Real Estate Investment Properties vs. High Borrowing Costs: How to Screen LA Deals for Cash Flow

Diana L. Marquez, Real Estate Agent, in a professional headshot portrait

By Diana L. Marquez, Real Estate Agent | CA DRE #01418705 | eXp Realty of Southern California, Inc., DRE #02187306

Supporting article | October 19–26, 2026 | Draft for review

High borrowing costs have not taken real estate investment properties in Los Angeles off the table. They have changed what deserves a closer look. When financing is expensive, an appealing listing or a hopeful rent estimate is not enough. The numbers need to make sense before you fall in love with the property.

As of October 15, Freddie Mac reported a 30-year fixed mortgage rate of 7.40%, unchanged from the prior week and up from 6.27% a year earlier. The October 19 market brief also noted daily lender averages around 7.45%, a 15-year rate of 6.71%, and jumbo rates near 7.59%. These are broad benchmarks, not a quote for an investment loan; your actual terms depend on your lender, property, and financial profile. (Freddie Mac)

The Federal Reserve raised its target range to 3.75%–4.00% in September and was scheduled to meet October 27–28. Rather than try to predict its next move, I’d screen a property using the financing terms available now. If the deal only works after a lower rate, it does not work on today’s numbers.

1. Start With Rent

I begin with a realistic estimate of what the specific unit could rent for, not the listing photo, a seller’s projection, or the highest number I can find online. I compare similar rentals by unit type, size, condition, location, and included features, then ask whether they are genuinely comparable.

A broad neighborhood average can be misleading. A remodeled unit and one that needs work may attract different renters and command different rents, even if they are close to each other. I want a rent estimate that feels supportable, not merely encouraging.

This first step matters because every calculation that follows depends on income. If the rent estimate is too optimistic, the monthly cash-flow picture will be too.

Simple desk setup with calculator and laptop displaying a generic property analysis spreadsheet

2. Count the Full Monthly Cost

Next, I build the expense side of the picture. That means more than the mortgage payment. I include:

  • Principal and interest, using the lender’s current terms
  • Property taxes and insurance
  • HOA dues, if applicable
  • A reserve for maintenance and repairs
  • A vacancy allowance for periods without rent
  • Property management or owner-paid utilities, where relevant

A condo can look affordable until its HOA dues are included. Those costs can change the monthly result substantially, so I check them early rather than treating them as a footnote. I also avoid assuming that a property will have no repairs or vacancy simply because it looks well kept today.

For an initial screen, I’d rather include sensible reserves and discover that a deal is stronger than expected than leave costs out and be surprised later.

3. Test the Honest Yield

Once I have a realistic rent estimate and a complete monthly cost picture, I can see whether income is likely to cover expenses. If it does not, the property may still appeal to an investor for other reasons, such as a long-term plan or potential appreciation. But that would be a bet on future value, not positive monthly cash flow.

That distinction should be clear before making an offer. Negative cash flow is not automatically a reason to reject a property, but it should be a conscious decision based on your goals and ability to carry the costs. At today’s borrowing rates, I would not want that decision to happen by accident because a payment, HOA charge, or vacancy period was left out of the screen.

This is general education, not a promise of rental income or investment performance. A lender, CPA, and attorney can help you assess the financing, tax, and legal details that apply to your situation.

4. Stress-Test the Rate

I also ask what happens if the financing costs more than expected. Could the property still fit your plan if the rate at purchase were one percentage point higher? Would the monthly obligation remain manageable if a repair arrived during a vacancy?

Then I consider refinancing carefully. A future refinance might improve the payment if rates and your circumstances allow it, but it is never guaranteed. Rates may not move as hoped, and eligibility depends on lender requirements and the property’s situation at that time. I would treat refinancing as a possibility, not the part of the plan that rescues a deal that does not work today.

5. Think About Time and the Exit

An investment property is not always easy to sell on a preferred schedule. In the September snapshot, Los Angeles homes were taking about 60 days to sell citywide, and condos were moving more slowly still. That market context does not predict how long any particular property will take to sell; it is a reminder that an exit can take months, not weeks. (Realtor.com Los Angeles market trends)

I’d buy with a hold period in mind and consider whether I could carry the property if the market became slower than expected. Asking prices have softened, while closed prices are up slightly year over year, so it is especially important to distinguish what sellers are asking from what completed sales show. I would not build a plan around a quick resale or a guaranteed price increase.

Los Angeles condominium community with landscaped courtyard and balconies

6. Notice Where Larger Buyers Are Selective

Recent commercial transactions offer a small window into institutional activity. EDENS acquired The Summit at Calabasas, a retail center, while Overton Moore Properties and Bridge Logistics Properties bought industrial assets in La Mirada and Santa Fe Springs. (EDENS; CBRE; Bridge Logistics Properties transaction coverage)

Those purchases suggest that large buyers are still active in selected retail and industrial opportunities. They are not evidence that a small residential investor should copy those transactions. Different property types, financing, tenants, and investment goals call for different analysis.

7. Make Passing a Valid Outcome

The MBA reported that mortgage applications fell 2.7% in the week ending October 9, and its survey put the 30-year mortgage rate at its highest level since November 2023. (MBA weekly survey) In a market where financing can weigh heavily on monthly returns, careful screening is not pessimism. It is part of making an informed decision.

Sometimes the disciplined move is to pass. Maybe the realistic rent does not support the cost, the HOA dues change the calculation, or the deal depends too much on a future refinance. You do not have to force a purchase to prove that you are serious about investing. Passing can be the right result of good screening.

My approach is to help investors review the assumptions, ask practical questions, and understand the trade-offs in plain language. You remain involved in the decisions, and there is room to pause when the numbers need a closer look.

Here to Help

If you are comparing real estate investment properties in Los Angeles, I can help you think through the property, the market, and the questions to bring to your lender and other professional advisors. You can also explore Los Angeles-area property information or connect with me when you are ready.

This article is for general educational purposes only. It is not tax, legal, or lending advice. Confirm property-specific figures and decisions with your lender, CPA, or attorney.

Diana L. Marquez | CA DRE #01418705 | eXp Realty of Southern California, Inc. — DRE #02187306