20% or 25% down payment on a loan for a rental property.

[Oscar Padilla]

What makes the most sense for an out-of-state investor looking to eventually acquire multiple properties valued at around 100-125k. Both options are 30-year loans. One is at 4% interest with 20% down or 25% down payment with a 3.25 interest rate?

[Joe Villeneuve]

The answer, as it always is, is hidden in the problem...in plain sight.

Here's what you're asking, translated to math:

Property Cost:  $100k
Option A:  20% Down (4%/30yrs)
DP = $20k
Monthly Pmts - $382/m

Option B: 25% Down (3.25%/30yrs)
DP = $25k
Monthly Pmts - $326/m

Difference in DP in Cash (what matters) = $5k
Difference in CF (what also matters) = $56/m
Number of months to recover the difference (Added cost) in DP:  89 months/7.5 years

In other words, you are pre-paying $5k in cash upfront, to get $56/month in extra CF.  Said another way, you would be buying $56/month, for 7.5 years, at a cost of $5k.