why is a large downpayment a bad thing?

[cashflowheroes]

Having more cash means being able to do more deals and also having reserves to deal with any problems such as repairs and maintenance or vacancies.  As many others have said it is all about leverage.  That is why real estate is a great investment vehicle.  There are other ways to invest but none offer the same leverage that you will get with real estate.  That said, every one has their own goals and risk tolerance so you have to make your own decision.  Good luck!

[moellerryan]

The borrower is the slave to the lender in things like your own home, cars, credit cards and personal debt.  Using leverage for a property that earns you monthly income is not being a slave it is significantly improving your cash on cash return.  Your tenants are paying your mortgage.  On top of that you get tax benefits and appreciation over time.

[motivatedceo]

Leverage is OK if done right.

Just never forget, cash talks, especially in this market.

You can pickup $150k houses for $50k cash in Dallas! Most people don't have $50k cash laying around, but if you DO, you can make purchases most folks can not even dream of doing with leveraged deals. Why? Desperate sellers are always around, even in good times, but they are more prevalent now than ever....and they want to close fast and prefer to deal with experienced buyers who have cash...especially after they realize that they don't have 90 days for an old fashioned realtor to sell their house. Someone else's problem can become your opportunity, with cash.

And if you want leverage ... you can take out a mortgage on your property once the deal is closed, or later on if you need access to the money. =)

[moellerryan]

Any newbies goals should be to minimize risk and maximize annual return.  By far and away most unsuccessful deals are at the beginning of investors careers when they make the most rookie mistakes.  Using your own cash is risky, using OPM or Other People's Money limits your risk.  At the same time you can maximize your cash on cash return.  Leverage is one of the biggest advantages of real estate and best ways to minimize your risk.  In addition, banks, hard or private money lenders will have to double check your due diligence so you get another set of eyes to make sure your deal is legit.  Make sense?  My recommendation is always go with leverage.