How much cash should I use for a down payment & holding costs

4 Replies

I cannot decide what percent of my cash to use as a downpayment, and how much to set aside for holding costs. 

I will be doing flips and have my credit line approved. I was thinking of using half of my cash as a downpayment, and the other half as a surplus to pay the holding costs. I'm sure I can go 70% downpayment and 30% surplus, but I want to play it safe. 

@Patrick Martone I feel that this will be complete personal preference but if you are intending to do flips, would you consider doing more than one rehab project at a time?  Also, how much if your line of credit for and what price point of properties are you examining?  The answers here might helps us make recommendations better.  Thanks!

Andrew Postell, Lender in Texas (#392627)
817-873-0621
Originally posted by @Andrew Postell :

@Patrick Martone I feel that this will be complete personal preference but if you are intending to do flips, would you consider doing more than one rehab project at a time?  Also, how much if your line of credit for and what price point of properties are you examining?  The answers here might helps us make recommendations better.  Thanks!

I will be doing one at a time, doing mainly cosmetic work myself. My HELOC is 312,000, I have 60,000 in Cash. The pricepoints of my homes vary form 150,000-280,000.

Originally posted by @Andrew Postell :

@Patrick Martone good information. I would strongly recommend to just use the LOC to do the entire project. That way you have $0 holding costs and it's more profits to you.

Well the issue is i need my cash to pay off the interest from the LOC monthly.

The more cash i put down, the less interest I pay monthly on the loc. If i put all my cash down, then i have no surplus to pay the loc. 

I have considered setting cash aside for 4 months of interest payments, but you never know what can happen with flips. Worst case I go back to fulltime work, but that is a last resort.

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