All Forum Posts by: Tyson Bumgarner

I'm working hard on building my down payment cash right now, but I can see that if I am to get started sooner rather than later I will need to borrow some money from a relative.

How would one go about structuring a loan like this? Just like a normal bank loan? Figure out a rate, loan amount, and number of payments, put it on paper and call it good? Or is there a different way people do loans from people very close to you? 

I want to come at this relative of mine in the most professional manner with a solid plan so he can see I'm serious and can't trust he will see his money again.

So I have been searching around and I found a nice little 4-plex around my area. I didn't talk to an agent or anything yet, but thanks to zwillow I saw that it was purchased in 2013 for $152,000 and comps are $280,000+ range. I looked up what its rents are and it says $600-ish a unit. I did the calculations and this doesn't even break .4 on the 2% rule. It would cashflow $120 a month. Obviously not a good deal at it's listing price. But it has been sitting for 200+ days now. I'm not sure if the seller is just waiting for an unsuspecting buyer to make his payday or what?

So whats a good way to ask for a price that would work for me? I haven't done the math yet, but I would guess I would need to get it for a least $300,000 or less for it to work at all.

@Nghi Le and @Mike Sumsky Thanks so much for informing me about the REAPS meetings! I will definitely be at the Fife one in September! I look forward to it! 

@Nghi Le I signed up for the meetup group. Thanks for the link! Although the www.reiawa.com website seems to be down right now. I'll be going to those groups as soon as I can get on the site of sign up.

@Kenneth Hynes I should have got started like you did a long time ago. I don't plan on staying in the Army. I'm only staying in long enough to get a few properties purchased and get some more schooling done. Are you doing SFR or multi-family?

Thanks for the warm welcome eveyone! 

@Nghi Le I would love to check that one out, but I'm going to do some searching around closer to my area first. Mercer island is a bit of a drive. I'm sure there is something close to Tacoma/Olympia.

@Michele Fischer It's good to hear that there are so many investors from Washington here on BP! I haven't picked an area yet mainly because I'm not sure if I want to focus around Joint Base Lewis/Mchord or not (also because I'm still saving for my down payment). I also need to start getting a feel for the area as far as prices go. I'm not sure right now if it's in an upswing or not. I still need to do research on that.

Hi all! 

So I initially made this account a few years ago when I lived in Hawaii. Needless to say, I got discouraged by the very steep prices of real estate over on Oahu. Well, I'm back in my home state of Washington now, and after listening to just about every BP podcast while doing my commuting, I finally decided to get started again! 

I just finished the free webinar that Brandon Turner (I don't know how to do the link) put on. It was great! (and not just because I got a pro membership! Thanks again!) It had tons of great tips! I'm really excited for what my future holds. 

I guess I'll share some of my info and plans to close this post out. I'm 29, I have 3 children (2 boys, and a girl). I've been married for 6 years, and I've been in the Army for 10 (still serving at JBLM). I have 0 rentals as of right now, but I have been educating my self through the BP podcast and lots of books. My plan is to landlord buy and hold multi-family rentals, as many as I can get. I would love to be doing it full time within 2-3 years.

That's it for now. If you are anywhere in my area (Seattle and southsound) and know of a REIA or anything, or just want to say "Hi" please just message me! I would love to learn any and everything I can about real estate from anyone willing to share their knowledge! Thanks in advance!

Sorry, I'm in Afghanistan on a Government computer with limited access. I'm just practicing with what I have available. I'm not able to download any of the forms provided on this site and I don't really know enough about excel to make my own spreadsheet yet.

Ok, I see your point. But wouldn't the compounding cash flow from 15 years up to 30 years make the 15yr loan catch back up to the 30yr loan since the 15yr home would be collecting full payments for 15yrs before the 30yr home see's full payments? I still see the reason behind the 30yr loan, as it will beat the 15yr loan in the 15yr period. I'm just not great at calculating compounding interest yet.

Derp! My bad...just looking at the numbers I could have saw it wasn't 17.2! I don't have much calculator experience with percentages yet. Lesson learned!

I was noticing that going with a 15 year loan really decreases the amount of properties that I would be able to get as far as a good deal goes. It seems like if a property looks great as a 30yr it might merely look good as a 15yr. I was just going with the 15 because I like the idea of paying less in interest and having it paid down faster. As you can tell, my math skills are still something I'm working on, but couldn't I basically get the same effect on a 30yr by simply paying more than the minimum each month?

So I borrowed this format that someone else used to analyze his duplex, and I decided to give a try at analyzing a duplex I found. This is what I came up with.

Duplex 3/1 with 1/1 attachment. They wanted 80k but the only way to make this work with positive numbers would be to get it for 70k or less. The listing says it rents $995 and $450 respectively, I lowered it to $900 and $400 just based on the appearance and the fact that it doesn't say if it has W/D hook ups. I also did this with a 15yr loan because I am looking for buy and hold rentals and from what I have read, 15yr loans workout better for this if I can get a deal with positive cash flow.

Purchase price: $70,000
Down Payment: $14,000/20%
Mortgage payments: $6,188.76/yr (PI $515.76/month @ 5% 15 yr)
Rental Income: $15,600/yr
Vacancy 9%: $1,404
Property Tax: $2,424/yr
Insurance: $600/yr
Property Manager 12%: $1,872/yr
Maintenance: $1,800/yr ($150/door per month, 100 for the 3br and 50 for the 1br)
Utilities: $300/yr water (I guessed again)
Advertising: $200/yr (the guy that made this had this in here; I figured PM took care of this?)
Total Operating Expenses: $8,600
Net Operating Income: $7,000
Less Mortgage Payments: $6,188.76
Total Cash Flow: $811.24
Cash on Cash Return: $811/$14,000 = 17.2%

That gives me a 10% cap rate and also hits the 2% rule if I'm not mistaken. What other things am I not considering? What price would you pay to make this work? What did I mess up? Thanks !