Why "I'll Just Wait for Rates to Drop" Is Riskier Than It Sounds

I hear some version of this every week. An owner — someone who has built real equity over many years — tells me they've thought about selling, but they're going to wait until rates come down first. It's a reasonable-sounding plan. Lower rates mean more buyers can afford to pay more, which means higher values. Simple math.

Except it's not quite that simple. And the longer I've been in this business, the more I've seen well-intentioned patience quietly cost people money. Here's how I actually think about it.

Waiting for rates to drop assumes the market is frozen while you wait — it isn't

Think of it like a boat that's slowly taking on water while you stand on deck looking at the horizon for a rescue ship. The ship might be coming. But the waterline is still rising.

Here's what's happening in the background right now: operating expenses are up — insurance, property taxes, and maintenance costs have all climbed meaningfully over the last two years. That pressure has compressed net operating income on properties across the board, and NOI is what drives value in this asset class. If your income is being quietly squeezed while you wait, your value isn't standing still. It may be drifting in a direction you don't want.

In Greater Cincinnati specifically, multifamily vacancy hit 8.1% in Q4 of 2025 — the highest level the market has seen since 2005. That's not a catastrophe, but it's a headwind that didn't exist a few years ago. More vacancy means more pressure on effective rents, and more pressure on effective rents means more compression on what your property is actually worth today.

Rates dropping doesn't automatically mean your value goes up

This is the part that surprises people most. Cap rates and interest rates are related — but they don't move in perfect lockstep. Between 2023 and 2025, we saw interest rates stabilize and then start to ease, yet multifamily cap rates still expanded across the board. Nationally, cap rates increased another 9 basis points through 2025 even as borrowing costs came down.

Why? Because value is also a function of what the income stream actually looks like. If NOI is softer, buyers adjust their offers accordingly — regardless of what the Fed does. So the scenario where rates drop and values immediately surge is possible. But it isn't guaranteed, and it isn't the only scenario worth thinking through.

When rates drop, you won't be the only one who notices

Here's the part of this conversation I want people to really sit with. When borrowing costs fall meaningfully, two things happen at once: more buyers re-enter the market, and more sellers who've been waiting decide it's finally time to act. You get more competition on both sides of the transaction simultaneously.

The buyers who were sidelined come back. But so does the seller across town who owns a similar property and has been having the same conversation I'm having with you right now. The window where you have motivated, qualified buyers without a lot of competing inventory — that window doesn't necessarily get bigger when rates drop. It might get smaller.

There's a third option most owners never consider: build your own bridge

Here's where I think the conversation gets interesting. If the core problem is that today's interest rates make it harder for buyers to underwrite a deal at a price you'd accept — why wait for the Fed to solve that for you? Seller financing lets you solve it yourself, right now.

The basic idea: instead of requiring the buyer to go get a bank loan at current market rates, you carry all or part of the financing directly. You become the lender. The buyer gets a more favorable rate than the market is offering, which lets them pay you a better price than they otherwise could. You get the sale, the income stream from the note, and often a meaningful yield on capital that would otherwise be sitting idle. I break this strategy down in full here →

Done right, it can feel less like a compromise and more like a chess move. A seller who carries a note at, say, 5.5% on a 3-to-5 year balloon has essentially captured the upside of a rate environment that works — while still closing today. When the balloon comes due, the buyer refinances at whatever rate exists then. If rates have dropped like everyone expects, they refi smoothly. If they haven't, the seller has options too.

It's not the right structure for every deal or every seller. If you need all your equity liquid at closing, it doesn't work. But for an owner who has low basis, isn't in a rush to deploy the capital elsewhere, and wants to close at a strong price without waiting for the market to do them a favor — it's worth understanding.

What I'd actually recommend — and what I tell every owner I work with

I'm not here to tell you to sell right now. That's not the point of this. The point is that waiting should be an active, informed decision — not a passive one. You should be able to say: "I've looked at what my property is worth today, I understand the direction my NOI is trending, and I've made a deliberate choice to hold." That's a completely valid conclusion.

But if your plan is to wait because selling feels uncertain and rates feel like the missing ingredient, I'd encourage you to at least put a number on what you actually own right now. You might be surprised — in either direction — and either way, you'll make a better decision with the information than without it.

This article is for general educational purposes and is not tax, legal, or investment advice. Please consult your CPA and attorney regarding your specific situation.