interest rate vs amount down

1 Reply

Hi all,

Just wanted to get your thoughts on this. When you guys finance your properties, what is more important to you: the interest rate or the amount down required by the lender. I know there are a lot more things to consider than just this, but from an ROI standpoint, would you take a higher interest rate for only having to put 20% down or lower interest rate and have to put 25% down. Let's say the difference in interest rate is 0.5%. Thanks!

Until interest rates exceed 8%, I don't really care much what they are. I'd rather have as little of my own money in a deal as possible, so if my only choices were 20% or 25%, I'd choose 20%, but honestly, I try to find ways to keep all my money out of the deal, period.

I'll borrow so I can offer cash on a property and get it at a cheaper price so that when I refinance, even though they keep "25%" equity in the house, the refinance is on a higher value than what I paid. On my most recent purchase that meant the only cost I actually paid with my money was $5,500 for repairs. Now, the price of rent is only $200 more than the mortgage on a 15-year note, but I'm out of pocket so little money, it's well worth not cash flowing.

I might not take a deal like that if cash flow was my top priority, but honestly, I'm not thinking much about interest rates so long as the numbers come out to me not losing money.