How much down payment should you put on an investment property?

How much you put down on a property can have a huge impact on the performance of your investment. More is not always better, and putting up the minimum does not always get you the best cash on cash return. Each deal is unique. In this episode, we share how we think about it, important metrics to look for and how we come up with the right choice for each deal. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everybody, welcome to another episode of the remote real estate investor. I'm Michael Albaum, and today I'm joined by my two co hosts,   Tom: Tom Schneider,   Emil: and Emil Shour.   Michael: And today we're going to be talking about how much downpayment should you be putting down on that investment property. So let's get into it.   Alright, guys, so there are a bunch of different metrics that investors utilize and look at when looking at investment property. And I think two of the big ones or three of the big ones that we talk a lot about our cap rate, cash on cash return and cash flow, either monthly or annual. So I'm real curious to get your thoughts around. How do you think about down payment amounts and how it affects the metrics that you're interested in?   Emil: Yes, I'll talk about what I've done in the past versus what I think you should do. So I've always gone. I've always gone to minimum downpayment because that I want to, you know, as I'm growing my portfolio, I just want to have as much money as possible to acquire properties. So I would just went with the minimum.   Michael: And for those that that maybe don't know, what is the minimum, the minimum?   Emil: When I first started, it was 20%. I don't know if it's moved up to 20. I've had some lenders, like when I bought my triplex in November, the minimum with them was 25%. I don't know if that was because it was more than one unit. They require a little bit more.   Tom: It can be lender specific too   Emil: Emil: Yeah, so typically 20% some lenders will be 25% currently.   Michael: Okay, so in that ballpark?   Emil: Yeah. The way you should look at it, if you're, you know, if you're an investor, right, you're looking to maximize your returns, right? If you're especially looking at your cash on cash return, you should ask your lender how your rate changes a different down payment amount. So let's say you put 30% down, and it goes down a quarter of a point, I'm just using examples here, versus 20%. Down, it's a quarter point higher, and maybe you pay, I don't know, one point on top of that for closing costs or whatever.   Well, what you should do is look at how those two compare and how those affects your cash on cash return. Right? It could be that when you put 30% down, you get that quarter percent off your interest rate, it actually improves your return. And you won't know until you do the math. So I think that's the way you should do it versus how I've done in the past.   Tom: Love it, That is good Emil.   Michael: Tom are you similar? How do you think about and approach your down payment amounts?   Tom: Yeah, I think it's, you know, good hygiene to look at what the different rates would be based on the different down payments, amounts, I typically somewhere to a meal will max out the debt just in that, that I get the biggest mortgage as possible the biggest loan to value just because the cost of debt is so cheap right now. And I, you know, don't necessarily need the cash flow now. So by getting a bigger loan, my cash flow is going to be smaller, but I don't I don't need more cash flow now just because I'