How Much SHOULD You Put Down on an Investment Property? (Rookie Reply)

Nov 15, 2024

Dive into the world of investment property down payments and discover how much you should really put down to optimize cash flow. Is it wiser to pay off high-interest mortgages or keep investing? The discussion reveals the pros and cons of both strategies. Hear about the challenges of negotiating hard money loans for house flips and the importance of getting your numbers right before diving in. This episode is packed with insights for new investors keen on navigating a complex market.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

ADVICE

Higher Down Payment Benefits

Putting more money down reduces risk and improves sleep.
Over-leveraging can be stressful, especially during market downturns.

ADVICE

Verify Income Projections

Verify Airbnb income projections with current market data.
Don't solely rely on past performance, especially from peak years.

ADVICE

Analyze Deal Metrics

Consider cash-on-cash return, not just cash flow, when evaluating a deal.
Factor in property appreciation and long-term costs like maintenance.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

How much should your down payment for investment property be? Should you increase your down payment to maximize cash flow, or does putting all your financial eggs in one basket limit your ability to build and scale your real estate portfolio? Or should you instead pay off that high-interest-rate mortgage early to keep all the cash flow at the end of the month? We’re answering these questions in today’s Rookie Reply!

With high mortgage rates, one rookie asks whether it’s better to pay off their home with a seven percent rate INSTEAD of investing in more rentals. Paying off that loan gets you an automatic return, but there’s a strong argument as to why it isn’t the best move.

Are you doing your first house flip? Another rookie wonders whether they can negotiate when taking on a hard money loan and if the juice is worth the squeeze for a $50,000 profit on their first flip.

Looking to invest? Need answers? Ask your question on the BiggerPockets Forums!

In This Episode We Cover:

Investment property down payments and how much you should put down to prioritize cash flow

Whether to keep investing or start paying off your high-interest-rate mortgages

Why you can’t just look at the cash flow when analyzing a potential investment

Financing a house flip and negotiating with a hard money lender (should you negotiate?)

What you should ALWAYS do before you take on a house flip to ensure your numbers are right

And So Much More!

Links from the Show

Ashley's BiggerPockets Profile

Tony's BiggerPokckets Profile

Join BiggerPockets for FREE

Real Estate Rookie Facebook Group

Real Estate Rookie YouTube

Protect Your Properties with an LLC through Corporate Direct

Ask Your Question on the BiggerPockets Forums

Grab the New Book, “The House Flipping Framework”

Find Investor-Friendly Lenders

Stop! Before Making a Large Down Payment, Read This

(00:00) Intro

(01:00) How Much to Put Down?

(11:42) Pay Off High Rate Mortgage?

(17:49) Financing a House Flip

(24:47) Is This Deal Worth It?

(29:24) Ask Your Question!

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/rookie-484

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com.

Learn more about your ad choices. Visit megaphone.fm/adchoices