I'm about to close on 5 units. The seller of the properties has owned these properties outright and hasn't kept rents up to market; he's roughly $300 too low per unit. He's even let half of the tenant leases expire. Nonetheless, I'm going to end up paying market price for the homes and it will take me some time (I presume 1-3 years) to get rents up to what they should be without losing all my tenants simultaneously.
With that said, I was going to leave a larger down payment (roughly 45%) so I can squeeze more income out of these properties until rents can get raised, but I can't decide if that's the best move. It would be a 5% ROI if I paid the 30% down which the bank has asked for at the current rents.
Alternatively, I can always just live with the 5% ROI and just go buy more properties and keep accumulating homes. I've never been fond of the idea of using more cash, but it does leave a lot more breathing room to cut your mortgage in half.
I'm having a hard time figuring out how to best use the money at my disposal.
It is going to depend on what you are comfortable with and how much you want to leverage. A purely math based approach would tell you to leverage as much as possible. I would personally go the other direction and opt for the lower mortgage payment. In this case it is personal preference.