Okay, I'm finally ready to do part two on the numbers on how I bought my duplex.

Okay, I'm finally ready to do part two on the numbers on how I bought my duplex. Boom. So let's get into it. So, for the purposes of this example, I'm going to use a purchase price of 400,000. My duplex was actually less than 400,000, but it's close enough that the numbers are pretty similar, so we're going to use 400,000. Okay, so this is how I thought about it and found out that my budget was going to be about 400,000 or less for my duplex. So I was currently renting a studio for $1,600 in Houston, and my lease was going to be up in about six months, six months to a year when I started thinking about this. And I already knew that they were going to increase the rent by about $100. So I knew that if I did nothing at all, if I didn't buy anything, that I would be paying $1,700 a month because I was not moving. I did not feel like moving. So again, I knew if I did nothing at all, I'd be paying $1,700. So if I had a duplex with two sides, both paying $1,700, with one of the sides being me, I knew my max mortgage that I could afford would probably be around $3,400 because I did not want to pay anything over $1,700, or else I just wanted to stay where I was at. Now, this is where having a good realtor and a good lender comes into play because you can kind of give your lender this number and you can back into what your budget needs to be based on, you know, interest rates and stuff like that of what the mortgage you're looking, you're comfortable paying. So I made an assumption up here that I could get $1,700 for the other side of my duplex and I would be paying $1,700, but the reality is the areas that I was looking at, the max rents in the area were about $1,500 to $1,600. So I always like to go on the lowest end of the spectrum and be very conservative. So knowing that the areas that I'm looking at, the max rents are $1,500 and I'm comfortable contributing $1,700 because that's what I would be paying anyway, I know my mortgage would really be, that I'd be really comfortable around, would really be $3,200 because I did not want to pay anything over $1,700 or else I just wanted to stay where I was at. However, there's a more favorable option. And I don't want to pay more than what my tenant is paying because why would I do that? I'm trying to invest. So my more likely outcome that I would like to happen was that the max rents in the area again $1,500, but I also want to pay $1,500. I don't want to pay more than my tenant was paying unless I just absolutely had to. So my goal was a $3,000 mortgage. That was my, my target. So boom, I found what I was looking for. My house was in my budget. So let's go through what closing looked like. So again, I'm going to use a purchase price of 400,000, even though mine was slightly less. So I did use an FHA loan at 3.5%, so I had to put around $14,000 down. And then closing cost, closing costs can to to can vary. Again, you can talk with your lender about this. There's a lot of programs that will pay closing costs and all that. They'll estimate that between like 1 to 4%. So we're just going to pay 3% here. So my closing costs were about $12,000. So all in all, to own this beautiful brand new duplex, my cash to close would be $26,000. That's what I had to bring to the table. But if you was paying attention in the last video I made, I told you guys, I invested in my employer's employee stock purchase program when I started at the company like five years ago. And usually and what that means is that if you work for a pretty decent company, you can buy stocks at a discount. So usually you're always making money. I just kept putting money in that from my check. I never missed it, and that grew so much that I just cashed that out and that was my whole down payment. So really, I just had to pay my closing costs, which were $12,000. This paid for itself through early investing in my employee stock purchase program. Now, let's get into interest rates. So at the time that I bought my house, the interest rate was 6.2%, and that interest rate wasn't going to work for my little $3,000 mortgage model I was going for. So my realtor told me about a 2-1 buy down. So a 2-1 buy down is when you ask the seller for closing costs, but instead of using that up here for closing costs, you actually ask them to buy the loan down. Two points in the first year and one point in the second. So what that looks like is again, interest rate was 6.2%, so in year one, my interest rate is going to be 4.2%, year two is 5.2%, and then year three through 30 for the rest of the loan is 6.2%. But I have a little call out here because my goal is to really refinance the house in year two if I can get an interest rate that is well anything lower than 6.2% because I'm not trying to pay that. But ideally somewhere just around the fives, I will refinance so that I can lock in my mortgage at what I'm comfortable at. Now, it's important to note that the seller has to agree to this. This is not something that your lender can give you. This is you're asking for cash from the seller. So I can't remember off the top of my head, but the money that I needed from the seller to make this happen was about $8,000 to $9,000, which is not crazy because people ask for that in closing costs, but again, I didn't want it for closing costs, I wanted it to buy down my loan. So some people might be like, oh, well, I would have just took the closing costs and then I could have just got a whole duplex for $4,000 or whatever it is, right? So I want the mortgage to be as low as possible. So just so you guys understood, my mortgage at 6.2% would have been $3,500, which if you remember is out of my budget. But at 4.2%, my mortgage was around $3,000, which was right in my budget. Obviously, in year two at 5.2%, it's going to be somewhere in the middle of this. Hopefully I can refinance and keep that middle number. But the good thing is I'm going to be raising my rents about 3 to 5% every year, so I'm going to get more from that other side and eventually move out of the other side and both are going to be raising rents. So the mortgage is going to cover itself. Yeah, and this is how I got my duplex. So if you have any more questions, let me know.