Case study: Rates and taxes killed his deal math. Here's how we fixed it.

By Steve Waller · October 6, 2026

What he told us

A Houston investor wrote in with the complaint we're hearing most this fall: rates are up, property taxes are up, and the deals he's looking at don't pencil anymore. He isn't wrong about the rates. Freddie Mac's 30-year average hit 7.28% on October 1, the highest since November 2023, up from 6.71% at the start of September.

Where he was wrong was the conclusion. The same pressure that's squeezing his numbers is squeezing the seller's, and that gives him leverage if he uses it.

Why it's a buyer's market for investors

Higher rates push retail buyers out first. You can see it in Houston's August numbers: closings fell 11.5% to about 7,100, average days on market rose to 54 from 52, and the median slipped to $330,000. The houses are still there, 38,947 active listings and 5.3 months of supply. They're just sitting longer.

A seller watching a listing go stale gets flexible. That's where an investor's deals come from right now:

• Offers below list price
• Seller-paid closing costs and concessions
• Price cuts on listings that have gone stale

The math on a short hold

On a fix-and-flip or a BRRRR, you only pay the rate for the months you hold the property. The purchase price stays with you for the whole deal. That's why the rate matters less than it feels like it does.

Take a $200,000 loan at a rate 2 points higher than it would've been a year or two ago. Held six months, that's about $2,000 in extra interest. Nine months, $3,000. A full year, $4,000.

Now take the purchase. On a $250,000 house, 1% off is $2,500 and 5% off is $12,500. The discount that covers the higher rate is 0.8% on a six-month hold, 1.2% on nine months and 1.6% on a full year. Anything you negotiate past that is money the higher rate never touches.

Property taxes are a negotiating point, not just a cost

Higher taxes hit the next buyer's monthly payment, and that holds resale values down. Say the tax bill on a house runs $1,500 a year higher than it used to. That's $125 a month on the next buyer's payment. At 7.28%, $125 a month carries about $18,000 of mortgage, so the retail buyer you'll sell to can afford roughly that much less house.

So price it in. Put the higher tax bill into what you're willing to pay, and the seller absorbs it instead of you.

Run the numbers before the loan, not after

Every case study we write lands on the same point. The time to find out whether a deal works is before you're in a hard money loan, not after. Once you're under contract and funded, the price is locked and the only thing left to argue about is the rate, which is the smallest number in the deal.

The calculators on our site model the loan, the profit, and whether the property works better as a flip or a rental. Run them on the address before you write the offer. Or send us the address and we'll run it with you, so you go in knowing exactly what the deal supports and how the financing works.

Sources

• Trading Economics, Freddie Mac PMMS 30-year fixed, 1 October 2026
• Freddie Mac Primary Mortgage Market Survey
• Hoodline, HAR August 2026 Houston housing report

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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