Higher interest rates have changed the real estate market—but they haven’t eliminated the opportunities. For buyers who are thinking beyond simply purchasing a primary residence, income-producing real estate can still offer an appealing combination of current income, long-term appreciation potential, and financial flexibility.

It’s easy to look at today’s mortgage rates and conclude that this isn’t the ideal time to invest in real estate. But interest rates are only one part of the equation.

Real estate investors tend to take a longer view. They consider what a property costs to own, what income it can generate, the strength of the local rental market, the potential for appreciation over time, and how the property fits into their overall financial goals. And, unlike some investments, an income-producing property has the potential to provide two distinct benefits: ongoing rental income and ownership of an asset that may increase in value over the long term.

Rental Demand Doesn’t Disappear When the Market Changes

Regardless of whether home prices and mortgage rates are rising or falling, people need places to live. In fact, when higher mortgage rates make homeownership less attainable for some households, many remain renters longer than they otherwise might.That makes the strength of the local rental market an important consideration when evaluating an investment property.

In Kitsap County, in particular, recent multifamily data has shown improving occupancy. In the second quarter of 2026, Kitsap’s multifamily vacancy rate declined from 7.9% to 7.0%, while average rents increased modestly.

For an investor, however, market statistics are only the starting point. The individual property matters enormously. An established property with long-term tenants can be particularly attractive because there is already a rental history and an existing stream of income to evaluate.

Look for Flexibility as Well as Income

Another consideration is how many ways a property can work for its owner. Some investment properties are strictly investments, while others provide options. A small multifamily property, for example, may allow a buyer to rent all of the units and hold the property as a traditional investment. Or, depending on the property and financing, the buyer may be able to live in one unit while collecting rent from the others.

For the right buyer, that can provide an interesting path into real estate investing. Rental income from the other units can help offset the cost of homeownership while the owner begins building equity in an income-producing asset. Later, that owner might choose to move elsewhere and retain the entire property as an investment.

What makes a good investment property? There isn’t one answer to that question. A good investment property is one whose numbers, location and potential make sense for the particular buyer. Among the factors worth considering are purchase price, current and potential rental income, operating expenses, property taxes and insurance, financing costs, condition of the property, vacancy history, location and long-term demand.

And that’s an important distinction in today’s market: the question isn’t simply whether this is a good time to buy investment real estate. It’s whether a particular property represents a good opportunity.

One Current Opportunity in Port Orchard

That brings me to a property I currently have listed in Port Orchard.

MLS #2452331 | $749,000

This property offers three separate residential units and, importantly, established long-term tenants. For a buyer seeking an income-producing property, that means the opportunity to acquire an existing rental rather than starting with an empty building and finding tenants for every unit. Its location is another important consideration, with convenient access to the hospital, freeway and other Port Orchard-area services and employment centers.

There is also flexibility in how a future owner could use the property. An investor can continue operating it as a three-unit rental property. Or an owner-occupant could potentially live in one unit and rent the other two, subject to existing leases and applicable financing requirements. For someone who has been considering adding real estate to an investment portfolio—or looking for a creative way to combine homeownership and rental income, it’s a property worth exploring.

Look Beyond the Headlines

Today’s real estate market is different from the ultra-low-interest-rate market of several years ago. That doesn’t necessarily make it a bad market for investing. It makes careful property selection and a clear understanding of the numbers more important. A well-located property, an established rental history, dependable tenants and multiple sources of rental income can all change the equation.

If you’re interested in exploring real estate investment opportunities in Kitsap or Pierce County—or would like more information about my Port Orchard property, I’d be happy to talk with you about what you’re looking for and help you evaluate the possibilities.

Doug Lawrence, VAMRES
Managing Broker, Better Properties Gig Harbor
MLS #2452331