5% or 20% down - building real estate portfolio

7 Replies

Hi all,

I am excited to get into real estate investing. I purchased my first property, a triplex for 500k and will live in one of the units. I have ~200k saved up and would like to build a portfolio of properties. How much would you recommend I put down on the property? Given I'll be occupying the building, I have the opportunity to only put 5% down.

Also, I plan on doing some renovations and the ARV will be around 650k. I plan on refinancing the property within a year. What would happen with the CMHC premium if I went with 5% and then refinanced for 80% LTV 30 year amortization?

Curious if taking advantage of only putting 5% down is something I should really consider. Note I remain cashflow positive in all scenarios.

Thanks in advance.

If you remain cashflow positive and can bump the value up with some renos...I'd do 5%, refi to 30yr with 80% ltv (even pull out and remaining equity of the numbers still work) and keep remainder of your $200k to purchase your next investment....use leverage to your advantage...as your next investment property you'll need 20%.

@Dominik B.

Not sure about CMHC...mortgage broker question I'd think.

Depends on your timeline for you next purchase and if you need to be cashed up. If a year fits your plan then you could 20% it....but also make sure your arv is well decided on based on comparable solds etc to make sure you can hit that value and get your $ back out.

Also look at your cash on cash return at 5 and 20%...even factor in if you have to pay off the CMHC fees worst case...see what numbers work best and what fits your goals

Hey Dominik!

First of all, note that if you are purchasing a house with 3-4 units, you are required to put at least 10% down. But if you are talking about a SFH or duplex, then yes, 5% is allowed.

From my understanding, if you refinance after improvements and you are able to take equity out while leaving in 20%, there should be no problem. The only catch is that the premium would be paid off from the refinance and you would not recuperate the insurance premium. We would have to sit down and go through the numbers to see what option is best!

Like Chris said, make sure that you know you will be able to to increase your property by that much. You don't want your money stuck sitting there. But if doable, cash is king and using the 10% leverage to your advantage, do it.

If you want, you can message me and we can talk about potential strategies on this property your looking to obtain and and lock you in a pre-approval! 


Zach Bousquet

Mortgage Agent

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