Critical Mistakes for the Investor to Avoid: Down Payment

Real Estate Agent with Excellence in Real Estate Tm @ Allison James Estates & Homes

Critical Mistakes for the Investor to Avoid: Down Payment
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors

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When an Investor is looking to purchase Investment property there are many different factors to be considered in every transaction - especially true if we need to make sure there is a positive cash flow every month.

One such critical decision that must be reached before the offer to purchase real estate can be consummated is the buyer must determine how much of a down payment he (or she) will be putting into the deal.


In the past, investment property typically required a minimum 20% buyer contribution - which made a property cash flow much easier.  More recently many investment loans were available with only 90% cash-in.  There have even been some creative loan packages that would allow a well qualified investor to finance an investment property with 100% financing - although I do believe that has disappeared fro the time being.

Lets assume a 6% interest rate on a $300,000 investment.  A 100% financing would require the buyer to pay $2,206 a month in Principal, Interest, Tax & Insurance (PITI).  The same home with a 10% down-payment would reduce the monthly PITI down to $2,026 and a 20% down-payment would then bring the monthly obligation down to only $1,846.

If this property will only rent for $1,500 a month, then you had better be prepared to step up the down payment to a whopping 39.33% or $118,000 if you want a 2% positive cash flow every month

So. I am hoping that you can see how a simple adjustment to the amount of money you put down on a deal will have a significant impact on your monthly cash flow.

I hope this little lesson will at least enlighten you to fully analyze your financing for your next real estate investment opportunity. 

If you would like to know how I can help you achieve your investment objectives please feel free to contact me directly.  I am not a "guru" selling books, CD's, DVD's and I don't even have my own seminar tour to invite you to.  Like you, I am looking for serious individuals to partner with.  My role is REALTOR®, focused primarily in Riverside County but licensed to buy and sell real estate all over the State of California... and yours is Investor.  Yes, we can both do our job without the other, but why?  Together we can create some much quicker profits for each other.  So please, if you want help, consider me as your REALTOR®

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 

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Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

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This blog and the contents written here is the intellectual property of John Occhi, San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

Comments (2)

Dan Forbes
Bradenton, FL
Good advice John.  I always appreciate your posts.
Aug 19, 2007 10:17 AM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

Dan Forbes - Well, I appreciate the kind words - I can tell you that I always appreciate you stopping by and reading my posts and even appreciate the comments more.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR 
Realtor Consultant to Foreclosure Investors
Mission Grove Realty

Aug 19, 2007 10:26 AM