More money down makes the deal.. Thoughts?

Question

Brent Coombs · Answer

Hypothetically then, what do the numbers look like if you put 100% down (vs leaving your money in the bank)?! And then, hypothetically, what will your return be if you never borrow any money for as many properties as you want?!...

Jesse Waters · Answer

When I look at a property I assume 100% financing to see how it looks.  True, the cash flow will increase with a higher down payment but there is a cost, more money out of pocket, and I haven't really seen any properties that I have looked at that drastically improve more than a small percent by putting a larger down payment on the property.

Just my 2 cents worth.

Joe Villeneuve · Answer

Short answer no...because it doesn't put you ahead...it actually puts your more behind.

I can show you why, but I would need some exact numbers...not just 30% and 30%, and not just $100 more/less per month based on the down payment.

Account Closed · Answer

@Brent Coombs

I of course didn't mean the hypothetical to extend to just buying properties all out. Just playing with the idea of putting more money down to make more profitable deals, without worrying about leverage.

@Joe Villeneuve

Thank you for your quick calculation. That completely answers my question.

Joe Villeneuve · Answer

Exactly.  The more money you take out of pocket up front (higher DP), the more behind you are starting out at...and have to catch up to.  If the extra 10% down represents another $12,000 out of pocket, but you are only getting $100/month ($1200/yr), that means it will take you 10 MORE years to break even.

More money down makes the deal.. Thoughts?

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