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Updated over 6 years ago on . Most recent reply

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Allan Anderton
  • Magna, UT
4
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25
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down payment in effect to brrr strategy

Allan Anderton
  • Magna, UT
Posted

okay keep in mind I am still learning "so be gentle" I was watching a webinar by David I believe last week and wanted to bring my question to the forums to hopefully get it more explained for me... lets say I want to by a SFH and its my first btw its say 100k as it will be a investment property I would be required for the 25% down but lets say I have 50k in my heloc that I could use, being this is my first property would you put the full 50k in for the higher cash flow or would you go more over with the 25% down and go for the brrr and refi back out the investment? my follow up question to that "probably the dumb question" is IF the house was able to cash flow say 150-200 a month and I refi surely my new mortgage payment would shoot over that cash flow and drop me into a negative or did I miss something? so why would I refi the house to go from a positive to a negative? I am sure I am about to get blasted for this one:)

Most Popular Reply

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Steve Vaughan#1 Personal Finance Contributor
  • Rental Property Investor
  • East Wenatchee, WA
16,111
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10,252
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Steve Vaughan#1 Personal Finance Contributor
  • Rental Property Investor
  • East Wenatchee, WA
Replied

Once you're above 20% down and avoid PMI, it usually only makes more sense to go higher if it is all cash and you are getting a significant discount because of it. I'm doing that now, and getting a 20% discount.

It's borrowed money anyway, so your cf won't benefit dollar for dollar.  Do 25% and see how it goes, Allan. It's a one way street. You can always pay the loan down if you want after, but can't get your DP back.  

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