Looking to purchase first rental property - feedback please!?

Question

Hi All -

I've been looking to purchase my first Rental property for about 6mos now. I feel like I have a decent understanding of the landscape and recently found a property that really seems to be a good fit. With 25% down payment the property should cashflow about $730/mo in profit (however I don't think it will appreciate much as time goes on). Couple of questions for the community:

• Do I need 25% down payment for the rental property? (I already own my primary residence and this will not be a house hack strategy)
• If I don't need 25% DP, what is the best amount of money to put as a down payment?
• The Cash on Cash Return number comes out 15.1% (with 25% down including closing costs), thoughts on this?
• Should I calculate the IRR? Is this a better metric to use vs a CoC? I haven't dove into the specifics of IRR yet but was curious for anyone's feedback.

Thank you in advance to anyone who takes the time to comment!

-Rod

Aaron K. · Answer

That is about right for a down payment, I would double check your numbers, or possibly ask people on BP to help with it though, because that would seem like a pretty good deal assuming it is in a decent area.

Grant Rothenburger · Answer

@Roderick McCleary If you're cash flowing $730/month (and calculated that correctly) I don't think you need more calculations lol. 25% down on an investment property is pretty normal. I think you can get as low as 15% (I've heard people say that no personal experience with it).