Interest rates, deal flow, and private capital availability are all shifting in 2025. Here's what our team is seeing across 47 states and what it means for your investment strategy.
After a turbulent rate environment in 2023 and 2024, private lending is entering 2025 in a position of relative stability — though not necessarily lower rates. The Federal Reserve has signaled a patient approach to cuts, which means private lenders are still pricing short-term capital in the 9.5%–11.5% range depending on LTV, borrower experience, and market. The days of sub-8% hard money are not yet back, but spreads have compressed meaningfully as competition among private lenders intensified.
Deal flow is one of the most significant stories of 2025. Distressed inventory — the lifeblood of fix-and-flip investors — increased in most major markets through late 2024 as adjustable-rate mortgages reset and some homeowners who purchased at peak values found themselves underwater. This is creating buying opportunities for investors who have capital ready to deploy. The investors our team works with in Phoenix, Atlanta, Dallas, and Detroit are reporting some of the best deal quality they've seen since 2019.
On the DSCR side, rent growth has moderated from the pandemic-era peaks but remains positive in most Sun Belt markets. The key metric lenders are watching is the DSCR ratio itself: with mortgage rates elevated, fewer properties hit the 1.20x minimum on day-one underwriting. Investors who buy at a price that generates a 1.25x+ DSCR at acquisition are in the best position for both loan approval and long-term cash flow resilience. We're seeing savvy investors negotiate purchase prices more aggressively to hit that number.
Capital availability from private lenders is healthy. The correction in some private REIT and debt fund vehicles in 2022–2023 shook out some of the weaker players, but well-capitalized direct lenders have maintained — and in many cases grown — their loan books. This is good news for borrowers: competition among lenders is keeping rates in check and service levels high. Borrowers with experience and a track record can now negotiate rate concessions that simply weren't available two years ago.
Our recommendation for 2025: focus on deals where the numbers work at current rates, not projected rate-cut scenarios. Investors who underwrite to today's cost of capital and still find margin are the ones who will execute reliably. If a deal requires rates to drop 200 basis points to pencil, it is not the right deal. The best deals we're seeing right now are in the $150,000–$350,000 acquisition range in secondary markets, where competition from institutional buyers is limited and renovation upside is real.