How Much to Put Down on First Rental Property

[Bruce Harding]

I could use advice on which way to go here.  

I have approximately $180K to use for real estate purchases.

I am specifically going to purchase SFH - building up to 10 of them.

I am looking to buy in a growing area where the prices are still fairly inexpensive.  So this is more of a cash flow market I am looking at with some modest appreciation over the long term.

Houses range from $90 - $150 K.

I am thinking it might be better to outright pay cash on the first property.

Why ?    First:  I would save about $4K in fees if I don't have to borrow from a lender.      

              Second:  Rent Income from the first property would be high since there is no mortgage which would be favorable to financing on the subsequent properties as my income would be much higher in the eyes of a lender.

              Third: I could use the income from the first property to start making higher payments on the second property's mortgage.

               Fourth:  I can always refi the first property to some extent in the future if needed to buy additional properties as I go along.

For these properties I would have to put anywhere from $25 - $35K down per property.

The alternative would be to buy several properties within a couple years using all financing and the down payments would come from the $180K pot.

Let me qualify by saying I have $35K currently in a syndicated deal paying 20% interest.   I will probably get this money back in one to two years and could use this for one of these properties.

I also have $135K invested now in two properties with a realtor who is paying interest and proceeds as these properties are being converted from homes into businesses in suburbs. This money is tied up for 18 - 24 months. So this is another pot I can use in a few years to purchase more SFH.

Is my thinking correct on buying the first one for cash ?  

[Frank Geiger]

Do a BRRRR. Cash is king. If your like most of us, it will take a few years to save 180k again. Start with one, find a mentor (give them a share of the deal), then learn how to properly implement a BRRRR. Recycle that cash then when you feel comfortable you can do multiple at once.

I bought my first house conventional and it took me forever to get that cash back. Would not do it again.