Is Buying an Investment Property Still Worth It? The Investors Still Buying Have Changed Their Playbook

It wasn’t that long ago that the decision to buy an investment property was fairly straightforward: If you could do it, you should do it.

“A few years ago, you could buy a property, benefit from rapidly rising rents, and watch the value appreciate almost immediately,” says Miltiadis Kastanis, a South Florida real estate agent and executive director of sales at Compass. But now, “that environment has changed.”

Rents have fallen year over year for 38 straight months, mortgage rates are hovering in the mid-7% range, and the expenses that sit between a landlord and a profit—from insurance and property taxes to maintenance and repairs—have climbed in many markets.

Given those headwinds, it isn't surprising that some investors have pulled back, purchasing 7% fewer homes than a year ago, according to the latest Investor Report from Realtor.com®.

What’s more surprising, though, is how resilient investors remain compared with everybody else.

While overall home sales and non-investor purchases were well below their 2017 to 2019 average in the first half of 2026—19.4% and 21.6%, respectively—investor purchases were still 4.2% above that benchmark.

So what are investors doing differently?

“The biggest difference today is that investors have to be much more disciplined,” Kastanis explains. “I wouldn't say that [the market] makes real estate a bad investment. It just means you have to be more selective.”

It’s a much less glamorous version of the passive-income pitch that was so popular at the height of the COVID-19 pandemic-era housing boom. And for anyone weighing the choice today, the answer ultimately comes down to three things: what you pay, what the property can realistically earn, and what it will cost you to own.

Understand the headwinds

“The first thing I tell investors is to look beyond the purchase price and really understand what that property is going to cost them every month,” Kastanis says. “You have to factor in your mortgage, property taxes, insurance, maintenance, and what you can realistically collect in rent.”

It’s sage advice for anyone weighing a home purchase today, as those carrying costs have been rising fast for all homeowners.

Property taxes rose 31% between 2019 and 2025, while average monthly homeowners insurance premiums jumped 72%, according to Harvard University's Joint Center for Housing Studies.

But investors may face an even higher cost burden, because their expenses often start from a higher baseline.

Insurance is just one example. A landlord or rental-dwelling insurance policy generally costs about 25% more than a standard homeowners policy, according to the Insurance Information Institute, reflecting the additional risks associated with renting out a property.

On the typical homeowners policy with $300,000 in dwelling coverage, that 25% rule of thumb would make a comparable policy for a landlord about $700 more a year, according to Insurify.

Financing can add another premium.

Investment-property mortgage rates are typically 0.5 to 1 percentage point higher than rates for primary residences, according to LendingTree—and that doesn’t factor in the larger down payment requirements or stricter underwriting that these loans often carry.

For an investment property to work, then, the rent has to clear a higher hurdle before the owner sees a return.

“I always encourage buyers to run the numbers conservatively,” Kastanis says. “If a property only makes sense when everything goes perfectly, it's probably not the right investment. You want something that can generate income today but also has the potential to appreciate over time.”

To expand, buy cheaper

But again, it's not as easy to identify those properties—that offer both solid rental income and appreciation—as it used to be.

Beyond cooling rents, home prices are also declining with the median list price down 1.4% compared to a year ago, according to the latest market report from Realtor.com. That trend is even more pronounced in some regions, with list prices down a whopping 3.8% in the Northeast and 2.4% in the South.

So what are investors still willing to buy in this tougher environment? The clearest clue comes from the group gaining the most ground.

Small investors accounted for 66.2% of investor purchases in the first half of 2026—up from roughly half around the pandemic peak and the highest share in at least 15 years.

Large and mega-investors, meanwhile, became net sellers.

It’s a notable difference because the properties those groups are buying look very different.

The typical non-investor paid $380,000 for a home in the first half of 2026. Mega-investors paid slightly more, at $385,000. Small investors, meanwhile, paid a median of $295,000—22.4% less than the typical non-investor.

It may seem like a small difference, but it becomes more meaningful against the backdrop of higher carrying costs.

A lower purchase price can mean borrowing less money, paying less interest, and leaving more of the property's rental income available to absorb rising costs. And as the housing market continues to cool, Kastanis says investors may have more leverage to find a price that makes those numbers work.

“One of the biggest advantages an investor has right now is the ability to negotiate,” Kastanis says. “You're not necessarily competing against 10 other buyers the way you might have been a few years ago.”

To his point, nearly 21% of listings had their price reduced in September—a 0.9-percentage-point boost year over year and the highest price-cut share in a single month since October 2022.

“You can't control interest rates or insurance premiums,” Kastanis adds, “but you can control what you pay, where you buy, and how much risk you're willing to take on.”

The geographic evidence suggests that investors are taking that advice to heart, too.

The 10 most investor-heavy large metros had a median investor purchase price of roughly $174,000 in the first half of 2026, compared with $295,000 nationally.

Toledo, OH, is a good example. Investors accounted for 17.3% of purchases in the Glass City, up 4.1 percentage points from a year earlier—and one of the largest increases among major metros.

The median investor purchase price was just $110,000.

Compare that with Seattle, where investors accounted for only 6% of purchases and paid a median of $757,500, or Oxnard, CA, where investor share was 5.7% and the typical investor purchase cost $900,000.

Cash helps—but it doesn't make the deal

There is another obvious way investors can protect themselves from today’s borrowing costs: Skip the mortgage altogether. And about 55.5% of investor purchases were made in cash in the first half of 2026, compared with 30% across the overall market.

“Cash certainly gives investors an advantage, especially in today's interest rate environment,” Kastanis says. “You're eliminating a major monthly expense, which can make the property's cash flow much more attractive.”

But not everyone enjoys the deep pockets and ample capital of the market’s biggest investors. Mega-investors—defined as entities with 351 or more purchases across the dataset from Realtor.com—paid cash 80.4% of the time in the first half of 2026, compared with 56.1% for small investors.

It’s a reminder that, while paying cash can help, it isn’t the be-all and end-all in deciding whether an investment property is ultimately worth it—a distinction Kastanis emphasizes.

“Financing can absolutely still make sense,” he says. “It really comes down to the purchase price, the rental income, and how much you're borrowing.”

But that's also where investors can get into trouble.

“The mistake is stretching yourself financially with the assumption that rents will continue rising or that you can refinance at a lower rate in the near future," he adds.

Is buying an investment property still worth it?

It's a telling warning. The market-level data shows us how investors are adapting to the current headwinds, but it doesn't tell us whether those investments are universally panning out.

For that, you have to come back to the property-level math.

Start with the rent the property can realistically command—not the best-case rent. Then subtract the mortgage, property taxes, insurance, maintenance and repairs, HOA or condo fees, property management if needed, and a reserve for vacancies and larger future expenses.

“Buyers often underestimate just how expensive it can be to own a property when nobody is living in it,” Kastanis says. “Even one or two months without a tenant can make a meaningful difference in your annual return.”

Those costs can change after the purchase, too.

“In South Florida, insurance, property taxes, and condominium assessments are also major considerations that investors sometimes overlook,” he says.

That's why Kastanis recommends building in room for things to go wrong—and that may be the clearest lesson from the investors still buying in 2026.

"My advice is always to do your homework upfront," Kastanis says. "A property might look like a great deal on paper, but the real investment is understanding what it's going to cost you to own it five or 10 years from now."