Buying rental properties

[Rhea Jackson]

Hello everyone, I've been hearing around that putting 20% down is the minimum to buy most rental properties. Is that true?

[Leo K.]

@Rhea Jackson @Derek Boone

I've found 3 commercial banks in Nashville that will lend up to 90% LTV for non-owner occupied rentals:

Tristar Bank

Republic Bank

Volunteer State Bank

I like the team at Simmons Bank as well but haven't actually closed a transaction with them as they don't like to lend beyond 85% LTV.

Personally I prefer to have a lower down payment even if it equates to a higher interest rate. I'd rather hold the additional 5% down payment in my pocket and reinvest it into another asset to capture a 15-20% ROI.

If I'm forced to invest a certain sum of money I'd rather inject the capital directly into the asset than trap it with the bank. Improve the property, drive rents, cash out refi down the road and lock in a lower rate at that point. 

At the end of the day your best option depends on your appetite for leverage and investing philosophy.