Down payment % on an investment property (Quad) - Austin market

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Down payment % on an investment property (Quad) - Austin market

Damian Chavero
Rental Property Investor · Austin, TX · Member since 2018 · 7 posts · 1 vote

What’s up y’all - Curious what you guys think regarding financing investment properties

Is it better to put down a larger down payment (30-35%) on an investment property vs the minimum (~20%)? If so, why?

Specifically, I’m looking at investing in a quadraplex in the Austin, Texas market and weighing out the best way to finance this deal.

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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
5y

@Damian Chavero It will completely depend on your goals. Do you want cash flow? In Austin, you'll need to look at larger down payments to achieve a cash flow positive level. I would also check with your lender to verify what the minimum amount you could put down. For most conforming investment loans, you will need at least 25% to get the optimum interest rate.

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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    5y

    @Damian Chavero It will completely depend on your goals. Do you want cash flow? In Austin, you'll need to look at larger down payments to achieve a cash flow positive level. I would also check with your lender to verify what the minimum amount you could put down. For most conforming investment loans, you will need at least 25% to get the optimum interest rate.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5110 Reviews
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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    5y

    @Damian Chavero I always put as little down as I can so I have more to invest in either other projects or rehab of said project. Like @Ryan Kelly mentioned you'll most likely need 25% down.

    [email protected]512-888-9122
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  • Stephen Stokes
    Rental Property Investor · Austin, TX · Member since 2016 · 317 posts · 257 votes
    5y

    @Damian Chavero the name of the game is to put as little as possible in all circumstances. The returns on the property will always be the same (nominator) but the amount invested into the property will fluctuate (denominator). ROI= return/investment. Lower investment on same return is always a higher ROI.

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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    DSCR lending allows for 20% down with rates in the 4's on a 30 year so you can maximize your cash flow as opposed to conventional. Higher ltv, similar rate significantly less hassle. Closing costs are more with DSCR, but many are opting for ease of use.

    Stephanie

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  • Dan BurstainBusiness Member
    Real Estate Agent · Austin, TX · Member since 2014 · 360 posts · 331 votes
    5y

    Money is still very cheap so I would recommend putting the minimal down.  You can find something that will pay better than 4% on the money you keep.  Also, it will depend on where you buy in the Austin area, but there are some 4 plexes you could still break even cash flow with the minimum down.  You will at least have no problem covering the note.  

    [email protected]512-588-3260
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