The Smaller The Down Payment - The BIGGER Your ROI
 |
ROI stands for Return on Investment. Very simply put, it is the percentage of money that you get back versus the amount of money that you put down to acquire property. Here is a very simple chart to illustrate how ROI and leverage works: (bear in mind that no matter how much you put down, the value the property appreciates will always be the same. |
The great part about buying investment property in Minnesota is, he smaller your down-payment - the BIGGER your our ROI.
| % Increase in Value (ROI) | ROI - Paid Cash | 50% Down | 20% Down | 10% Down | 5% Down |
|
10 20 30 40 50 60 70 80 90 100 |
10% 20% 30% 40% 50% 60% 70% 80% 90% 100% |
20% 40% 60% 80% 100% 120% 140% 160% 180% 200% |
50% 100% 150% 200% 250% 300% 350% 400% 450% 500% |
100% 200% 300% 400% 500% 600% 700% 800% 900% 1000% |
200% 400% 600% 800% 1000% 1200% 1400% 1600% 1800% 2000% |
Observe in this simple chart how dramatically ROI increases as down payment decreases. This is the nature of "Return on Investment", the less money you use to acquire, the same result yields the highest ROI.
You and your expert-lender will sit down and discuss the appropriate down payment for you and this property. Bear in mind that commercial properties, or commercial loans for multiunit residential-properties will require larger amounts of cash down, usually at least 25%. This is part of the reason most people start investing with residential-properties.
You can buy the most investment property for the least amount of money down. Before you leave this page, study this chart for a minute.
When you are sitting in your lender's office choosing a loan (without a lot of money out of your pocket) but wondering why you have a little monthly negative cash flow - remember this chart!
