All Forum Posts by: Felicia West

Some of it may be the market you're looking at. My local market is insanely high and so I'm looking outside my local area. I'm doing a little higher for repairs (8%), and about the same as you for others. I'm finding properties that are right at the edge, which gives me hope, but like you, I'm a new investor as well.

I don't know if you're on Facebook, but there are some off market real estate groups for various towns/cities. It might be work just looking for deal analysis practice to see if you get closer to a number that works.

@Felicia West

The best answer to this is you should model out what each situation will cost you in excel. There are typically different interest rates associated with how much you are putting down (20%, 25%, 30%, etc.) as well as different points charged.

Model out each situation in excel and you'll have a concrete answer as to which is cheapest.

 20% will be your min required, 

Hello Felicia, 

The good news is that rates have started to come down a bit so that can help your cashflow a little more. Typically if you put 25% down you do get better rate assuming you have a 760 or better fico. Not sure what market your in but if you can find something that you can potentially at the very least break even then that's a win in this market. What you don't want is to be negative even if its $100 unless you have a plan where you know that the appreciation will help offset that negative rent or you know you can squeeze out more juice in the near future by adding more value to the property later. If you have more than 25% down and you know that you can use the rest of the money you have to help you fix the property or invest it in another asset where the money will continue to grow then by all means go for it. Keep in mind that when you invest all of your capital into one property that money will be stuck there until you can cash out refi or sell the property. 

If you are ok living with roommates another option is house hacking where you buy a property as a primary and rent out the rest of the property then move out after 12 months to acquire your next one. The great thing about this strategy is that you can put as little as 3-5% down allowing you to keep more of your cash in your pocket and still get a lower rate. If you played your cards right you may even cashflow upon moving out because you will now rent the space your were living in. There's many paths to grow your real estate portfolio just make sure you pick the one that is right for you and remember this real estate game is a long term investment. 

@Albert Bui @Matthew Kwan

Compare your cash flow between options. Rate will be lower with a higher down payment, so you'll cash flow more, but look at what you're saving by using that as a down payment vs. what you'd gain by putting less down and and using that towards the next property. 

Ask your lender if there’s a discount at 25 or 30% (assuming 20% is required.)

It used to be “dumb” to put down more than required when rates were 3%. 

Today you might save 7% annually plus 1%+ on day 1 with origination and if there’s any chance to get even a 1/4th point lower rate with 25% down you’d be getting another 3/4’s of a % on your down payment. It’s pretty hard to earn a guaranteed 8-9% return. 

Putting down 25% instead of 20% won’t affect your until you can’t buy that 5th property and that might a couple years from now. You can always do a cashout refi if rates drop. 

@Felicia West I put down 30% on my first property and have regretted not having those funds for another investment ever since.

I recommend 20%. And my lender doesn’t charge extra fees or costs just to put down 20%. I closed a deal today and the costs were rock bottom in my opinion. $7000 closing costs on a $420K property plus an additional $30K for construction loan.

If you are planning on buying more properties, I'd do 20% down.