Investment Property Down Payment: How much should you put down?

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

This is geared towards the investment property you're not going to live in. By law the government requires you to put down 20% of the purchase price. Whether it's a $500,000 condo or a $1.4-$1.5 million triplex.

Here are four factors to consider with respect to how much down payment you should put down when buying an investment property.

1-Cash Flow

If you are looking to get a positive cash flow investment property then in the downtown area, if you are buying a condo, you are looking at approximately 35% down payment. Now if you are buying a duplex and triplex you might be able to get away with 25% to make it a positive cash flow.


Going back to the first point, is you have to have 20%. Now if 20% is all you got then that's all you can put in. But let's say you have more, let's say you have 30 or 40% down payment. How much capital do you want to tie up? This really falls into or I should say ties into your next step. If you are planning to buy another investment property then you don't want to put all that capital into one specific property.

3-Tax “Deductibility”

If you're looking for investment property to create a tax deductible vehicle then a few things to consider. One is you want to have your mortgage set at a 30 year amortization because that will provide you with the best cash flow scenario because you have a lower mortgage payment and at the same time it will give you the highest interest deduction portion of out of that mortgage.

4-Your Next Step

If you're planning to buy multiple investment properties, I highly advise you to sit down up front before you buy first one with your real estate agent as well as your mortgage broker to determine the plan of action. Because you want to make sure when you buy your first one, it does not hinder you when it comes to mortgage qualifications for the next one and the third one and the fourth one.

It's critical to plan ahead depending on where you want to go, how to structure your first purchase which will make a big difference for you moving forward.