Just my 2cents, if you can't afford to put 20% down then you shouldn't be buying rental real estate.
I'm leaning this way as well.
When you borrow to purchase an investment, you are leveraging your equity (your down payment in this case), which can be great for returns, but gets ugly quick when things go bad.
Here is a little example:
Good times:
$100k House bought with 90/10
You rent it out, net a $2000 profit for the year after expenses.
Awsome! You just made a 20% return on your investment vs someone who paid cash for the house would have only gotten a 2% return
Bad Times
Your rental sits vacant for 4 months after a tenant trashes it and you need to make repairs and re-market the property.
You show a $2000 loss or a 20% loss vs the guy who paid cash who only had a 2% loss.
The worst part is that you had to come up with the cash for the repairs and the loan payment vs the guy who paid cash only has to pay for the repairs.
To play the leverage game with rentals, you need to have an emergency fund that also covers the added debt payments, vacancy risk, maintainance risk, etc. because the last thing you want is to have to dip into your 401(k) to make a payment. Sure, putting 20% will reduce your returns a little, but it also makes that payment a little easier to handle when the property is vacant.
