@Terral Tyler unless there’s more information or something I’m missing I’d put down 20 percent. Since you’ll occupy it you get the better interest rate already and like you said you should avoid PMI.
Others will say as little as possible, I like doing 20 percent as it helps limit your risk some. That’s what I’ve done on all my rentals.
Depends on the answer to a few other questions ...
Will you need the cash for additional rental acquisitions in the near future ? Will the property require additional work, that might need your cash reserve? Are you looking at this investment as a cashflow investment or are you looking at it as an appreciation type investment?
If you believe you will need cash soon enough, then you want to put as little as possible, so that you can do more purchases to start building up your portfolio.
If you believe you won't need the cash for the near future ... then put down 20% and avoid extra expenses ... such as PMI ... etc.
My very first rentals, I bought them in class A, pure appreciation play, put 20% down. It was nice, but I ran out of cash fast ... Looking back, I wish I had done it slightly differently. Everyone's goals are different.
Good Luck !!!
Hello @Terral Tyler
Cash on cash return is something you may want to consider as well. If you do a FHA loan you need 3.5-5% down to purchase a home. Instead of paying the full 20% on a smaller property, you can get a multifamily property and house hack while you live there. When you want to move the numbers may be good enough where you keep the multifamily and rent it out completely. Yes you will have to pay PMI but you get more bang for your buck with multiple units.
Let me know if this helps or if you have any questions.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing