10% vs 25% down loan options

[Vivian Sung]

Newbie investor:

Thoughts about 10% down with 3 points versus 25% down with 0.38 points, 30 year conventional for a STR? This is for a $255k loan, plan to buy and hold. Not turnkey but no major rehab- mainly cosmetic value add. Initially was going to do 25% down for lower points, but not sure if I'm thinking about this right from an investment standpoint, and second guessing now.

Pros of 10% down:

Less money tied up in investment means more money to use on others

Cons:

More points and money down the drain not towards equity

If downturn and home prices go down will have even less equity in the home.

Now I’m thinking I should go with the 10% since it is a buy and hold??
What am I missing?

thank you. 

[Sergey A. Petrov]

Quick back of the napkin math with very limited details tells me your extra payments on the points plus higher rate and PMI will match your initial extra 12% downpayment 25% vs 10%+3 points) in about 7 years. So either pay that cash upfront or monthly over the next 7 years. What will you do with that "12% cash" in the next 7 years? I say you can put it to use elsewhere even if your cash flow is not as great initially (and should improve as rents increase)