BiggerPockets Real Estate Podcast
Episode: Don’t Bet on the Fed: What Investors Need to Do Now as Rates Rise Again
Host: Dave Meyer
Date: October 31, 2025

Episode Overview

In this episode, Dave Meyer tackles the persistent confusion and frustration among real estate investors about the relationship between Federal Reserve rate cuts and mortgage rates. Despite widespread expectations, recent Fed rate cuts have not led to lower mortgage rates—in fact, the opposite has often occurred. Meyer urges listeners to look beyond hopes for Fed intervention and instead focus on actionable strategies for investing successfully in today's higher-rate environment. He provides both big-picture perspectives and practical steps investors should take to build resilient, profitable portfolios, regardless of where rates go next.

Key Discussion Points and Insights

1. Why Fed Rate Cuts Aren’t Lowering Mortgage Rates

• Fed Cuts ≠ Lower Mortgage Rates: Dave explains that, contrary to common belief and much online speculation, Federal Reserve rate cuts impact short-term borrowing costs, not the long-term rates that determine most mortgages.
  • Quote:
    “The Fed cut rates on Wednesday and mortgage rates went up. So what gives? Hasn't every person on the Internet been saying that there will be lower mortgage rates because the Fed will cut rates? Well, I haven't.” — Dave (00:00)
• Mortgage Rates Loosely Correlated with 10-Year Treasury Yields: Mortgage rates are more tied to the yields on the 10-year US Treasury, which move based on bond investors' worries about inflation and recession.
  • Quote:
    “What really moves the bond market are fears of recession and fears of inflation … and that pushes bond yields and mortgage rates up.” — Dave (05:45)
• Current Market = Tug-of-War: Today, fears of both inflation and recession have "stalled" the bond market, leading to relatively stable but elevated mortgage rates.

Timestamp:

How Fed and mortgage rates differ explained: 02:00–07:30

2. Stop Obsessing Over Rates—Focus on What Is in Your Control

• Rates Aren't the Only Factor: Dave reminds listeners that affordability hinges on three factors: mortgage rates, home prices, and wages.
  • Quote:
    “Rates matter because they are a critical function of affordability… but rates aren't the only function of affordability. You also have home prices, and you have wages.” — Dave (11:35)
• Small But Positive Signs: Recent months have seen modest improvements in affordability—mortgage rates are down from their peak, wages are rising faster than inflation, and prices are stable or slightly down.
  • Quote:
    “Housing affordability has actually been improving just for the last couple of months … not by huge numbers, but even though mortgage rates haven't moved down in the way a lot of people wanted or were expecting, we're still seeing improvements in affordability.” — Dave (12:18)

Timestamp:

Affordability and its drivers: 11:35–15:45

3. Investing Tactics for a Higher-Rate Environment

Dave sets out a step-by-step playbook for investors to thrive even when rates stay high:

Step 1: Leverage What the Market Gives You

• Negotiate Hard: Buyers now hold more leverage. There’s more room for patience, diligent deal selection, and negotiating better terms and prices.
  • Quote:
    “Be very patient and disciplined about only buying at the right price and getting the right terms.” — Dave (16:55)

Step 2: Target Relative Affordability

• Focus on Affordable Markets/Neighborhoods: Markets or neighborhoods with better affordability for local residents are likely to be more resilient and have stronger long-term returns.
  • Quote:
    “I believe that areas that are affordable … are going to perform the best over the next couple of years. I think they are going to be more insulated against downside risk.” — Dave (18:00)

Step 3: Underwrite Using Today’s Rates

• Don’t Bet on Future Rate Cuts: Assume rates remain flat or even rise; only buy deals that work now, not on the hope of refinancing.
  • Quote:
    “Do not count on cuts. Don’t even count on a refinance unless you’re doing a BRRR … Don’t assume that rates are going to come down and that’s magically going to make your deals better. That is just wishful thinking.” — Dave (23:21)

Step 4: Underwrite Scared—Protect Against Downside Risk

• Conservative Projections: Underwrite assuming no appreciation, no rent growth, and higher vacancy.
  • Quote:
    “I'm also not assuming that rents are going to grow and I'm also assuming that vacancy is going to go up.” — Dave (24:05)
• Be Ready to Reject Many Deals: Out of 50 deals, maybe only one will meet your criteria.
  • Quote:
    “The whole goal here is to get great low risk assets during a time when fewer people are competing. You're going to be able to find great assets, but you're going to have to sift through a lot of garbage to get it.” — Dave (25:52)

Step 5: Target Upside Potential

• Look for Value-Add Opportunities: Find assets where you can add value or income (e.g., adding ADUs, capital improvements, zoning/planning opportunities).
• Consider Owner Occupancy: Take advantage of lower living costs by living in your investment.
  • Quote:
    “The way you get the big benefits from real estate is targeting those upsides. These are things like zoning, value add, owner occupancy.” — Dave (25:55)

Step 6: Use Fixed-Rate Debt

• Avoid Variable or Short-Term Risk: Dave warns that rates could be higher in 5 years; locking in a fixed-rate now could be prudent.
  • Quote:
    “I actually think there's a chance that mortgage rates will be higher in five years than they are today. I am not trying to discourage you, I am trying to prepare you for this.” — Dave (27:00)
• Beware Seller Financing with Short Terms: Many seller-financed deals involve balloon payments that could expose you to unforeseen rate hikes.
  • Quote:
    “Most seller financing deals … are not giving you a 30 year fixed rate debt.” — Dave (28:05)

Timestamps:

• Steps 1-2: 16:55–18:50
• Step 3: 23:21–24:45
• Step 4: 24:45–25:55
• Steps 5-6: 25:55–29:05

Notable Quotes and Memorable Moments

• On Market Unpredictability:
  “No matter what the Fed does, it doesn't equate to better investing conditions for us. And so what we need to do is, is look at the conditions on the ground today and figure out how to optimize for the existing market.” — Dave (07:08)
• On Market Cycles and Adaptation:
  “There is never a perfect market ever. It doesn't exist … Instead, you got to adjust to what the market is today and think critically about how you can take advantage of the conditions the market is presenting to you.” — Dave (16:35)
• Final Encouragement:
  “We’re in a higher rate environment and that’s okay … there are tons of things that are actually in your control that can positively impact your portfolio.” — Dave (30:01)
• On Mindset:
  “Don’t see high rates as your enemy … see it as just a shift and an adjustment that you need to make.” — Dave (16:48)

Actionable Takeaways for Listeners

• Accept today’s environment—stop waiting for the “perfect” market or bail-out from the Fed.
• Only buy deals that make sense using today’s facts and figures.
• Focus on affordable markets with strong demand fundamentals.
• Be extremely selective—expect to review many deals and reject most.
• Prioritize fixed-rate financing. Be wary of variable or short-term reset risk.
• Keep searching for value-add potential and ways to protect your downside.

Closing Thoughts

Dave concludes with a reminder that real opportunity exists for investors willing to adapt, remain disciplined, and focus on what’s actually within their control. He invites listeners to share lessons and strategies with the BiggerPockets community to help each other navigate the current climate.

Listen If:
You want a clear-headed, actionable take on real estate investing in today’s high-rate, uncertain market—and you’re ready to stop waiting for the Fed to save you.

Referenced Timestamps for Key Segments:

• Fed and mortgage rates disconnect: 02:00–07:30
• Affordability breakdown: 11:35–15:45
• Strategic/tactical investing steps: 16:55–29:05

Hosted by: Dave Meyer
BiggerPockets Real Estate Podcast, Episode released October 31, 2025