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Updated about 2 years ago on . Most recent reply

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John McKee#5 Commercial Real Estate Investing Contributor
  • Investor
  • Fairfax, VA
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So how much cash are you willing to put down?

John McKee#5 Commercial Real Estate Investing Contributor
  • Investor
  • Fairfax, VA
Posted

Everyone is complaining about cash flow, but the truth is everything cash flows.  It's a matter of how much you want to put down on the property.  Even if you are doing a value add deal you most likely want some initial cash flow on the deal.  How are you coming to terms with putting more down?  Are you waiting it out, offering less, or putting more down?  What say ye?

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Wayne Kerr
  • Rental Property Investor
  • Somewhere over the Rainbow
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Wayne Kerr
  • Rental Property Investor
  • Somewhere over the Rainbow
Replied

For me personally it's about the ROI - if I put down 20k, I want to net at least 2k per year or 10%

I do deals occasionally where I'll trade lower cashflow for a higher equity capture at purchase - for example my ROI my be 5% but I'll pick up 15-20% in equity

That being said - I typically try to put down the LEAST amount possible - for 2 reasons - (1) it allows me to scale faster since all my capital isn't in one deal and (2) the tenant is paying the mortgage anyway so I don't necessarily need a lower mortgage payment since the tenant is paying that for me anyway

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