Investing now or waiting for a larger down payment

Starting Out
8moFollow

Investing now or waiting for a larger down payment

Samuel Nelsen
Member since 2024 · 2 posts · 8 votes

Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 

8Reply
508 views

Most Popular Reply

Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
8mo

You need more saved up. 20K is a 80-100K property (going the conventional 20% down route). In my market (which is a Midwest one) that is a D to C- area. The 20K also doesn't include closing costs, having reserves set aside and any repairs or make ready that is needed. I would look at house hacking or potentially owner financing. Definitely be careful of buying a property OOS using all your funds. Spend time now learning, saving and getting rid of consumer debt (if you have that). Attend meet ups and network locally where you are.

5Reply
See this reply in the discussion

28 Replies

Jump to latestLatest
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    8mo

    You need more saved up. 20K is a 80-100K property (going the conventional 20% down route). In my market (which is a Midwest one) that is a D to C- area. The 20K also doesn't include closing costs, having reserves set aside and any repairs or make ready that is needed. I would look at house hacking or potentially owner financing. Definitely be careful of buying a property OOS using all your funds. Spend time now learning, saving and getting rid of consumer debt (if you have that). Attend meet ups and network locally where you are.

    5Reply
  • Tre DeBragaPro Member
    Real Estate Agent · Worcester, MA · Member since 2022 · 112 posts · 49 votes
    8mo

    Hey Sam, 

    I would just get more specific. Where are you looking to invest, what is your investing strategy, is it going to be owner occupied (in this case you might have enough depending on the market).. If you can respond to my comment with specifics of what you are looking to do and your goals I can help curate your situation.  

    2Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    8mo

    Hey Samuel, I'd recommend saving up some more capital and to start looking into house-hacking options where you can utilize a lower down-payment. If you want to take on more risk you can try utilizing the BRRRR method, but even then you'd want around at least $35k saved up and set aside just for real estate.

    [email protected]614-662-1652
    Reafco - Samuel Diouf528 Reviews
    WebsiteView Page
    2Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    8mo

    @Samuel Nelsen, $20K can work, but I’d recommend saving a bit more so you can put a stronger down payment down and still keep cash in reserve for repairs and vacancy. From my experience, only buy rent-ready, verify rents with real comps, and get a solid local property manager/contractor lined up before you close, so the numbers don’t fall apart after purchase.

    [email protected]614-490-1163
    Kerlous Tadres | Reafco Real Estate541 Reviews
    WebsiteView Page
    3Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    8mo
    Quote from @Samuel Nelsen:

    Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 


     I would save between $35k to $50k. You will either buy a really bad property or bad area with that downpayment. 

    With the amount i suggested, you can run BRRRR/value-add deals in decent locations. OR you can buy a cashflowing property in a cashflow-heavy market. Choose B- or C+ locations. Don't go below that.

    [email protected]614-802-5698
    ReafCo | Ahmed Group 533 Reviews
    WebsiteView Page
    2Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    8mo
    Quote from @Samuel Nelsen:

    Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 

    Hey Samuel, $20K can definitely be enough depending on the market and loan type, especially if you’re targeting lower price point areas, but I’d make sure you still have some reserves left after closing because repairs or vacancies always pop up when you don’t expect them. For out of state, the biggest thing is choosing a market with strong fundamentals and solid rent demand so the deal still works if something goes sideways, which is why a lot of newer investors are looking at Columbus right now. The macroeconomics there are really strong with population growth, job growth, and major companies expanding like Intel, Amazon, and Google, and because of that demand you can still find properties in the 120K–180K range that can hit the 1% rule and produce positive cash flow while also having solid appreciation upside. Starting with something that cash flows in a strong growing city usually makes the first deal way less stressful and sets you up better long term. Happy to connect and answer any questions you have!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9121 Reviews
    WebsiteView Page
    3Reply
  • Mayo Gilfurt
    Real Estate Consultant · Connecticut Ct · Member since 2026 · 131 posts · 30 votes
    8mo

    $20k can be enough, but the bigger question is whether you’re protecting liquidity after closing.

    For a first out-of-state rental, I’d usually want to see: • Down payment plus 6–9 months of reserves

    • A clean property manager already lined up

    • A conservative DSCR (don't rely on pro forma rent)

    Many first-time investors rush deployment and get squeezed on repairs or vacancy. Sometimes waiting a bit longer improves both leverage and sleep.

    Curious what market and price range you’re targeting?

    2Reply
  • Pavel Voroniuk
    Specialist · Member since 2026 · 54 posts · 25 votes
    8mo

    The bigger question isn’t just whether $20k is enough for a down payment — it’s whether it’s enough after closing costs, reserves, and the first unexpected repair.

    Especially for an out-of-state first deal, I’d personally want margin. Vacancy, turnover, and surprises feel very different when you’re remote and thin on reserves.

    If the deal only works because you’re putting most of your liquidity into it, that’s usually a sign to either wait or adjust price range. Durability matters more than getting started quickly.

    2Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 960 votes
    8mo

    @Samuel Nelsen

    Hey Samuel, you can absolutely start with $20k if you focus on markets where that amount gets you into a solid cash-flowing property without over-leveraging. Look for turnkey or light rehab single-family homes in stable neighborhoods where rents cover mortgage, taxes, and expenses from day one. Off-market deals and connections with local agents, contractors, and property managers will be key since they can help you avoid overpaying and secure reliable tenants. Starting small, learning the process, and building a strong local team will put you in a great position to grow your portfolio safely.

    [email protected]614-418-6081
    1Reply
  • Ethan HaiglerBusiness Member
    Real Estate Agent · Charlotte, NC · Member since 2019 · 111 posts · 58 votes
    8mo

    @Samuel Nelsen in Cleveland where I have a team, we can get you into a great BRRRR project for $10k or less. I have a private lender that will finance up to 100% of deals

    [email protected]704-607-2078
    3 Little Pigs Rental Management
    WebsiteView Page
    2Reply
  • David F.
    Member since 2018 · 113 posts · 136 votes
    8mo

    Not nearly enough. I would recommend you consider your $20k as cash reserves/savings for your investment property. For WHEN (not if) unforeseen expenses come. Non payment of rent, replacing HVAC/sewer line/roof etc. Those expenses will come, I promise, usually when you least want or expect them.


     So now start saving for your downpayment. Good luck!

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    8mo
    Quote from @Samuel Nelsen:

    Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 


     You can get a small single family property in a C class area in the midwest

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    2Reply
  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    8mo
    Quote from @Samuel Nelsen:

    Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 


    Just last night an investor was referred to us that had $60K in an IRA and wanted to start buying AirBnBs. We're looking at a strategy of them making shorter-term, higher-yield, lower-LTV bridge loans under $50K, which is really, really hard to find. Since we deal with a lot of seasoned commercial borrowers, we do see those loans regularly. That would help them build up some capital to have a buffer when they move into real estate buys in the IRA. I don't see a viable way to buy investor real estate safely with $20K when you have to include down payment, closing costs, operating expenses, reserves, etc. Perhaps building your war chest with a different strategy would be more appropriate...and safer.

    1Reply
  • Ryan SpathBusiness Member
    Real Estate Agent · Boise, ID · Member since 2017 · 576 posts · 379 votes
    8mo

    If 20k is all the money you have I personally would keep saving. If you are going to buy an investment property, you are going to be right in the 100k purchase price range. If anything goes wrong, you may be in trouble. We will likely need more information to help. A couple people have mentioned Columbus as a possible opportunity. The question you have to ask is are you willing to invest your nest egg in a place that is far away from home? 

    [email protected]208-600-2814
    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    8mo

    @Samuel Nelsen

    no, it's not enough.

    can you invest closer to where you live?

    1Reply
  • Mayo Gilfurt
    Real Estate Consultant · Connecticut Ct · Member since 2026 · 131 posts · 30 votes
    8mo

    The bigger question isn’t just whether $20k is enough for a down payment — it’s how that capital performs once it’s deployed.

    In some cases, waiting feels safer but actually slows momentum more than people realize.

    1Reply
  • Mayo Gilfurt
    Real Estate Consultant · Connecticut Ct · Member since 2026 · 131 posts · 30 votes
    8mo

    Curious what asset class you’re leaning toward — buy-and-hold vs value-add can change that decision completely.

    0Reply
  • Mayo Gilfurt
    Real Estate Consultant · Connecticut Ct · Member since 2026 · 131 posts · 30 votes
    8mo

    $20k can be enough, but whether it’s “safe” depends less on the number and more on structure and margin for error.

    For a first out-of-state deal, the biggest risks usually aren’t the down payment — they’re reserves, property management, and having room to absorb surprises without forcing bad decisions.

    In many cases, starting smaller or closer to home helps you learn faster with less downside, even if it feels slower on paper.

    0Reply
  • Min ZhangBusiness Member
    Real Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
    8mo

    Hey Samuel, with $20k you’d likely be limited to properties under $100K if you’re putting 15–20% down on a single family home. Keep in mind that closing costs, inspections, appraisal, and initial repairs (if any after closing) will also eat into that amount. I’d strongly recommend having additional cash reserves beyond your down payment especially for your first rental. Hope this helps

    [email protected]614-412-2912
    Reafco.512 Reviews
    View Page
    1Reply
  • Kyle HendricksPro Member
    Lender · Member since 2021 · 170 posts · 74 votes
    8mo

    Need a bit more information. Out of state may be tough unless you are looking at sub 100k purchase prices. Are you open to househacking in your current market? Could be a better option to get started and be able to put down less and get better financing.

    [email protected]253-355-0247
    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    8mo
    Quote from @Samuel Nelsen:

    Hello all, I am looking at buying my first rental property and I have a $20,000 down payment saved up for it. Is it enough money to safely use it to invest in a property out of state for my first time. Any advice will be greatly appreciated. 


    Heck, no!!! 20k is what you should have in reserves, AFTER down payment, closing cost, rehab cost, a couple months holding cost and PM fees! On top of that OOS investing comes with a at least 20% cost premium local investors don't have, operational inefficiencies and complications you have not even thought about. Shelf your real estate dreams (for now) and learn how to make money on the side. There are a million things you can do - just ask your favorite AI, give it some context over your skills, abilities, strength and weaknesses and get to work! We will see you back here when you have 100k in the bank!

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    8mo

    @Remington Lyman
    @Ethan Haigler
    @Arman Ahmed
    @Mayo Gilfurt
    @Jimmy Lieu
    @Kerlous Tadres

    A "solid cash flowing property without over-leveraging" - are you kidding me????

    You guys rub me the wrong way. I can't believe what I am reading. Telling a noob that $20,000 is a viable entry point is borderline predatory. Sorry, I take that back - that IS predatory!

    You all know the math. At least I hope you do!! 

    Even in Columbus that puts you into the bottom 10% of the barrel neighborhood with a house that is 120 years old and could easily use 50k in rehab - IF you are local and can keep it on a budget! No way for an OOSI, they will charge him a markup on everything. And you know it! The guy thinks he will see his spread sheet cash flow eventually show up in his bank account and you know that is never going to happen. He is lucky if he finds a tenant who will pay rent 90% of the time and not trash the place! And a qualified PM willing to take that on for the small rent amount.

      Let me also remind you: you are licensed and have a fiduciary duty to your clients. And if you don't understand the implications of what you are suggesting then you are not qualified to advise a client and I believe even in Ohio you are required to possess reasonable skill and competence. Setting up an OOS noob from a far away state who has never done a rehab or managed tenants in a low income area for a trial-by-fire is plain reckless. 

      If you really have to pitch so hard, at least have the integrity to include the full cost and what he will have to deal with after you walk away with your commission check

      5Reply
    • Mayo Gilfurt
      Real Estate Consultant · Connecticut Ct · Member since 2026 · 131 posts · 30 votes
      8mo

      Marcus — I appreciate you raising the risk side of the equation. You’re absolutely right that out-of-state, low-price acquisitions carry execution risk, particularly around rehab control, tenant quality, and property management.

      To clarify, my intent was not to suggest that $20k is a universally “safe” entry point, nor to minimize the operational realities you outlined. Any recommendation I make is framed with full underwriting, realistic vacancy and maintenance assumptions, and a strong emphasis on local teams and exit optionality.

      I agree that investors—especially newer ones—should be presented with complete costs, downside scenarios, and clear expectations, not spreadsheets that ignore reality. Sound advice requires that level of transparency, and that’s the standard I aim to hold.

      I respect your perspective and the reminder that discipline and experience matter in these markets.

      0Reply
    • Ricardo Amaya
      Real Estate Agent · NY · Member since 2026 · 8 posts · 4 votes
      8mo

      Samuel, $20,000 can be enough, but only if the deal structure and your reserves make the risk manageable. For an out of state first rental, the down payment is only one part of the equation. The real question is whether you can cover surprises without getting forced into a bad refinance or a fire sale.

      A practical way to think about it:

      First, confirm what $20,000 actually buys you
      If you are using conventional financing, $20,000 often becomes tight once you include closing costs, inspection items, initial repairs, and lender escrows. On a $200,000 purchase, 20 percent down is $40,000, so $20,000 usually means you are either targeting a lower price point, using a low down program, or a different loan type.

      Second, do not spend every dollar at closing
      For a first rental, especially out of state, I would try to keep 3 to 6 months of full housing expenses in reserves after closing, meaning mortgage, taxes, insurance, and an allowance for repairs. If using $20,000 leaves you with little or no reserves, that is a sign you should either wait, buy cheaper, or choose a structure that preserves cash.

      Third, out of state adds layers you need to budget for
      Property management, turns and vacancy, surprise repairs, and contractor coordination are harder when you are not local. Plan on a professional property manager, and budget for leasing fees, maintenance, and a vacancy cushion. If the numbers only work when everything goes perfectly, it is not ready.

      Fourth, underwrite for cash flow, not appreciation
      A safe first rental should be able to stand on its own. I would stress test it with higher interest, at least one month of vacancy, and realistic maintenance and capex. If it still cash flows and you still have reserves, then $20,000 can work.

      When waiting makes sense
      If $20,000 is your entire liquidity, waiting is usually the smarter move. A larger down payment is helpful, but what matters even more is having reserves plus enough cushion to handle the first year of ownership.

      A workable middle ground
      Consider starting closer to home, or pick an out of state market where you have a trusted boots on the ground team already lined up, agent, manager, and contractor. Another option is a lower priced property where you can still keep reserves after closing.

      I hope this helps. Good luck and stay strong. 

      0Reply
    • Ricardo Amaya
      Real Estate Agent · NY · Member since 2026 · 8 posts · 4 votes
      8mo

      Samuel, $20,000 can be enough, but only if the deal structure and your reserves make the risk manageable. For an out of state first rental, the down payment is only one part of the equation. The real question is whether you can cover surprises without getting forced into a bad refinance or a fire sale.

      A practical way to think about it:

      First, confirm what $20,000 actually buys you
      If you are using conventional financing, $20,000 often becomes tight once you include closing costs, inspection items, initial repairs, and lender escrows. On a $200,000 purchase, 20 percent down is $40,000, so $20,000 usually means you are either targeting a lower price point, using a low down program, or a different loan type.

      Second, do not spend every dollar at closing
      For a first rental, especially out of state, I would try to keep 3 to 6 months of full housing expenses in reserves after closing, meaning mortgage, taxes, insurance, and an allowance for repairs. If using $20,000 leaves you with little or no reserves, that is a sign you should either wait, buy cheaper, or choose a structure that preserves cash.

      Third, out of state adds layers you need to budget for
      Property management, turns and vacancy, surprise repairs, and contractor coordination are harder when you are not local. Plan on a professional property manager, and budget for leasing fees, maintenance, and a vacancy cushion. If the numbers only work when everything goes perfectly, it is not ready.

      Fourth, underwrite for cash flow, not appreciation
      A safe first rental should be able to stand on its own. I would stress test it with higher interest, at least one month of vacancy, and realistic maintenance and capex. If it still cash flows and you still have reserves, then $20,000 can work.

      When waiting makes sense
      If $20,000 is your entire liquidity, waiting is usually the smarter move. A larger down payment is helpful, but what matters even more is having reserves plus enough cushion to handle the first year of ownership.

      A workable middle ground
      Consider starting closer to home, or pick an out of state market where you have a trusted boots on the ground team already lined up, agent, manager, and contractor. Another option is a lower priced property where you can still keep reserves after closing.

      I hope this helps. Good luck and stay strong!

      0Reply
    Join the conversationCreate a free account to reply, vote on answers and follow this thread.
    Log InJoin for Free