How creative financing maximizes returns in a high-rate environment
When conventional debt becomes expensive, the structure of a transaction can matter as much as the purchase price.
The cost of capital is part of the investment
Elevated interest rates strain cash flow, reduce prudent leverage, and make otherwise sound properties difficult to finance. We view that constraint as an underwriting fact—not a reason to force conventional debt onto every transaction.
Assumable mortgages and seller financing can preserve lower-cost capital that already exists. A property carrying debt well below prevailing rates may support stronger coverage and greater resilience than a comparable asset financed conventionally.
A transaction must work for both sides
Owners with low-rate loans may hesitate to sell because replacing that financing would materially increase their own costs. A thoughtfully structured sale can provide liquidity and flexibility to the seller while giving the buyer access to terms no longer available in the open market.
These structures can be particularly useful in estate transitions, partnership dissolutions, time-sensitive sales, and situations where a rigid conventional closing leaves value on the table.
- Assumption of qualifying existing debt
- Seller-carried notes aligned with property cash flow
- Hybrid structures combining existing and new capital
Resilience before upside
Lower debt costs can help a property absorb temporary vacancies, operating volatility, or slower rent growth. Flexible terms may also create room to stabilize an underperforming asset without relying on immediate appreciation.
Creative financing is not a substitute for disciplined underwriting. The basis, property operations, legal structure, and counterparty obligations must all stand on their own. Used selectively, however, structure can turn a difficult transaction into a durable investment.