Putting 40-45% down to cash flow a property

Denton, Texas
General Real Estate Investing
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Putting 40-45% down to cash flow a property

Carlos Silva
Argyle, TX · Member since 2013 · 76 posts · 21 votes

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?

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
1mo

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.

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  • Gregory AcsPro Member
    Lender · MD · Member since 2025 · 203 posts · 80 votes
    1w

    Hi Carlos,

    I'm seeing more investors ask the same question. Putting 40% to 45% down can improve cash flow, but it also ties up a significant amount of capital that could potentially be used for future opportunities. Sometimes adjusting the financing structure or expanding the search criteria can achieve similar results without committing that much cash upfront.

    I'd compare the return on the additional capital you're putting down against what that money could earn elsewhere. If the numbers only work with a very large down payment, it may be worth looking at different properties or financing options before moving forward.

    I'm a mortgage broker and work with investors throughout Texas. I'd be happy to help you compare different financing scenarios to see which structure gives you the best balance of cash flow and long-term returns. Feel free to send me a message.

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  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    6d

    I would not put down 40%-to 45% to improve cashflow. If I'm buying for the cash flow, I'm financing as little as possible, not as large downpayment as possible. If I were looking at a deal where I needed to put down nearly 50% to make it cash flow, I would pass on that deal. However, there are times when I bought property not for cashflow. I've bought farms and woodland, which generated no cashflow, but were bought for subdivision possibilities. These properties of scatterred lot bought for resale did not generate any cashflow, but many were mome the less excellent deals because they were sold for much more than the purchase price.

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  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4d

    A lot of people do this in my market when buying house hacks to OWNER OCCUPY, once you factor in class A area growth, rent increases and owning quality assets long term while living free in your favorite neighborhood it does work out well for them. For a pure investment property I would instead buy 25% down and put the extra funds into a value add as this strategy will create instant equity. Do cosmetics, add in unit laundry and drastically raise the rents, a value add does not need to be a ton of risky work. Buying truly full turnkey properties rarely makes any sense, maybe 15 years ago when real estate was cheap it did.

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  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    2d

    @Carlos Silva In most decent DFW neighborhoods, a house won’t cash flow much at today’s rates, even with a big down payment. Putting 40-45% down just means you pay for the thin cash flow up front.

    Cash flow is only one of the four ways a rental makes you money:

    1. Cash flow: often small or break-even right now

    2. Depreciation: a tax write-off that can shelter your rental income

    3. Principal paydown: your tenant pays down the loan every month

    4. Appreciation: DFW has a long track record of solid long-term growth

    A house in a good area that breaks even can still be a strong investment once you count all four. Just make sure you have reserves, and check the full property tax rate before you buy. Taxes in parts of Denton County can come close to 3%.

    Side note, I'm in contract on a North Fort Worth house right now that will cashflow with <20% down. But I have to work for it. BRRRR is really your best bet for cashflow.

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