Mortgage rates are now over 6.5%, the highest level since the Iran war began. For anyone who planned to make 2026 the year they started or accelerated their real estate investing career, that’s some sobering news. However, people are still investing and doing deals now, which will pay off in the future.
Understanding the Rate Environment
It might not be much consolation to state that today’s high rates were largely self-inflicted. Inflation tied to geopolitical concerns has pushed Treasury yields to multiyear highs. It’s a significant reversal from February 2026, when rates briefly dipped below 6% for the first time in over three years, so if the Iran war ends, we could be back there again quickly. So there’s that to hope for.
Six Action Items to Keep Your Real Estate Career Going
So how do you keep your real estate investing career moving forward when your first inclination is to do anything except spend money on a house? A combination of creativity and hard work will get you there, adapting your strategy to match today’s market realities rather than waiting for conditions to improve.
Here are six strategies to consider.
1. Roll up your sleeves with a DIY renovation
Though it’s been much maligned of late, the BRRRR strategy—buy, rehab, rent, refinance, repeat—remains an effective wealth-building tool in 2026. However, it has to be modified for it to work with today’s high rates. That means streamlining it and taking out any extra costs.
Difficult conditions have been the case for a while now. “Home flipping activity and profitability continued to decline in Q3 2025 with typical return on investment dropping to 23.1%, the lowest since 2008,” said Rob Barber, CEO of ATTOM, a provider of real estate data, in the company’s Q3 2025 U.S. Home Flipping Report.
“Rising home prices and shrinking margins have made flipping increasingly challenging,” Barber added. “What was once a flipping market that consistently delivered 40% to 60% returns for more than a decade beginning in 2009 has now settled into five straight quarters of returns in the 20% range.”
The most obvious area for cost-cutting is with the “rehab” part of the BRRRR equation. By handling renovations yourself—painting, flooring, and basic repairs—you can significantly reduce the capital tied up in a deal. Granted, you might not complete the BRRRR in the same time frame you had a professional crew tackling it, but with construction costs on the rise and contractors in high demand, a few extra days of sweat equity could pay big dividends. Those free Home Depot courses and YouTube videos can come in handy.
Also, choosing less expensive cities to concentrate your BRRRRs in will minimize the risk. “[One-percent] investors are not simply looking at big cities; they have been moving to cheaper, smaller, and faster-growing cities in the Southeast and Midwestern areas of the United States, where the price-to-rent ratios are more favorable,” Ben Mizes, a licensed real estate agent and cofounder of Clever Offers, told Yahoo! Finance.
The key to an affordable BRRRR is not to over-renovate. Cosmetic improvements valued by renters—kitchen upgrades, fresh paint, and modern fixtures—are key, but keep your renovation budget around 10% of your property’s value, with an added buffer for extra costs.
2. Find cheaper money
If you are doing BRRRRs with traditional hard money financing, the added points and payments can add up, especially if there are unforeseen delays. Instead of establishing a less expensive relationship with a private lender, consider offering them security such as a pre-signed deed in lieu of foreclosure (but check with an attorney and your state laws) should you not perform. Or use a construction loan that converts to permanent financing, often referred to as a fix-to-rent loan, which avoids the cost of two closings.
When it comes to the rental part of the BRRRR, if your property is in a desirable area, consider boosting rents with short-term rentals and mid-term rentals—see more on this below.
3. Explore subject-to financing arrangements
Another strategy that has gotten something of a bad rap of late is subject-to financing. Purchasing a property subject to an existing mortgage, taking over the payments, and adding your name to the title might trigger the due-on-sale clause, giving lenders the right to call the loan if ownership transfers (though this is seldom enforced).
The current market broadly favors deals that maintain existing interest rates. Seeking legal advice as to how to navigate that in your state is a prudent move.
4. Liquidate non-real estate assets to make all-cash purchases
Amid the high interest rate environment, the premium on all-cash deals is at an all-time high and could result in significant savings on the purchase price. Whether your lump sum of cash comes from the sale of a home, liquidating stocks, selling jewelry, or simply working hard and saving, cash is always king, and its majestic power is at its peak.
5. Maximize cash flow through short-term and mid-term rentals
Granted, the World Cup only happens every four years, and it comes to the U.S. only once every few decades, but the lessons learned by landlords making a fortune by renting their properties to the visiting international hordes this summer are ones many other investors can apply to their own situations.
Owning rentals in highly coveted areas, such as tourist destinations, college towns, near sports stadiums, or big cities, can make the high maintenance and additional costs worthwhile.
6. Target break-even properties in Midwest markets for long-term holds
While coastal markets struggle with affordability, Midwest cities offer compelling opportunities for buy-and-hold investors willing to play the long game. Cities such as Birmingham, Cleveland, Indianapolis, and Kansas City feature property prices between $80,000 and $300,000, with rent-to-price ratios that deliver cash flow or break-even scenarios from day one.
Even if a deal is only breaking even, building equity through principal paydown and offsetting taxable income is a good reason to keep some of these homes for the long term, making it easier to achieve your financial well-being when taking a more holistic view.
Mizes explained in a MarketWatch article that “In secondary cities [smaller or mid-sized markets outside major coastal hubs] and suburban Midwest and Southeast, especially in St. Louis, the deals are incredible. There’s more inventory, less competition, and the prices are more reasonable than the coastal metros.”
Final Thoughts
The 2026 housing market is a gift and a curse. Compared to the frothy post-pandemic 3% mortgage-rate market with bidding wars and continually escalating prices, the current market is a gift of calm and sanity—but it’s a curse because it’s tough to make deals work when borrowing at current interest rates.
Long-term thinking, creativity, and focusing on the fundamentals—looking at more houses, meticulous screening, low-cost renovations, and having cash on the sidelines to offset unforeseen expenses, which always occur—could allow you to continue investing and put you in a great position to refinance when those pesky interest rates finally drop.
