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Updated about 5 years ago,

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Ryan Zidek
  • Orange County
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Loan Scenario Clarification - Beginner

Ryan Zidek
  • Orange County
Posted

Recently I have bought "The Book on Rental Property Investing," and there is a section discussing How to Make $1m in Rental Properties (pg 54) going through the plan. Year by year, Brandon Turner goes over the loan amount, property value, cash flow, total equity, and total net worth for the end of the year. Following the fourth year, Turner has three fourplexes and a combined loan amount of $177k. Which from what I understand are the loans taken out to buy the fourplexes using the cash flow from the prior year as a 20% down payment? 

My question comes at year five, where Turner is "trading up" to obtain the first 24 unit apartment. He uses the equity (minus trade up costs) from his fourplexes as a down payment of $160k for the apartment to which he takes out a loan of $640K for the apartment price of $800k. In his end of year five calculation, he has a loan total of $625k, and I am wondering where the $177k from the fourplexes went.

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