All Forum Posts by: Brandon G.

Hello all,

Though we're just getting started we plan on owning quite a bit of rental property and we'd like to go ahead and start with a good real estate specific CPA to help us save as much as possible.  We're in the Nashville, TN area.  Any recommendations?

Thanks,

Brandon

@Brent Coombs I know the internet can be deceptive at times so I want to make sure I state I am in no way arguing a point here, just questioning to see if maybe I don't understand something of if there was a miscommunication.  My friend offered to raise the price of his home so that it will include the price of the closing costs so that I could keep more cash in my pocket.  His thought was that I may need more cash in case something comes up in the way of an emergency in the beginning.  I was just trying to determine if his offer was more beneficial than just paying the paying costs out of my own pocket.

Wow man, some of that is some intense stuff.  I suppose if someone shot themselves inside your apartment you could possibly have some contractors that wouldn't want to clean that up.  I certainly wouldn't want to have any part of that.

Thanks guys for the responses.  @Brent Coombs I'm not sure I understand why my friend's contract should say 67K no matter what.   The difference between paying 67K and the closing costs or raising the total cost of the loan to the amount of the 67K plus closing costs (let's just pretend that would be 70K) would be the difference choosing between saving money up front on the down payment and less cashflow.

I'm about to make a report to give to the loan officer about a property we're about to buy.  This is our first purchase so we don't have a track record, however I have stopped in and established a relationship with the loan officer.

I intend to include:

•  my wife and I's family budget
• our goals and reasons for investing
•  a breakdown of costs on the property (capex and opex) and show in an excel spreadsheet that it will cashflow (Rents-50%-mortgage = cashflow)
• list of maintenance and money spent on the property in the last several years
• report from a licensed inspector
• 6K in reserve emergency fund for repairs

• Existing lease agreement from current owner

Is there anything else I should include and would anyone have an example of what they have taken to a loan officer (with no real numbers, of course).  I want to establish credibility and professionalism right from the start, even if it is maybe overkill for just a duplex because hopefully it will make further purchases easier.

Thanks,

Brandon

I recently heard this mentioned on one of the podcasts as well.  I talked to a gentleman at church that has rental property and he just had a renter die in the property.  The relatives called the landlord and said they were unable to contact him and knew he had been having some health issues.  My friend went and unlocked the door for them and they found him dead on the couch.

I'm not sure what I would do in that situation, but that would be turr-ible.

I'll try to be as succinct as possible.  I have a question on a couple of options on how to structure our first deal.

We're buying our first property, a duplex, from a friend.  My friend must walk away, after everything, with 67K.  We have almost exactly 15K for the down payment (plus some saved for an emergency fund that we're not touching).  We aren't using an agent.  My friend said he would be willing to let us add the closing costs into the total of the loan to lower our cash out of pocket if we wanted to do that (essentially, he would pay closing costs and we would add that amount to the total loan amount).  Our goal is cash flow and all cash flow will be reinvested back into purchasing more rental property.  Our main goal is to save as much money as possible and leverage as wisely as possible to acquire enough properties, as soon as possible, to supplement my wife's income with cash flow so that she can stay at home with the kids.                                                                                                               (If it's relevant, we determine cash flow as: Total Rent - 50% - mortgage = cashflow)

Here are some of the different scenarios I have worked out.  Assuming closing costs are 3% I figured the first scenario where we pay 67,000 and also pay the closing costs out of pocket.  In the other scenarios I first added 2K, then 4K, into the principal of the loan to account for closing costs and assumed a 20% down payment in each case.  It seems if all costs associated with closing this deal were 4K, then we would save $1,200 up front, but our cash flow would decrease by approximately $20 a month.  

Please let me know if I have done this incorrectly or if I have left anything out.  

                                                                                       Cash out

Price         Down Payment        Loan Amount               of Pocket            Monthly Payment

67,000           13,400                     53,600                       15,400                     324.81

69,000           13,800                     55,200                       13,800                     334.50

71,000           14,200                     56,800                       14,200                      344.20

What all costs are associated with "closing costs?"  Does this include title insurance?  Are there any other expenses I should be aware of that I may be leaving out?  

Thanks,

Hey Tom, thanks for the reply.  I forgot to mention that we won't be using a real estate agent since we know each other and the duplex is off market.  So I suppose that the first thing to do would be to personally inspect the property, get an idea of how much the loan will be and talk to the lender.  At what point does the title company come in the play?  

We found our first duplex and have run the numbers, so I'm going to "noob it up" as hard as I can here.  I've never purchased a property before so rather than ask people who would benefit financially from the steps we take, I thought it wiser to ask my new guy questions here in the loving care of the forums, where perhaps I won't take too much flack.  It's amazing how with the help of this site you can learn intricate details of how to analyze a deal and run numbers, often times better than those that have been investing for years, all before doing your first deal and still lacking the actual experience of having done each step youself. 

Our friend has a duplex that they are wanting to sell.  After we inspect the property ourselves and have it inspected, what is the next step.  The terms I set with the seller will determine on how much closing costs and all other costs will be in order for us to have the keys in our hand.  I have already established a relationship with the loan officer we're going to use at a local bank, but have yet to approach her with the details of this deal.  I know there will be a title company involved as well, though I haven't chosen one.  Could someone explain the steps and the best order to take.

Thanks,

Nooby McGreenerson

We're about to purchase our first Duplex in Gallatin.  Ours was off market.  I was searching for a while but I hadn't noticed any duplexes for sale lately, which one were you referring to @Brad Taylor