So Gibo finally called Angela back yesterday while she was getting her nails done. She couldn't really talk, plus she doesn't know much about finances, so she couldn't really answer Gibo's questions. So she texted me his number to call him.
Gibo asked me some questions about where we were planning to buy and if we had already talked to a bank. He said he would send me his email address so that he could go over our preapproval letter. He also mentioned that you should never use any of your own money when buying a rental property. I'm not so sure that I understood what he was saying, but it sounded like this - he just through some numbers out there:
- Buy a house that's worth $80k for $60k
- Put a down payment of $12k ($20k)
- Your mortgage balance is $48k.
- Immediately refinance the home for the $80k that it is worth.
- Pay off the $48k, leaving you with $32k cash
- Pay yourself back the $12k down payment.
- That leaves you with $20k for repairs/profit.
- Rent out the house.
The last thing he mentioned was that the first thing we need to do to get started is form an LLC. So Angela and I have been working on figuring out how to do that, and thinking of some names. I like "La Tierra Dorada"; "El Dorado"; and "El Camino Real". Angela is coming up with some dumb names. The easiest way is to use Legal Zoom to form your LLC, but I think we can do it ourselves to save money. Angela has contacted some of her former colleagues from when she used to do legal work to see if anybody can help us out. So, we'll see where it goes.
Please check out my website for my other side business/hobby. www.yrlenterprises.com and at facebook.com/yrlenterprises
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