If you invest the down payment in something that could lose value over a year, and it does, how do you feel about that?
If the answer is, that's OK, I'll just buy a different rental later, you can invest it however you're comfortable investing for the long haul, but sometimes it won't all be there.
If the answer is, dang, good rental investment opportunities don't come every day, I needed that down payment money, take the 1% the banking industry gives you.
If the answer is between here and there, Vanguards short term corporate bond index has a little bit of risk and a little bit more yield than 1%.
Personally, for money I need within five years, I shop around for the best bank rate. Guarantees cost what they cost.