hey everyone what's going on hate and crabtree here super excited to be doing this video with you where we're going to talk through how to read a settlement statement sometimes called a closing statement other times called a hud h-u-d and so they're all the same thing and the intention of this video is to teach you guys how to actually go through and read a settlement statement because first time real estate investors or even second time real estate investors these can be kind of overwhelming they have a mix of accounting you know and debits and credits and trying to understand where different sources of money come from so i have a real treat for you guys today i'm going to share my screen i'm actually going to walk through two different settlement statements the first one that we're going to walk through is for a rental property that i bought and the other one is going to be for a storage facility that i sold so we're going to see get to see both sides of the coin right we're going to get to see where i'm buying i'm going to show you how it works for me how it works for the other party how all the numbers flow together and then we're going to see where i'm selling how much money we're walking away with where those numbers come from etc so if you're ever buying a property and this is really a resource video uh for my second book and we talk about the process of getting from contract to close with that last step being reviewing the settlement statement uh and actually you know uh making sure everything checks out understanding how those numbers flow it's really important and in fact what we're going to see here today is that these things can often get revised and you can have some input in there to make sure that they get done the right way so if you guys are coming for my second book welcome i'd love to have you subscribe to the channel uh if you haven't come for my second book yet i'd love for you to get that or i'd love for you to get a copy of my first book skip the flip secrets to one percent know about real estate investing absolutely free links in the description but all that aside i'm here to provide value to you guys i want you to get a lot out of this so let's dive in and i'm going to share my screen and let's do this so listen settlement statements what are they are they complicated what do i have to know do i have to be an accountant to read it no absolutely not and what we're going to break down today is how to go through that and how to read that so the first one we're going to start is the settlement statement where i'm actually buying a property so let me share my screen with you guys and let's walk through this together really slowly so we can start up here in pretty much the top section and i had to blank some of these out i had to blank some information out uh just for privacy other people's privacy so these black i'd love to share all the information with you guys uh i just want to respect other people and i don't want to put other people's information out there um so i'm going to black it out if you see anything black it's not that you need to know it it's just other people's sensitive information that i want to respect uh and so don't mind the black spaces uh they're not really important i left all the important numbers in here for us to go over together so we can kind of read through here you know we could see section b one two three four five six seven uh b six seven eight uh and so you know as we go through here sometimes we'll have different labels we'll see you know reference to section j line 100 or 106 or 108 or whatever that is but what we're going to see here is the name of the barber that's me hayden crabtree uh next we're gonna see the address of the seller the lender name who gave me a loan the settlement date uh the settlement agent name is the attorney the property location place of settlement which is where we closed all this is just kind of formal who's buying who's selling where's it happening when's it happening right and so the next thing that we kind of want to go over there's two different sections here the left side here is the summary of the borrower's transaction borrower's transaction i am the borrower i am borrowing money from the bank and i am also the buyer the other side so this is j over here the other side k is summary of sellers transactions so these are all the numbers that are important to me this is where i'm getting money from where i'm spending money uh and how much money i'm gonna have to put into closing and then this side over here is for the person who's selling me the property so this isn't really important to me at all this is kind of serving them and as we can see uh i bought the property for 169 900 so that's line 101 contract sales price and then settlement charges to borrow 4 937 and 38 cents so this is other money i'm getting charged that was outside of the purchase price we're gonna walk through this okay and so as we're going to go through 4 937 we see we've actually got two pages here with the second page being all about me and the money that i'm getting charged okay so at the bottom here we can see 4937 again we're going to go through all this together but this is the amount that i got charged and that's where it's pulling from right so that's a total of all the other charges i'm going to get charged now as we go through we're going to look at adjustments and prorations county property taxes city property taxes and there's a mobile home on this property so mobile home property taxes are not property but just mobile home taxes all of these are adjustments and so what that means is the seller owned the property okay but they didn't uh own it for the full year i bought this property in 2018 and so they didn't own that property for the full year uh and therefore they shouldn't have had to have paid all the property taxes and i didn't own it for a full year so i shouldn't have to pay out with a property taxes so this is proration meaning i'm going to pay my fair share about this on 9 27 18 so my fair share of the property taxes from here from 9 27 to 12 31 is 542 okay uh and that's how much the the seller paid in advance the person selling the property paid that amount and i need to pay them back okay same thing for the mobile home taxes there so what this means we're gonna add up the purchase price plus the other charges plus the tax prorations that i need to reimburse the seller and total i'm going to spend 175 403 on this property okay so that's the amount of money that i have to come to the table with in order to buy this property except one quick thing which is i'm gonna have a loan on this property somebody's gonna give me a loan so i don't have to pay for all that money right so the loan that i got on this property was 127 425 so the bank is paying that amount for me if we see right here on line 200 it says amounts paid by or in behalf of the borrower so who's paying money on behalf of me i like that when other people pay on behalf of me so 127 000 comes from a new loan let's see what else is coming here so there were some security deposits on the property that got transferred over to me and there was a rent proration right rents people paying rents uh throughout that month and so the seller owed me some money for rents that are going to occur in the second half of that month whereas people have already paid that so 229 is coming there a full credit for the security deposits coming there and so the total amount paid for by other people on my behalf of buying this property 131 252 131 252 right so again the total amount that was due was 175 the amount paid for by other people is 131 000 and so with this section right here at 300 it's going to show how much money i need to pay so we're going to take the amount from line 120 you can see here it references line 120 and so 120 is 175 that's the amount i have to pay less when you see last that means minus subtract amounts paid for by others line 220 so that's 131 000 there so the amount that needs to be paid minus the amount of people paid for me and we're gonna have a cash from borrower of forty four thousand one hundred and fifty dollars right so i my down payment on this property is forty four thousand one hundred fifty dollars okay and so that's how i would read this section but i would want to make sure that everything is correct and in fact this is not correct i didn't buy this property my personal name i bought it through an llc so i had to get that changed on here so that it was legally correct right i also want to go through and i want to check everything else of where that four thousand nine hundred thirty seven dollars make sure everything was correct so whenever we come through here and we read i didn't use we use this was an off-market deal there were no brokers involved so uh there were no commissions of any kind but if there were commissions they would have been listed here we had origination charts that i had to pay the bank for the origination of the loan had to pay an appraiser 625 flood insurance monitoring and flood certification twelve dollars i had to pay for home insurance a full year up front so i had to pay for 679 dollars of home insurance i didn't have any of these other items that i had to pay for okay i had no hoa dues or any of that thing that i had to pay for i'm not escrowing anything on this loan so i didn't have to prepay any of that but sometimes that is normal if you're buying a personal property uh they'll require you to put in you know three months of escrow up front something like that but i didn't have any of that here but it is normal to see those kind of things you just want to check the you know check the calculations make sure everything's correct make sure you're not getting overcharged for anything then we can go through and we can start looking at title charges so title services and lenders title insurance uh 908 here uh settlement or closing fees 575 owner's title insurance 490 lender's title policy 333 and then we come through we have 200 for title insurance uh we have some other fees that were charged to the seller and then we have some government recording charges which is just making sure everything's up to date in the uh the government's books we've got to pay them to process that transfer taxes that the government charges us 552. okay and then we can see that there's some titles and affidavits and all these other things that have to be paid that are charged to the seller in this case and then future release fee 24 and then pay in for courier fees things of that nature ninety dollars and uh looks like the seller 1031 out of this property therefore had to pay for some 1031 fees so out of the other charges they got charged 747 which is reflected right here other charges that they had and then i got charged four thousand nine hundred thirty seven dollars which again is reflected up here so as we see this number like where does that number come from we can dive deeper into it on this next page right so this is walking through buying a property uh you know this is how it's done right you want to make sure that you're getting charged the right amount you want to make sure that the seller's paying for what the seller's supposed to pay for that your your taxes and your uh are getting prorated that you're getting credits on security deposits that you're getting prorations on your rents everything of that nature so this is how you go through and read again you just want to kind of read the heading see how this lays out this isn't exactly how every single uh hud is going to look a lot of these are similar this is how all the same numbers work this is a really great layout sometimes you'll see some a little bit different but this is for the most part exactly what you're going to see right is this layout right here so we could kind of run through this uh for the seller kind of see how the transaction looked for them they sold it for 169. they had to they got some extra money coming in for me for the property tax probation which they've already paid so total amount that i needed to pay them was 170 465 dollars plus they had some charges 747 dollars they had a loan here of 61 974 uh they needed to pay off they had some other property taxes that they needed to pay and they had some security deposits and rent prorations uh and so essentially what this shows us is the amount of money that they had to pay to other people and at the end of the day they walked out with 101 755 dollars and so i bought the property from them for 169 call it 170. uh they had a little money coming back to them for paying off property taxes and then they had to pay their bank off and they walked out with a hundred and one thousand dollars uh going to a 1031 to buy more property right so this is how you read one that i'm buying again if you have any questions about this drop comment below happy to answer any questions the other one i want to show you is where i was selling and it's actually from a different company uh so i want to show you guys that real quick so this is a property that this is the storage facility that i sold uh and i had some partners in this deal and so here are me and all my partners i had one two three four partners here's me uh i sent my money to a 1031 agent uh and that's why it reads independent trustees for hay and crabtree but let's walk through this real quick right this is only so it's a little bit of a different layout uh there's no two pages here there are two pages but it's not referencing anything else and this doesn't have the buyer side on it so this is just another format that you may see but here's how it goes right first sale price 1.761 million dollars uh i had to do some credits here to the buyers and so i had to pay them uh there was some damage on the buildings they wanted some trees cut back um you know that these are charges over here these are charges this amount that i'm gonna have to pay and this is amount that's coming back into me right so i got thirty five hundred dollars for accounts receivable i think that that was a uh rent proration i can't remember exactly what it was but they owed me thirty five hundred dollars on top of the purchase price um that's right i had to credit them eighty three hundred dollars for prepaid rent we had twelve hundred dollars of security deposits we had to get them so again seller charge this amount that's coming out of my pocket and this is the amount that's going into my pocket so you'll see at the bottom here again if you just look at seller charge seller credit at the bottom these two balance out we're getting charged and credited the same amount at the bottom here we're gonna see how much cash we walked away with okay so coming back here had real estate commissions uh to do two different brokerages here uh kind of like in the last one that i just showed you there's property tax prorations and so these amounts right here are credits so we had already paid for property taxes and the buyer had to reimburse me for the property taxes already paid in which they uh were going to not have to pay property taxes but they were going to own that property in that year so again these are credits coming in towards me and then we have attorneys fees 6800 i had to pay i had a uh a loan here five hundred thousand dollars was the outstanding balance i had some interest on the loan i had to pay from the time that we were uh going over in that month this is normal to have to pay a little bit of extra interest for that time period between your last payment your next payment of when you're actually gonna pay the loan off and then i had a one percent prepayment penalty on here as you can see five thousand three dollars is exactly one percent of five hundred thousand dollars we had some escrow charges 250 dollars we had some transfer taxes uh 1761 uh we had some different fees here some going to uh me to help with the disposition some other going to different contractors so these amounts that the buyer the sellers got charged my party got charged and then funds held for recording fees after closing so at the end of the day we got paid 1.761 million dollars uh had some other charges that i had to pay off here you know totaling 50 60 000 uh and at the end of the day after we paid off our loan walked away with me and my partners for 1.149 million dollars so again all of this went into a 1031 that's why it reads independent trustees for me uh and that's important right is where's the money going who's it going to post closing so that's why they want to do it there if you guys have any questions about this again this one was a little bit different than the last one because on the last one if you remember and we can see here uh they had the the summary of borrowers transaction and summary of seller's transaction on the same page but in this one right here this is all just seller there's no buyer here so they would have a separate one of these in the same format for the buyer so if you guys have any questions about this i hope it was helpful i hope this can help you read and analyze your own closing statements if you have any questions feel free to drop a comment below if this is your first time watching my channel hit that subscribe button hit that bell like this share it with a friend trying to grow the channel putting out more real estate investing content every single week and i would really appreciate it if you subscribe stay tuned you got some sick value out of these videos because i'm really trying to help people my goal is to help a thousand people buy their first rental property change their financial future and i want for you to be one of those people so thanks for joining me again thanks for subscribing thanks for liking this video and i'll see you in one of my other videos see you then