Is Buying an Investment Property Worth It Right Now? Here’s Where Investors Are Getting Ahead

During the COVID-19 pandemic-era boom, it almost seemed reckless not to invest in real estate. Low mortgage rates and sustained demand for rentals and fix-and-flip properties delivered tidy returns for investors on a fast, predictable schedule.

"During the pandemic, record-low interest rates and rapid capital appreciation created a highly forgiving environment for investors,” explains Duncan Kreeger, a real estate investor and finance executive. “Leverage was cheap, price growth was consistent, and even marginal assets performed well.”

But with mortgage rates stuck above 6%, high renovation costs, and cooling rent growth, deals today are getting harder for investors to pencil out—and what used to be a sure bet is looking increasingly like a gamble.

“The fundamentals have changed,” says Kreeger. “Investors can no longer rely on rising asset values alone. Cash flow, net operating income, and the ability to manage costs now sit at the center of every sound investment decision."

Yet, savvy investors are still finding ways to come out ahead, especially in the Midwest and South, where affordability and steady demand continue to drive solid returns. But with margins thinner and borrowing costs higher, the landscape increasingly favors investors who can think long term—and outmaneuver the competition.

Where today’s opportunities are

Even in a tougher market, opportunities abound for investors who know where to look, says Kreeger. He points to single-family rentals in supply-constrainted areas as well as smaller multifamily units that can diversify income.

Recent investor activity already reflects these insights. Missouri (21.2%) led the nation in investor buyer share in 2024, followed by Oklahoma (18.7%), Kansas (18.4%), Utah (18%), and Georgia (17.3%), according to a June 2025 report from Realtor.com®. These are markets where entry prices remain accessible, rental yields are steady, and economic growth is underpinned by population inflows and expanding job bases.

Kreeger cautions investors to be wary of short-term rentals where returns can evaporate as demand or regulations shift. The focus, he says, should be on control.

“Across all categories, investors are prioritizing control over speculation. Assets where operational improvements can be made or income can be increased are receiving the most attention,” he says.

That shift toward control and cash flow has also renewed attention on growth markets positioned for long-term stability.

“Across the country, every state is trying to attract capital, talent, and innovation to fuel sustainable economic growth,” says Jeff Herman, an investment adviser who works with residential and commercial buyers. “But the truth is, it’s hard to do. I'd recommend identifying your target markets by researching those states that are successfully investing in infrastructure, education, and business climate to create the kind of ecosystem where entrepreneurs want to build.”

He points to South Carolina as one of the standouts, which has seen a boom in startup activity since 2010, according to a recent report from the International Monetary Fund.

“That data confirms what many investors and business owners in the state already sense: This is a state on the rise.”

It helps that these states are investing heavily in new construction to house the talent they’re working hard to bring in. Once again, South Carolina provides an apt example, earning top marks in the Realtor.com State-by-State Report Cards for its affordability and large share of new-construction permits.

It’s precisely the type of investment opportunity that investors should look for today, if you act early, says Herman.

“Be first in line for presales,” he advises. “Developers often need early buyers for new projects. Look for news articles about new developments, do your research, and follow the companies that will bring them to life. By being one of the first to show interest, you can secure properties at a lower price and even score upgrades that boost your property’s value. Once the project is completed, if you want to, you can sell for a profit before you ever set foot on the property.”

The new costs every investor needs to price in

To make an investment property today worth it, buyers will need to change their formulas. The math that powered pandemic-era profits is likely to solve for a bust today. Instead, concentrate less on appreciation and more on fundamentals like cash flow, net operating income, and cost control.

The goal can’t just be to grow value; it has to include staying solvent through volatility, says Kreeger.

"First-time investors frequently underestimate operational and regulatory costs,” he explains. “Many rely on outdated assumptions about rent growth or market appreciation. Others overextend themselves with leverage or overlook important local legislation that affects tenant rights, licensing, or occupancy rules.”

Such oversights can quickly turn the math against investors, especially landlords. New York provides a good example.

Over the past 10 years, the Rent Guidelines Board has allowed rent in the city’s rent-stabilized apartments to grow by 17%, falling well below cumulative inflation since then. The city has also issued a slew of new regulations for buildings, including green mandates that, while well-intentioned, have added unexpected costs (like adding green appliances to apartments) to landlords’ balance sheets. 

These headwinds have eaten into returns. But still, on the whole, landlords of rent-stabilized apartments in the city seem to be doing fairly well, with a 12.1% increase in net operating income from 2022 to 2023, according to a 2025 study. They do, however, illustrate how unexpected changes can drag down profits.

“One of the most significant errors is failing to plan for void periods or maintenance events, which can materially impact cash flow,” Duncan says.

Those miscalculations can leave investors facing carrying costs that far exceed their rental income, jeopardizing more than just one deal.

“Successful investment today requires a disciplined, informed approach. Real estate can still offer strong long-term returns, but only when treated as a professional and active investment strategy,” he adds.

Timing the buy: Act now, or wait for rate cuts?

The Federal Reserve is widely expected to cut rates by a quarter point as early as next week—so should you wait to buy?

Market timing has always been a risky game, especially in an environment this uncertain.

When rates fall, competition surges, pushing prices higher and erasing any financing advantage. Instead of trying to time a rate cut, focus on market strength, asset quality, and entry price, says Kreeger.

“Trying to time interest rate movements is speculative and, in most cases, unproductive,” he explains. “If a deal makes sense today based on conservative assumptions, it is often better to act than to wait.”

In other words, the next opportunity is less likely to come from timing the cycle perfectly, and instead from buying intelligently, with enough margin to weather any market.

How to know if a deal is worth it right now

So, how can you tell if buying an investment property is worth it?

Start with the entry price. A deal that begins below comparable sales—or involves a motivated seller—is often the clearest path to immediate equity and healthy margins.

But discounts alone aren’t enough; you'll need to run the math under pressure. Every potential investment should be modeled to see how it performs if rates rise or expenses climb. Two key metrics help investors measure whether a property’s income truly supports its debt and cash flow: the debt service coverage ratio (DSCR) and cash-on-cash return (CoC).

The debt service coverage ratio (DSCR) compares a property’s net operating income to its annual debt payments. A DSCR of 1 means the property earns just enough to cover the mortgage; 1.25 or higher is typically considered healthy, signaling the property generates 25% more income than it needs to pay its debt.

Cash-on-cash return (CoC), on the other hand, measures how much cash flow you earn relative to the cash you’ve invested. For example, if you put in $100,000 and earn $10,000 a year after expenses, your CoC is 10%. It’s a direct way to understand your annual return on the money you’ve actually put at risk, which is especially important when borrowing costs are high or appreciation is uncertain.

Take the time to understand your overhead. Insurance premiums have been one of the biggest deal breakers of the past two years, as costs rise across the country. Get quotes in hand before you close, and familiarize yourself with your local legislature: What property tax caps and proposals do they have on the books? Will they need to raise mill rates in the next few years to cover deficits?

Lastly, map your exits. Every investment should have a clear strategy, whether it's refinancing after stabilization, selling into a stronger market, or executing a 1031 exchange. Set timelines and assumptions before you buy, not after.

In today’s market, a deal is worth it only when it performs under stress.