How much cash to put for down payment?
If I have a good amount of cash. Is it smarter to buy a more expensive house with 20% down or a cheaper house with 30% down?
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@David Arshakyan I'm guessing you're a buy-and-hold investor. If you had $40,000 I would suggest putting 20% down on $200,000 vs. 30% on a $133,000 house for a bunch of different reasons.
First, cash will come in handy for repairs and reserves.
Second, think of the kind of tenant you will get in a house that appraises for $200,000 vs. one that appraises for $133,000. Depending on the area, you may be choosing between 3 bedroom and 2 bedroom. You may be choosing between 1 income producer and 2 within the household.
Third, if both of those properties appreciates 2% per year for the next 5 years, you realize $20,816 on resale in the latter example and $13,877 in the first. You've put the same amount of money down, but you get around $7,000 more at the end.
Fourth, rates will be lower on a higher loan amount than a lower one.
There are all kinds of reasons to put 20% down instead of 30%. Maybe this starts to give you an idea why. Peace.