Your CD is maturing and rates are falling. Now what?
A client called with a simple question: my CD matures soon and it paid 5% — can real estate do that? We ran the numbers on a real property. It could. Here is the full arithmetic, the costs this comparison usually leaves out, and a note on what happened next.
The situation
When rates rose, banks started offering high-yield savings accounts and CDs paying over 5%. A great deal of money moved there and stayed — $6.2 trillion sitting in low-risk money market instruments as of late 2024.
The appeal is obvious. Put $100,000 in a CD, collect $5,000, take no real risk.
Then the Fed signalled cuts. And a 5% yield becomes a 2% yield.
At 2% you are not really earning — you are roughly keeping pace with inflation. That is the moment a lot of parked capital has to decide where to go.
Why the obvious answer is complicated
The instinct is equities. But consider why rates are being cut: the Fed is responding to signs of economic weakness.
So the same event that reduces your CD yield also raises the risk in the market you would move to. And if retirement is not far off, a downturn arriving just as you need the money is precisely the outcome the CD was protecting you from.
Can $400,000 earn 5% in real estate?
A client with a maturing CD asked exactly that. So we went and found out.
| Item | Figure |
|---|---|
| List price | $400,000 |
| Negotiated purchase price (cash offer) | $390,000 |
| Location | Southeast Las Vegas |
| Monthly rent | $2,100 |
| Annual gross rent | $25,200 |
| Less taxes, insurance and HOA | ~−$4,200 |
| Net annual income | Over $20,000 |
| Return on purchase price | 5.34% |
The cash offer is doing real work here. $10,000 off asking on a property that would rent regardless is an immediate improvement to the return, and it is available to a cash buyer in a way it is not to a financed one.
Side by side, over one year
| CD at 5% | Rental property | |
|---|---|---|
| Starting capital | $400,000 | $400,000 |
| Income after one year | $20,000 | ~$20,000 |
| Value of the asset | $400,000 | $412,000 if it appreciates 3% |
| Total position | $420,000 | $432,000 |
The income is a wash. The entire difference — $12,000 — is the appreciation assumption.
Which means this comparison does not really turn on rental yield. It turns on whether the property goes up in value, and by how much.
Three things worth adding before you decide
1. The 5.34% excludes maintenance, vacancy and management
That figure nets out taxes, insurance and HOA. It does not account for a water heater, a month between tenants, or a property manager's 8–10%.
A realistic model assumes something for each. See how to evaluate a rental property and property manager or self-manage.
2. Getting out costs money
Selling a Las Vegas property runs roughly 4.4% to 6.9% of the sale price once you include commissions, title, escrow and transfer tax — the full breakdown is in what it costs to sell.
On a $400,000 property that is $17,600 to $27,600. Over a one-year hold it wipes out the appreciation advantage entirely and then some. A CD costs nothing to exit.
3. A CD is insured. A property is not.
CDs carry FDIC protection up to the applicable limits. Property values carry no such guarantee, and the 3% appreciation is an assumption rather than a floor.
The trade-off that decides it
Real estate can fall in value. Over a long hold, dips have historically corrected and resumed — so if you are not buying and selling quickly, short-term market value matters less while the rent keeps arriving.
The genuine drawback is liquidity. A CD matures on a date you know and pays out. A house means listing it, finding a buyer, and 30 to 45 days of escrow at minimum.
So the deciding question is not which returns more. It is: might you need this money soon?
If yes, stay liquid, whatever the yield. If you are genuinely long-term, the income plus potential appreciation is a reasonable case.
What actually happened
This was published in September 2024. Two years on, it is worth saying how the thesis held up, since half of it rested on a projection.
| The claim | Outcome |
|---|---|
| A Las Vegas rental can return about 5% net | Held up. Rents stayed firm, and properties below the median continued to let readily |
| Property appreciates ~3% a year | Did not hold. Valley medians ran roughly flat — about $478,000 in September 2024 and about $480,000 in August 2026 |
| Falling rates would push capital into property | Partly. Rates never fell as far or as fast as forecast, and inventory rose instead |
So the income side worked and the appreciation side did not — at least not on this timescale.
Which is the more useful lesson than the original comparison. If a deal only beats a CD once you assume appreciation, you are not comparing returns. You are making a bet on direction.
The version that survives contact with reality: buy for the income, hold long enough that the appreciation has time to arrive, and do not need the money in the meantime. The monthly data since is in the market hub.
CDs vs real estate: FAQ
What happens to CD rates when the Fed cuts interest rates?
They fall, often sharply. CDs and high-yield savings paying over 5% during the high-rate period can reset toward 2% or lower as rates come down. At 2% you are barely keeping pace with inflation, which is what pushes money out of cash and into other assets.
Can a rental property match a 5% CD return?
It can. In this case a $390,000 Las Vegas purchase renting at $2,100 a month produced over $20,000 net after taxes, insurance and HOA — about 5.34%. That figure does not include maintenance, vacancy or property management, all of which reduce it in practice.
What does a rental return leave out that a CD does not?
Maintenance, vacancy, property management fees, and the cost of getting out. Selling a Las Vegas property costs roughly 4.4% to 6.9% of the sale price, so a short hold can consume more than a year of returns. A CD has none of those frictions.
Is real estate less liquid than a CD?
Considerably. A CD matures on a known date and pays out. Selling a house means listing, finding a buyer and a 30 to 45 day escrow at minimum, plus selling costs. If there is a chance you need the money soon, that illiquidity is a genuine reason to stay in cash.
Why do rate cuts make the stock market risky at the same time?
Because of why rates are being cut. The Fed lowers rates in response to signs of economic weakness, so the same conditions that reduce your CD yield also raise the risk of a downturn in equities. Moving from cash into stocks at that moment is not the safe-haven trade it can appear to be.
How much appreciation should I assume on a Las Vegas property?
Less than you might expect, and never as a guarantee. A 3% annual assumption is common, but Las Vegas medians ran roughly flat from late 2024 through 2026. Any comparison that depends on appreciation to beat a CD is depending on something that may not arrive on schedule.
Where was $6.2 trillion of investor money sitting in 2024?
In low-risk money market instruments — money market funds, CDs and high-yield savings accounts — parked there while those vehicles paid over 5%. As rates fell, that capital faced a decision about where to go next, which is the question this comparison addresses.
Have capital coming due?
The useful version of this conversation runs your actual numbers — the amount, the timeline, whether you might need it back, and what current properties would realistically rent for net of everything. Happy to run it properly.
Related: evaluating a rental property, a $400,000 rental start to finish, REITs vs syndications, and is it too late to invest.
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Jim Fong · NV license BS.0068736 · The Jim Fong Group at Real Broker · 702-997-2050
One client's transaction, described with permission. Published September 2024 with an editor's note added September 2026. Returns, rents and property values vary and are not guaranteed; past performance does not indicate future results. Not investment, tax or financial advice — Jim Fong is a licensed real estate agent, not a licensed financial adviser.