How much to put down?

[Jill Rio]

Hi Bigger Pockets,

We are about to purchase our first rental property, and are trying to decide how much to put down.  We can put down 40% and cashflow monthly, or we can put down the minimum of 25% and break even monthly.  We anticipate that we can raise rents in the future as we are in the Bay Area and are buying in a very desirable area.

Is there a benefit to either?  This property is mostly an appreciation play, as we live in a high cost, high appreciation area.

Thank you for you input!

[Amit M.]

depends. If you guys are high income earners than the extra income is taxed at a high rate anyways. And if you're thinking of buying more investment property in the Bay Area, then having that extra 15% as available cash will help you with your next purchase. If your purchase is in a decent location, vacancy should not be a major issue. You just need to price it correctly. 

I just re-rented a 2BR in San Francisco, and had people falling over each other at first open house to get it. I did put it at an attractive price, because I'd rather get the best tenants than max another $100 in rent. Plus they tend to stay longer, and tenant turn over is such a headache....I'd rather relax and sip lattes than deal with frequent turnovers ;)