Day 50 - March 30, 2016
So, we received our LLC paperwork on March 10th, 2016. I also applied for and received our EIN tax number from the IRS. It is a very simple process. Just go to IRS.gov and the process is very simple. You will get your EIN immediately. Do not pay legalzoom or anybody else to obtain your EIN number. It is a very simple process.
On March 21st, Angela and I went to our local Prosperity Bank to open up a business checking account. We chose the account which is free as long as you keep $3500 minimum in your account. We had about $750 in cash from a garage sale that we had and from my side business facebook.com/yrlenterprises. We pulled the rest from out savings account.
We then asked to speak with a banker. The lady we talked to, we'll call her Trish, was somewhat helpful. I kind of got the feeling that she was more trying to feel us out for what we knew than actually interested in helping us. Well, we're new to this, so we don't really know anything. I basically wanted to know what type of loans they would offer for a business, and how to qualify. She asked me if we were interested in a commercial loan, or a business loan. I still don't know what the difference is, but I said a business loan. Trish said to qualify, we would need to send in the last two years' tax returns as well as a financial statement. She emailed me an excel form to fill out for the financial statement. The financial statement basically asks about your finances (imagine that). Like how much money you have in each account that you own. How much your house is worth and how much equity you have in it. The value of your vehicles. How much debt you have. etc. Surprisingly, Trish did not ask about a credit report, or what my credit score is. She said the terms of the loan would be:
-80% LTV - this means that they will loan us 80% of the value of the house.
-5.9% Fixed - Interest rate
-15 yr term - 15 years to pay off.
I think these terms are very doable.
So on March 23rd, Angela called our realtor, Gibo, and told him we were done with our homework. We had formed an LLC, opened a bank account, talked to a banker, and we are now ready to buy a rental property. Gibo told Angela that he would begin searching for us, and let us know when he found something.
Also, I set a goal of quitting my job on July 4th, 2021. That gives me 5 years to grow my empire to where my passive income will support my family and lifestyle. If I can get my net passive income to around $100k in five years, I will have succeeded. According to my simple calculations, that will take about 20-25 rental properties. So to achieve this in 5 years, I would need to purchase 4-5 properties a year. I do expect my plan to change along the way, but the end goal will not. I want to be free to spend time with my family, and pursue the many hobbies which I have. It's not that I don't like my "real" job, I just don't want to waste my life slaving away at work every day. This past weekend was Easter. We had lots of family over to celebrate, eat, and have fun for the kids. The thought kept crossing my mind, "man, I have to go to work tomorrow." By the end of the day, I was tired, the house was a mess, and there were broken cascarones all over the yard. If I didn't have to go to work, these kinds of things would not bother me, or stress me out. But since work consumes all of my time, I have to look at things differently. I will probably never clean up the cascarones from the yard. Just mow over them and eventually they will go away. I want to be able to say, I'll clean that up tomorrow. I'm not sure if this example explains how I feel. I just want a life that is not consumed by work.
Please check out my website for my other side business/hobby. www.yrlenterprises.com and at facebook.com/yrlenterprises
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