Drawbacks of making a large down payment?
We are hoping to buy our first buy-and-hold property by the end of this summer. We feel like we've been analyzing properties ad infinitum and just need to take action!
We live in the East Bay Area (Livermore) and would like to buy locally but what we could afford here would mainly be condos/townhomes; not sure we like not having full control over the property. We both like the Folsom/Roseville area (near Sacramento where we are from) and find ourselves in those areas several times a month visiting family.
We've read the advice on not to buy any property with negative cash flow. It seems, though, that if we put a larger down payment, we can create positive cash flow. We know that reduces some leverage, but we are somewhat conservative and don't necessarily want to leverage to the hilt.
The question is (and maybe there is no right answer): is it advisable to put more than 20-25% down for the sole purpose of generating positive cash flow? What are the negatives of that if we plan to only hold one or two properties for the long term?
We already have a significant (to us) chunk of money in stocks and would be investing in real estate solely to diversify our holdings. Would that change the answer?
Looking forward to hearing your thoughts and advice. Thanks!