Benefits and cons of money down on my fist real estate investment

[Rob Halpert]

Hello everyone, I'm looking at purchasing my first investment property and i am weighing the pros and cons of putting a 20% down payment. I have been approved for a zero down loan from Navy Federal so i have options. On one hand forking over a good chunk of my life savings doesn't seem wise but on the other hand I want to avoid having to pay private mortgage insurance and by putting money down i believe i could negotiate for a better rate.

My goal is to have multiple properties in the next couple years so i'm not sure that 20% down for multiple properties going forward will even be feasible since my cash flow at first will be more like a trickle than a river. Will PMI just be something i need to fit into my budget and live with?

I'm also interested in discount points. Has anyone utilized them? I'm interested in any strategies that will help me reduce long term costs, help get me good rates but will still giving my decent cash flow on rentals. 

any comments, tips, tricks or advice is appreciated!

[Christopher Phillips]

@Rob Halpert

You have to run the numbers. It all depends on what you're buying. If you use a VA loan, you'll have to be an owner/occupant, or at least "intend" to for at least 12 months. There is also a limitation on when you can start to rent it out.

On the other hand, leveraging 100% on a property leaves you with little room if you suddenly have to sell on short notice at a loss, which is one of the reasons why you "want" to put money down. Also, leveraging 100% means you're paying a higher monthly mortgage payment and that will make it harder to find positive cash flow properties.

You can't really use VA loan to flip a home due to fact they want the homes to be near turnkey, certainly move in ready. So, that makes it hard to buy a deeply discounted property with condition issues for the flip.

Non owner occupant loans usually want you to put down 25% to 30%.