We want to begin the journey this year but will likely have ~40k for a down payment.

Hey Abe, one thing I would mention is to consider what down payment would be required with the lender you work with.

Payments show up on time.

Hi Arshiya,Typically a Hard Money Lender will look at your:Down Payment (assets/liquidity to put into down payment) - 20-30% for first time investorsProperty value and After Repair ValueRehab Plan and Timeline - detailed rehab plan with realistic timeline and budgetExperience - not necessary but helpsFinancial Strength - credit score, track recordsExit Strategy - how you plan to pay the loan off

Can you try to utilize a 40yr term or I/O period to lower the payments a few bucks?

They would provide you with the terms befitting your situation, you would agree to the terms, pay for down payment, closing costs, appraisal.

How much down payment should I prepare?

An example would be those who can't afford a mortgage of less than their cost of rent simply because they don't have a down payment and the score to back it, yet provide accurate and detailed rent payments over X amount of years.

Knowing interest rates are crazy right now and cash flow would be minimal anywhere without an extremely large down payment, I have thought about and am fortunate enough to think about purchasing an investment property 100% cash.

You'll need a down payment which is negotiable between you and the seller.