putting 30% to 40% down (which dilutes their leverage) or buying in low-income neighborhoods. But through our 20 years of experience, we’ve seen that low-income properties often have hidden maintenance, vacancy, and tenant turnover costs that quickly eat up any “on-paper” spreadsheet cash flow.

So, how do you continue to build a high-performing portfolio without sacrificing cash flow or safety?

Our 3.99% Rate Solution

To keep you moving toward your retirement goals, regardless of what the Fed does, we leveraged our long-term lending relationships and collective scale to secure a game-changing financing solution.

The Solution: We secured a 3.99% interest rate, fixed for the first seven years (a 7/6 ARM), for a limited number of JWB clients.

This 7-year fixed window perfectly aligns with our “property baby” strategy, giving you ample time to build equity, grow rents, and eventually harvest that equity to reinvest. There is no prepayment penalty, and you have complete flexibility.

👉 JWB’s 3.99% Interest Rate Flipped the Cash Flow

Case Study: Standard 6.5% Rate vs. Our 3.99% Rate

Look at how this rate completely flips the math on an actual, brand-new construction property in Jacksonville, FL:

By lowering the barrier to entry, this rate turns a monthly liability into an immediate income-generating asset, allowing you to stay on your buying plan and confidently purchase your next property.

NOT YOUR AVERAGE INSIGHT: Build for the Real Market, Not the Perfect One

👉 How Vertical Integration Helps Investors Handle High Rates

If your investment strategy only works when interest rates are low, you don’t have a bulletproof strategy.

Don’t try to time the market, nor let the daily news cycle freeze you into inaction. Instead, focus on what you can control: building a portfolio with a team that works backward from the desired outcome.

Our vertically integrated model was built to withstand volatile economic cycles. By controlling the construction, management, and financing relationships, we can manufacture positive cash flow and strong returns even when the external market is tough.

Stop waiting for the “perfect” interest rate environment. Take control of your financial future, utilize the tools built to protect your cash flow, and keep moving forward.

Just remember… Don’t Be Average.
Gregg Cohen
Co-Founder, JWB Real Estate Capital