Quentin stress tests his portfolio to 10-year rates and focuses on purchasing properties that produce cash flow in appreciating markets. He also recommends proactively selling underperforming assets to build a cash cushion and securing lines of credit before lending rules tighten, which provides flexibility to withstand higher rates.
In the residential one-to-four-unit space, falling prices combined with stable rents are creating cash-flow-positive opportunities in quality neighborhoods with strong fundamentals. In the commercial five-plus-unit space, Ontario rent-controlled buildings with significant gaps between current rents and market rents offer value-add potential through unit turnover.
Quentin advises that if rate volatility is causing anxiety and affecting your sleep, converting to a shorter-term fixed mortgage—such as a one or two-year fixed—can provide peace of mind. He notes that while the spread between fixed and variable rates is currently close to 200 basis points, sleeping better is worth the trade-off for some investors.
According to Quentin, cap rates on five-plus-unit properties have remained relatively stable because sellers are still asking for prices similar to six months ago. He explains that cap rates are based on location, asset quality, and interest rates, but in the current environment, the market has not yet fully adjusted cap rates upward.
Quentin's top tip is to view rising interest rates as an opportunity rather than an obstacle. He emphasizes buying quality, cash-flow-positive assets, avoiding over-leverage, and making long-term investment decisions based on economic fundamentals instead of reacting to short-term news cycles.
