"What Every Busy Professional Needs to Know About Interest Rates, Cap Rates & Positive Leverage in Multifamily"
Dear Friends,
You might ask WHY THIS TOPIC? We’re seeing increased confusion (and opportunity) as interest rates remain elevated while cap rates lag. Many passive investors don’t realize that understanding this one dynamic — positive leverage — can make or break their real estate returns. This newsletter breaks it down in plain language, tailored to high income professionals who want to put their capital to work without leaving their day jobs.
Last week, one of my IT friends called me after reading a news headline:
"Mortgage rates are up again. Is it still worth investing in multifamily real estate?"
I told him: “That depends… are you investing with positive leverage or not?”
He paused. “What’s positive leverage?”
If you’re reading this and asking the same thing — you’re not alone. And I promise, after today, you’ll not only understand it… you’ll know how to profit from it.
📊 What Is Positive Leverage?
Positive leverage happens when your cap rate exceeds your interest rate.
Example:
Cap Rate on Property: 6.0%
Loan Interest Rate: 5.25%
Result: You’re making more on your investment than you're paying to borrow the money. That difference boosts your equity returns.
🧠 Why This Matters in 2025
Right now, interest rates are still hovering around 5.5%–6.5%, depending on the asset class and lender. But in select secondary markets (like Bowling Green, KY or Manchester, TN), we’re seeing cap rates of 6%–7% on stabilized properties.
That means positive leverage is still alive and well — if you know where to look.
📈 Pro Tip: These markets often fly under the radar of institutional investors, leaving room for well-capitalized professionals like you and me to buy great assets with solid upside.
🔁 Why Negative Leverage Kills Returns
Here’s the opposite scenario:
Cap Rate: 4.5%
Interest Rate: 6.0%
You're paying more in financing than you’re making on the asset.
Every dollar borrowed drags your returns down.
And guess what? This is where most institutional buyers are stuck — overpaying for Class A assets in big cities with low yields.
That’s not the game we’re playing.
🏙️ Where We’re Finding Positive Leverage Deals
At Level 7 Investors, we’re targeting deals in:
🏡 South & Central Florida (6–30 units in prime workforce housing areas)
🏘️ Kentucky, Indiana, Tennessee, the Carolinas (20–100 unit opportunities)
💡 Class A or B assets in Class A/B- locations
💰 Cap rates between 6.0%–7.5%
✅ Clean financials with light value-add or strong lease terms
These markets offer positive leverage and true long-term wealth creation through cash flow, equity growth, and tax savings.
🙋♂️ Who We Work With
We don’t work with everyone.
We partner with professionals who:
Want passive income and financial freedom
Believe in Truth, Trust, Transparency, Teamwork, and Traction
Want to give back to the communities we invest in
Are open to learning how multifamily works
🚪 Ready to Explore a Deal?
We have upcoming opportunities with:
✅ Projected 6%–7% cash-on-cash
✅ 2x–2.25x equity multiples over 10 years
✅ Stabilized assets in great school districts, low-crime areas
👉 Want to see the next deal before we go public?
DM me or fill out our short investor form here:
🔗 Join Our Investor Circle
Connect with Me
⭐ I can be reached on the following social media platforms
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📍 Investing with integrity. Building generational wealth.
We’re building something special at Del Val Investment Group and Level 7 Investors.
Looking forward to partnering,
Manny Del Val
Del Val Investment Group | Level 7 Investors