All Forum Posts by: Zach Bagby

I currently pay 1350 in rent for a 1br 1ba in the South Denver area. I am looking for something to buy sometime next year, maybe sooner if the right opportunity came up. Mainly looking in the Littleton and Englewood areas of Denver Colorado but open to look a little further out if need be. This post is mainly for practice and feedback. My lease is up in April 2018. If you were me would you buy a Duplex or 4-plex? I want to house-hack. Let's make some assumptions before beginning: rents are at 1500 per unit, no immediate repairs are needed, and seller will pay closing costs. (This just makes things easier for a noob like me)

Let's start with a duplex:

(i'm using trulia calculator)

Cost $350,000

Downpayment = $17,500 (5% down)

Principal & interest=($1,549)

Property taxes=($158)

Home insurance=($75) Mortgage insurance=($211)

Total PITI = $1,993

Vacancy = $200

Repairs = $150

Cap Ex = $ 150

Prop manage = 300

Total monthly expenses = $2,493 w/o PM and $2,793 w/ PM.

Total monthly Income = $3,000

Monthly cash flow = $507 w/o PM and 207 w/ PM

Cash on Cash = 507*12 / 17,500 = 34%

That seems too high like I'm doing something wrong any suggestions? I would most likely be paying more than just a down payment but this makes things easier.

Rough Avg principle paid per month = $500 which makes my ROI almost double 34% or 68%.

I would be living in one side which gives me -1500, but it reduces my monthly rent payments from 1350 to 1000 and I get to practice being a landlord.

Now a 4-plex:

Cost $750,000

Downpayment = $38,750 (5%)

Principal & interest=($3,396)

Property taxes=($423)

Home insurance=($75)

Mortgage insurance=($450) Total PITI = $4,344

Vacancy = $400

Repairs = $300

Cap Ex = $ 300

Prop manage = $600

Total monthly expenses = $5,344 w/o PM and $5,944 w/ PM.

Total monthly Income = $6,000

Monthly cash flow = $656 w/o PM and $56 w/ PM

Cash on Cash = $656*12 / 38,750 = 20%

Rough Avg principle paid first year = $13,000 

ROI = 53%

In this case when I -1500 for myself living in one of the units I'm only having to pay $844 a month which is even better.

Assuming I can actually find deals like this (or maybe better) and have the downpayment... What would you do? Duplex? Triplex? 4-plex? Live in flip? How do you analyze deals? Are my calculations Waaaay off? If these are bad deals, why? At what price do they become good deals? Are you seeing any deals like this now? Thanks in advance! =)

@Bryan O. I will be there! Thanks for setting one up a little closer to home. @Billie Miller here's one closer.

@James Carlson

Great input! If I could find a completely separate living area in a basement for a good price I will definitely have lot's of questions regarding Airbnb. I wouldn't mind the extra work while I'm just dealing with one location starting out. The goal of this first purchase is to lower my monthly houses expenses by as much as possible to allow me to save more for the future, I like the idea of CFHA but I think my wife and I will be able to pull together enough to pull this off without the extra interest. With that being said If I could potentially live for free it may be worth it. I will definitely keep the basement apartments in mind while looking.

Awesome! Thanks for the great information. 

@Ray Lai 

Thanks for the suggestion! What is a typical or average % for closing costs for a buyer. An example is $100,000 purchase price would be $3,500 for a down-payment. What would be typical closing costs? Or is there a good rule of thumb I haven't heard of yet? Also how much would a typical inspection be? (trying to figure out how much I need to save by Early 2018)

@Chris Lopez 

Thanks a ton! Excellent advice. That eGuide will provide a lot of value to a lot of people, myself included. I look forward to reading that.

@Jared Bouzek

Thank you. Is there a minimum amount of time I need to have worked for before asking for a loan? I've read different things like banks prefer 2 years of pay which isn't possible in my case since I was in College.

@Chris Lopez Thanks for the input! Any tips on finding the right real estate agent?

@Dan Mackin Great suggestions. I've never heard of HomeReady or HomePossible I'll look into those. I want to reduce my monthly costs by as much as possible and find a place where my wife approves. As long as we have our own living area separate from anyone else we will be fine. We both realize this isn't a forever home and don't need anything that nice. Thanks for your reply!

Thank you so much @Steve K. and @Billie Miller! Feel free to message me anytime! I would love to hear your story and discuss how I can make this happen or if there is a better option.  I'll look into the meetup more closely. 

Hey everyone! My name is Zach. My wife (Britt) and I recently graduated college and got jobs! I've been working since January in Highlands Ranch and my wife will start in August working in Englewood. I started my interest in personal Finance and Real Estate partway through college and have read many books and listened to many podcasts since then. I absolutely hate paying this much in rent for a one bedroom apartment. Our lease is up early next year and I would like to snag a small multifamily in the Littleton/Englewood area. I've seen a lot in the area while we drive around looking at open houses and going to estate sales. Since this is my first deal I would love to bounce ideas off someone and meet up with someone who has done this before. Are there any meetups in my area? I know my next steps are to find a lender and then start looking for deals while saving as much as we can until early next year. Could give me a quick idea of how to qualify for an FHA or FHA 203k loan? And then there is the whole finding a deal I would like some advice on. Should I go through MLS and find a real estate agent, send yellow letters, drive for dollars, talk to property management companies in the area, or talk with banks about foreclosures/preforclosures? Maybe all of them? Anyways, I'm really excited to finally get into real estate and to see what Denver has to offer. If there is anyone in my area who would like to meet up for lunch or anything else let me know!