Real estate investor says interest rates are ‘most likely at the top’ and doesn’t think it’s a bad time to buy: If you can make a deal work in today’s environment, it could be ‘really lucrative when rates come back down’

Our investing experts respond to readers’ questions and write unbiased product reviews (here’s how we evaluate investing products). Paid non-client promotion: We may receive a commission from our partners in some cases. Our thoughts are always our own.

• Volnay Capital founder Ricky Beliveau believes mortgage rates are “most likely at their peak.”
• He expects rates to fall in 2024, but that doesn’t mean investors should wait until then.
• If you can find a deal that makes sense now, “it’s probably going to look a lot better in 2026.”

As of October 2023, average mortgage rates were slightly higher than 7%.

Rates have remained in the 6%-to-7% range throughout 2023, which is about four percentage points higher than when they bottomed out in 2021 and the highest level since 2002.

Higher rates imply higher mortgage payments for first-time buyers, making home ownership more difficult and expensive.

It’s a difficult market to enter as an investor or a homebuyer, but one seasoned investor believes the market will shift favorably for buyers in the next year or two.

“Interest rates are most likely at or very close to the top right now,” Volany Capital founder Ricky Beliveau, who owns hundreds of Boston condos, told Insider. “And inflation is now stable. The economy is still strong, and I believe interest rates will begin to fall in 2024 and 2025.”

That doesn’t mean you have to wait until then to buy a home, he adds: “There are still opportunities out there.”

He urges investors to continue to look at deals and run the numbers. He stressed the importance of being realistic with your numbers, saying, “I can make any deal look good in Excel without using the proper inputs.” You must be truthful about the rate, rents, and renovation costs. Make sure you’re taking a step back and asking yourself, ‘Okay, are these inputs legitimate?'”

Beliveau also admitted that it is currently “very difficult to make deals pencil out.” However, if you can find something that yields a decent return in the current environment, you’ve most likely found an excellent deal that will yield even better returns in the coming years.

“If a property you’re buying makes sense with today’s interest rates, it’s going to be really lucrative when rates come back down,” he added. “And they don’t have to drop a lot.” If interest rates fall by a point or two, it will have a significant impact on the value of the property as well as your cash flow when you refinance.”

Your interest rate, as he pointed out, is not permanent. You can always refinance your loan.

As a result, he advises investors to concentrate on what they can control — the property itself — rather than factors beyond their control.

Consider this: “You marry the property.” “You date the rate,” Beliveau explained, quoting a lender in the Boston area. “Yes, interest rates are currently high. But when they do come down, and I believe everyone can agree we’re almost there, you’ll be able to refinance that asset and it will be more profitable.”

With the right mindset, investors can view the current downturn as an opportunity to take advantage of lower competition and land a deal at a time when many people are hesitant to buy.

When interest rates were extremely low, “a lot of people who bought buildings overpaid,” Beliveau explained. “And now, if their rates are going to reset in a year — if they were at three or four and are now going to jump to seven — that property may no longer cash flow.” So we’re flipping the script: if a property works now, it’ll probably look a lot better in 2026.”