Will they? Won’t they? Who knows! President Trump’s latest round of tariffs—a 25% tariff on imports from Canada and Mexico (currently on a 30-day pause) and a 10% tariff on Chinese goods—has the real estate world buzzing. Are these just aggressive negotiation tactics? A bluff? Or will they actually stick? Either way, for investors, the mere speculation around tariffs can drive up prices, disrupt supply chains, and create ripple effects in the housing market.
The question is: Do you stock up now, or do you gamble and hope prices stay steady? If you have the space and the cash, taking inventory of what you need this year for lumber, appliances, and capital might be a smart move. Because if history tells us anything, it’s that costs rarely go down once the market starts panicking.
1. Rising Material Costs: What If Lumber Spikes Again?
New tariffs on Chinese imports could hit essential building materials like lumber, steel, aluminum, and electrical components. And while the Canada-Mexico tariffs are on pause, there’s no telling if they’ll return—Canada has long been a primary supplier of lumber to the U.S.
Remember the 2018-2021 housing boom? Tariffs on Canadian lumber sent prices soaring to record highs. Could we see a repeat? If these tariffs hold, investor margins could take a hit.
What Investors Should Consider:Stockpile critical materials now if you have storage capacity.Seek out domestic suppliers or explore recycled and reclaimed materials.Consider prefabricated or modular builds to optimize material use.
2. Supply Chain Roulette: Will Delays Get Worse?
A 10% tariff on Chinese goods doesn’t just mean higher costs—it could also mean delays in getting what you need. Appliances, lighting fixtures, HVAC systems, and plumbing materials could see extended lead times, impacting both fix & flip projects and new builds.
Even worse? China could retaliate, further disrupting supply chains. And if that happens, investors might see bottlenecks in getting materials just when they need them most.
How to Prepare:Bulk order now before tariffs or price hikes hit full force.Pad your project timelines for potential delays.Work with local suppliers and contractors to limit reliance on imports.
3. Interest Rates & Market Volatility: The Hidden Risk
If tariffs stir up economic uncertainty, we could see higher interest rates as the Fed responds to inflation fears. For fix & flip investors who rely on short-term financing, or developers who take on large loans, this could mean higher borrowing costs and tighter margins.
Strategic Moves to Stay Ahead:Utilize cash-out refinancing to free up liquidity for bulk material purchases.Consider longer-hold strategies if short-term flips become riskier.Focus on markets where demand is strong enough to absorb potential price increases.
Even if these tariffs end up as a bluff, the speculation alone can move prices. If you have the space and the capital, now might be the time to buy what you need before we see any major cost increases.
Final Thought: Leverage DSCR Loans for Stability and Profitability
In uncertain times, rental investments backed by DSCR (Debt Service Coverage Ratio) loans offer a more stable and profitable strategy than speculation on short-term flips. DSCR loans allow investors to qualify based on rental income, ensuring access to capital without relying on traditional income documentation. Plus, Dominion Financial offers a DSCR Price Beat Guarantee, ensuring you get the best rates in the market.
Why Consider DSCR Loans Now?Lock in long-term, fixed-rate financing to hedge against future rate hikes.Build passive income streams that generate revenue even in uncertain markets.Keep your capital liquid while scaling your rental portfolio.
Let’s talk strategy—because in this market, being proactive pays off.
Note: This analysis is based on information available as of February 4, 2025. Policies may change, and investors should consult financial advisors for personalized guidance.
