Putting 40-45% down to cash flow a property
Argyle, TX · Member since 2013 · 76 posts · 20 votes
Putting 40-45% down to cash flow a property
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesYou do realize when you put down more money (especially that much more) all you're doing is paying that negative CF upfront...and gaining nothing. You're behind before you even start. The cost of RE, the total cost, is all the cash that comes from your pocket...no matter when that happens.
25 Replies
- 1wJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Carlos Silva The answer is no. Most investors are not putting that much into turn-key rentals. The ones that do are further a long the investing journey, scaling back (selling duds), or buying "stress free" rentals. They pay a company for PM as well. It's a long term appreciation play; call them piggy banks.
If you're new to REI you want and need to be fully hands on. Turn-key is the opposite of that mindset. You want to find/buy/create equity and CF where ever possible. The majority of turn-key companies can't offer that. You can research this or complete a BRRRR and learn the truth for yourself. CF can be found in Argyle, TX but it's unlikely with a turn-key rental. In my opinion distressed properties with value-add upside it the where it's at if you want to scale, and my statement works in so many markets.
If I put 40% down on properties all my capital would be tied up. In my market with my business $$$ that's like 2 SFR at the most. The ROI would be terrible and I'd burn most of my reserves which crazy risky.
- Argyle, TX · Member since 2013 · 76 posts · 20 votes1w
These are two scenarios I’ve been looking at.
(1) SFR listed for 150k, rents are roughly 1,450. Putting down 25% or 37,500 cash flow roughly 250.00 a month
(2) SFR listed for 400k put down 40% 160k finance 240k. Break even cash flow.
I was just assuming it’s better to have more leverage and some one else pay down the debt.
- 1wJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
You do realize when you put down more money (especially that much more) all you're doing is paying that negative CF upfront...and gaining nothing. You're behind before you even start. The cost of RE, the total cost, is all the cash that comes from your pocket...no matter when that happens.
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes1w
Right, nothing more than mental gymnastics with an illusion of success. I'll pass.
- 1wErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
It might be that your market is harder to BRRRR. I am seeing in other states, borrowers put 10% down + closing and successfully exit on the refi if they bought with a good cushion and anticipated the rehab costs correctly.
LuxePrivate Investments LLC 572 Reviews - 1wArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 904 votes
Quote from @Carlos Silva:
Been looking for turn key buy and hold properties, having a difficult time finding ones that cash flow with 20% down using 6.5% -7.5% rates. Is anyone still buying/investing and putting 40-45% down to make sure the properties cash flow in the DFW area?
Hey Carlos, I’m seeing the same thing in a lot of markets. Putting 40 to 45% down can make the cash flow work, but it also ties up a lot of capital. I’d compare the numbers in Midwest markets like Ohio, where lower purchase prices can make turnkey rentals pencil out with less money down.
- Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes1w
I just screen-grabbed Mortgage News Daily's Owner-Oc National Average 30-year Fixed Rates. The rate range you are mentioning is a bit low right now for Non-Owner-Oc Investment property. Not too far off, but a bit lower than market as of 9/9/26. That being said, 80% LTV is more that do-able IF you can get the rents to eclipse the PITI+HOA. It's harder to do than it was 2-3 years ago. Most our our clients are putting down 25% or more just to improve cash flow...and the rates are much better the lower the LTV. This is what we see as a lender.
- 1wHarry B.Pro MemberLender · New York, NY · Member since 2026 · 48 posts · 15 votes
Quote from @Carlos Silva:
Been looking for turn key buy and hold properties, having a difficult time finding ones that cash flow with 20% down using 6.5% -7.5% rates. Is anyone still buying/investing and putting 40-45% down to make sure the properties cash flow in the DFW area?
Carlos, i do not disagree with your long term goals of owning doors and creating passive income. I would suggest starting with distressed properties and using 10% down payment for the acquisition and getting that money back in 3-6 months using brrr. It may benefit you to create a few gc relationships along the way to ensure you have 'boots on the ground' in every zip code you decide to invest in. --Also search the 'subject-to' market for lower acquisition costs on subjects that can be rente right away.--Lastly keep an open eye for 3-4 units, since they finance easily and require less out of pocket to maintain each 'door'. Godspeed!!
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes1w
@Carlos Silva We bought and sold over 1,000 properties for our own inventory, and we never put 40% down, and we never put down more to cash flow. But that's just us. Last year we bought properties from builder at 4.25%, 4.25% and 4.75%. This year I saw a builder offereing as low as 3.85% interest. Plus look for non-institutional financing liek from sellers, friends and relatives with money in the bank paying 1% to 4% who would be willing to finance you for a better return for them. Also shop off market, Sheriff Sales, Tax sales, Bank repos, HUD, and VA for lower prices. HUD and VA sometimes finance their better repos. At one time we had 7 VA mortgages, 90% LTV for investors.( which only required 10% down even for investors.) HUD and VA will finance 1 to 4 units as long as 1 of the units is owner occupied for 3.5% down and zero down for Vets.
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes1w
@Carlos Silva PS also the first 11 properties that I personally bought were all 100% financed in one way or another, becuase I did not have savings and was only on the job for 9 months at a low paying entry level job. If I can do it anybody can. First property I house hacked renting rooms to others to cover the mortgage payment. 2 bedooms rented covered my P+I, and I lived for free. We split utilities. Told story in Bigger Pockets Podcast #82, check it out.
- Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes1w
This is not the way I invest. I honestly don't see the point unless you are just so in love with the property that you have to have it. Not my style, but if you think it's something that will massively appreciate soon I guess I get it. However, it makes no difference. You are paying the negative cashflow upfront. I wait for the deal that makes sense to me. Most things don't qualify these days, but every now and then something will fall into my lap. In other cases, I take something distressed, fix enough to rent, they add value over the years to push the equity.
- Member since 2026 · 7 posts · 2 votes1w
Worth running the actual numbers here, because the down payment changes less than it seems.
Illustrative only, with a hypothetical $350K purchase, $2,200/mo rent and a 7% rate; swap in your own deal:
At 20% down ($70K), the mortgage is about $1,863/mo. Operating costs run about $1,242/mo, and roughly $613 of that is property tax alone at around 2% of value, which is typical for a lot of DFW. That leaves NOI around $958/mo, so cash flow is about -$905/mo.
At 40% down ($140K), the mortgage drops to about $1,397/mo and cash flow improves to about -$439/mo.
At 45% down (about $158K), the mortgage is about $1,281/mo and cash flow is about -$323/mo.
So the extra $88K or so over the 20% scenario buys about $582/mo of reduced loss, roughly 8% a year on that extra cash; not nothing, but you're still negative. The down payment isn't really the problem; the tax load and the rent-to-price ratio at 7% are.
To break even at 20% down on that $350K house you'd need rent around $3,100; at 45% down, around $2,500. Or, at $2,200 rent, a purchase price closer to $220K. Those deals exist; they're just harder to find.
Putting more down can still make sense if your plan leans on appreciation, paydown and a refi later, but it doesn't fix the underlying math. I don't own doors yet myself, so weight this as arithmetic rather than experience.
- 1wJ CastroBusiness MemberLender · Florida · Member since 2025 · 661 posts · 239 votes
Quote from @Carlos Silva:
Been looking for turn key buy and hold properties, having a difficult time finding ones that cash flow with 20% down using 6.5% -7.5% rates. Is anyone still buying/investing and putting 40-45% down to make sure the properties cash flow in the DFW area?
From a lender’s perspective, I think the bigger question is whether putting 40–45% down is actually the best use of your capital.
If a turnkey property only cash flows after putting nearly half the purchase price into it, I’d take a step back and look at the deal itself before simply increasing the down payment. More equity will obviously improve debt service and cash flow, but it also ties up a significant amount of capital that could potentially be used for additional acquisitions, reserves, renovations, or other investments.
I’d personally run the numbers at several leverage points — 20%, 25%, 30%, 35%, etc. — and compare:
Cash flow + cash-on-cash return + DSCR + equity position + opportunity cost of the additional capital.
Also, don't overlook the financing structure. A 6.5–7.5% rate doesn't necessarily tell the entire story. Depending on the property and borrower, DSCR financing can allow investors to qualify primarily based on the property's rental performance rather than personal income, which can be useful when building a rental portfolio. The DFW market is a good example of why investors have to be disciplined right now. If the property only works because you're putting 45% down, you may be solving the financing problem rather than finding a better investment.
I'd rather see an investor find a property with strong fundamentals and use reasonable leverage than force a mediocre deal to cash flow by dumping more capital into it.
That said, there are definitely investors who prefer the lower leverage/high-equity approach for stability and long-term wealth building. There's nothing wrong with that strategy — it just needs to align with your overall portfolio goals.
A good question to ask yourself is: “Am I trying to maximize cash flow per property, or maximize the return on my total available capital?”
Those can lead you to two very different investment decisions.
If anyone in DFW is actively buying right now, I'd be curious to hear what purchase price, rents, leverage, and actual cash flow numbers you're seeing. That's where the real conversation gets interesting.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1wthis is the reality right now in the real estate market. if you are looking to buy something at a "retail" price in a decent location, yes you can buy stuff in other areas which have better cash flow. they probably don't have appreciation but if you want to buy a decent property in an a or b neighborhood, more than likely it's going to take 40% down to get it cash flowing (unless you buy something that you can rehab or you get it off market). whether or not it is a good investment depends totally on the person in a situation and the amount of risk they want to take.
7e investments53 Reviews - 1wDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Leverage is RE's superpower. Reducing leverage is like introducing kryptonite. Why would you want to do this? It is an ROI killer.
10% appreciation at 80% LTV equates to 50% return from appreciation.
10% appreciation at 60% LTV is 25% return from appreciation. This is around killer.
What is the ploy here? Turn key implies no value add and often paying top of market price. The LTV was set to create a near cash neutral stance which I am skeptical if it does in DFW with their high property tax if you are properly allocating for vacancy and sustained expenses (including cap ex). So not much cash flow. And by reducing leverage you have significantly reduced the return from appreciation. Where is the return that justifies owning residential RE with the associated effort and risk.
GOOD LUCK
- 1wRoque MirandaPro MemberRental Property Investor · Miami FL · Member since 2024 · 61 posts · 32 votes
Carlos, I think it really comes down to your strategy.
For us, putting 40–45% down just to force a property to cash flow defeats part of the purpose of investing, especially if you're trying to scale. Yes, the property may show positive monthly cash flow, but you have a significant amount of equity sitting in one asset producing a relatively low return on that capital.
Our approach is different. We focus heavily on buying below market value, creating equity through the purchase and rehab, and then refinancing based on the stabilized value. We're willing to use hard money and accept a higher short-term financing cost if it allows us to preserve liquidity, complete the rehab quickly, refinance, and recycle that capital into the next acquisition, it works very well.
We look at cash flow, but we also look closely at cash-on-cash return, equity created, total capital left in the deal after refinance, and how quickly we can redeploy that capital.
Also, don't limit yourself to DFW. There are still plenty of markets outside DFW where properties can cash flow tremendously, even with today's rates, there are cash cows markets all over the sunbelt. Sometimes the answer isn't putting 40–45% down to make a deal work — it's looking for a market where the fundamentals and price-to-rent ratios make more sense.
Personally, if a turnkey property requires 40–45% down just to produce acceptable cash flow, I would question whether the deal is attractive enough at that purchase price. I'd rather find a property and a market where I can manufacture the equity than bring all that equity to the closing table.
At the end of the day, capital is what allows you to scale. I want as little of it trapped in each property as possible while still maintaining healthy cash flow and a strong asset.
Best of luck to you!
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1w
The only way I'd put more than 25% down is if it comes from a 1031 exchange. If it is actual earned income you use for the downpayment then keep it to 20-25%.
Leverage is RE's super power and there is nothing wrong with negative cash flow for a quality asset. As long as you are making enough in your W2 to cover the gap. I always say this: if an extra $200 per month make or break your financial life, you probably should not invest in RE in the first place.
Wealth is generated from equity, not from cash flow. So with long term goals in mind I would rather buy 2 properties with negative cash flow than 1 with 40% down.
I would also MUCH rather have one cash flow negative property in a good school district than 10 in the hood that show cash flow on paper!
But that leaves the issue of scaling: if you want to build a portfolio, you have to force equity. W2 earned income is really not a very good way to build a portfolio. Your real estate should have babies: if this were a farm, you buy a few head of cattle and then grow the herd. Takes time and effort, but beats buying a herd. In Multifamily it's called "repositioning" or more old school value ad: reduce vacancy, fix up, increase rents -> drive up NOI and then refi. In the residential world this is known as BRRRR.
- 1wJames J. Rezendes IIBusiness MemberReal Estate Agent · RI · Member since 2026 · 19 posts · 7 votes
This isn't really an "investment strategy," it's a workaround for a rates that do not pencil at normal leverage. It can make sense if you're playing a long game — buy the asset now while it's flat, force cash flow with a bigger check, and let a future refi or rate drop improve your leverage later. It makes less sense if you're trying to scale a portfolio, since tying up 40-45% per deal caps how many properties you can acquire.
I'm not able to tell you it's "right" for you specifically — that depends on your other capital options, your timeline, and whether you're optimizing for cash flow safety or portfolio growth. If you want, I can run the actual cash-on-cash numbers on a specific address so you're deciding off real figures instead of the general market data.
- 1wGregory AcsPro MemberLender · MD · Member since 2025 · 137 posts · 52 votes
I think more investors are asking that same question today. Putting 40-45% down can improve cash flow, but I'd also look at the opportunity cost of tying up that much capital in one property. Sometimes it makes sense, and other times a different financing structure or market can produce a better overall return while preserving liquidity for future deals.
I'd compare several scenarios before deciding how much to put down instead of assuming more is always better. If you'd like to run through different financing options or see how changing the down payment affects your cash flow and long-term returns, I'd be happy to help.
- 1wGregory L DanyowPro MemberNew to Real Estate · VT · Member since 2026 · 11 posts · 0 votes
I just put in my first offer on a rental property today... (go me!) and ultimately what I THINK is true is that if you roll with a turnkey, you're looking to invest in a property that hopefully appreciates well and is less about cash flow. All the work is already done so you can't ADD anything to it to push cash flow.
If you want cash flow, you want to find cheaper, "value-add" properties that you can put 20-25% down and use the rest of that capital you have to fix up the joint either cosmetically, mechanically, etc... adding a unit... whatever it is that allows you to either raise rent or SAVE on expenses by investing in efficiencies.
I'm going to be putting that into practice soon enough and I feel this is correct. Others with way more experience may disagree with me. - Mexico City · Member since 2026 · 4 posts · 1 vote1w
That much down is basically you trading equity for cash flow, so it's worth checking whether it actually gets you where you want to be. A quick way to see it: calculate your cash-on-cash return at 40-45% down vs. a more typical 20-25%. If the cash-on-cash at the higher down payment is still mediocre (say, under 6-8%), you're tying up a lot of capital for a return you could probably beat elsewhere — and you lose the leverage benefit that makes real estate attractive in the first place.
The other number I'd look at is DSCR at a normal down payment. If the deal can service debt at 20-25% down with something like a 1.2x+ DSCR, putting 40-45% down isn't really necessary for the deal to work — it's more of a personal risk preference. Nothing wrong with that, just worth being clear on which problem you're solving: making the deal work, or reducing your own risk tolerance.
In a 6.5-7% rate environment in DFW, I'd model both scenarios side by side before committing that much capital to one property.
- 1wRudy TaghiPro MemberRealtor · Los Angeles California · Member since 2018 · 11 posts · 3 votes
Personally, I wouldn’t put 40–45% down simply to force a weak deal to show positive cash flow. I’d want to know what return that extra cash is actually producing compared with keeping some of it liquid for reserves or another opportunity. Sometimes a bigger down payment absolutely makes sense, but to me the question is whether the property itself is strong enough at the current purchase price. Not just whether we can make the payment smaller by adding more cash.
Have you calculated the cash-on-cash return at 20%, 30%, and 40% down side by side? This kind of comparison usually tells me a much clearer story.
- Specialist · Long Beach, CA · Member since 2011 · 873 posts · 393 votes1w
I know of a few builders that offer 3-4% interest rates on brand new property. One them is building new duplex's south of Ft Worth that offer a 3.75% rate for 10 years. And they cash flow decently
- Englewood, NJ · Member since 2018 · 357 posts · 61 votes5d
Carlos, a lot of good math in this thread already. I want to push back on the framing a bit.
The question shouldn't be "how much do I put down" but "am I paying the right price for this property." If you need 40 to 45 percent down to make a turnkey rental cash flow in DFW, the property is telling you something. It is telling you the purchase price is too high for the rent it produces.
I buy properties at tax deed auctions in Broward County, so my acquisition prices are well below market value. I am not sharing that to pitch auctions. I am sharing it because the principle applies anywhere: when you buy at a meaningful discount, the cash flow problem largely disappears. You do not need to engineer the financing. The deal works at any reasonable leverage level.
Here is what I see in your numbers. A 150K property renting for 1,450 with 25 percent down gives you 250 a month. That is a 4.8 percent cash on cash return before reserves, vacancy, and capex. That is thin. Now look at the 400K property with 40 percent down at break even. You are putting 160K in and getting nothing back monthly. Your return on that 160K is zero until the tenant pays down the principal and the property appreciates. That is a very expensive way to build equity.
Matthew Walker ran the real numbers above and showed that even at 45 percent down you are still negative on a 350K house with 2,200 in rent. The property tax alone in DFW eats you alive at those price points.
The better question might be: what purchase price on a property renting for 2,200 in DFW would actually cash flow at 20 to 25 percent down? Run it backwards from the rent. If the answer is around 200 to 220K, then that is the price you need to find. Those deals exist but they are not on the MLS as turnkey rentals. They are usually distressed, off market, or in transitioning neighborhoods.
David Krulac mentioned tax sales, sheriff sales, HUD repos, and bank repos above. That is where you find the acquisition discount that makes the rest of the math work. The discount is what replaces the 40 percent down payment. You keep your capital liquid and the property cash flows from day one.
I would also add that tying up 160K in one property at break even means that 160K is not available for the next deal, for reserves, or for rehabbing a property that could produce even better returns. Opportunity cost is real.
Curious, have you looked at what price point in DFW actually works at 20 to 25 percent down, or are you mostly seeing turnkey listings in the 300 to 400K range? - Investor · Washington, US · Member since 2021 · 58 posts · 12 votes16h
That 4.8% CoC is before reserves, vacancy and capex, so run it again with those subtracted and see what is left - most deals like this land near zero or negative once you hold back 8-10% vacancy plus 10% for capex and maintenance. Also compare the all-in cash against what that same down payment does elsewhere, since at 40-45% down you are basically buying a low-yield bond with a roof on it. If the numbers only work at that much equity, the real question is whether the price or the rent is wrong, not the financing.
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