Theoretically speaking.....max down or minimum down...?

[Bruce Woodruff]

So let's say that you had $500,000 cash to use as a down-payment.....

You want to purchase a $1 mil  multi-family building.... Would you use the $500k to get a 50% down and lower payment? Or split it in half and use $250k to buy 2 similar Apartments, being in at 25% each. The math is one thing, but the strategy is another....

Which one would you choose and why?

[Steve Vaughan]

@Bruce Woodruff. 25% down if my only other option is 50% down. 

50% to me is the no man's land of equity.  You have a ton into it, basically pre-paying your 'cash-flow', yet not having enough equity to have additional leverage options should rates and terms improve.  

My portfolio equity up until I sold most last year was around 50%, but properties were either highly leveraged (70-80%) or had no debt at all.   I then sold my free and clear MFs on contracts. 

At 50% leverage,  your options are more limited and you're giving your lender more protection than necessary.   

Your rate is the best it can be once you put down 30%.  If there was another tier down in rate for 50%, the numbers would be worth running, but don't put down more than will give you the best terms possible. 

An additional option and one I would more consider would be to pay cash for a $600k MF building if a fast close and or condition nets a discount down to $500k.   Season, improve and refi that, bank the equity and do your 30% down on 2 or 3 additionals where the seller can wait 45-60 days to close.