All Forum Posts by: Drago Stanimirovic

Hi Paul,

You're in a strong position with your portfolio, and both strategies have their advantages. Here’s a streamlined perspective:

Your current approach, putting more down upfront, minimizes risk, increases cash flow faster, and allows you to build equity while reducing overall interest. This aligns well with your goal of achieving $11K/month in cash flow and retiring within 5-10 years. It also gives you stability in the event of market downturns or unexpected expenses, allowing you to lower rents if needed without feeling financial pressure.

The alternative leveraging more with 20% down—would allow you to acquire properties more quickly, accelerating your cash flow goal. You’d benefit from faster appreciation, tax benefits, and rental increases. However, this increases your exposure to risk, especially in terms of vacancy, repairs, or market shifts. Lower immediate cash flow and higher mortgage payments would extend the timeline for paying off properties and add interest over time.

In essence, it’s about balancing risk and speed. If your focus is on minimizing risk and ensuring consistent cash flow, your current strategy works. But if you’re comfortable taking on more leverage to acquire properties faster, the second approach can help you reach your goals sooner. A hybrid approach purchasing a few more properties with 20% down while paying off existing loans, might give you the best of both worlds.

Let me know if you need any further guidance on running numbers or fine-tuning your strategy.

Best,

Drago

Hi Conor,

In your situation, owner financing with a 1% lower interest rate and a 30-year amortization with a 15-year balloon could offer better cash flow now. This is appealing for short-to-medium term gains, especially if you’re confident in your ability to refinance or sell in 15 years. However, this comes with the risk that market conditions or interest rates could change, making refinancing or selling more challenging at that time.

On the other hand, a conventional 30-year mortgage offers long-term stability and predictability. While the interest rate might be higher, you eliminate the risk of needing to refinance or sell later, making it a safer option if your goal is to hold the property long-term without any financial uncertainty.

If maximizing cash flow now is a priority and you're comfortable managing the future refinancing risk, owner financing with a balloon could be the better choice. But if you prefer stability and want to minimize future risk, the conventional loan provides more certainty.

Ultimately, the decision depends on your cash flow needs, risk tolerance, and long-term strategy. 

Let me know if you’d like help analyzing the financing options or structuring the deal!

Best,

Drago

Yes, it is possible to do a cash-out refinance on a hard money loan, but it can be a bit tricky. Not all traditional lenders will refinance a hard money loan due to the perceived risk, but many specialty or non-QM (non-qualified mortgage) lenders may be willing to work with you. These lenders are more flexible, especially if the property has equity and your credit and financial situation are solid.

Here’s what you can expect:

• LTV (Loan-to-Value): The lender will typically assess the property's current value and lend a percentage of that, often around 65-75% LTV for cash-out refinances.
• Requirements: Expect higher interest rates than conventional loans and potentially stricter terms, but it should still be better than the hard money loan.
• Timeline: Start the process early to avoid issues with your hard money loan coming due.

You should reach out to lenders who specialize in investment property refinancing. If you'd like assistance in finding a suitable option, I’d be happy to help!

Best,

Drago

Hi Mellisa,

You're on the right track with DSCR loans to leverage your rental properties for the remodel. DSCR loans are ideal when your debt-to-income ratio is a concern, as they focus on the property's cash flow rather than your personal financials. The terms like the 70% loan-to-value (LTV) ratio and 3% origination fee you were quoted are standard but can vary depending on the lender. Some may offer better terms if your properties are cash-flow positive, so it's worth shopping around.

A key advantage of DSCR loans is their flexibility with LLCs and Trusts. Unlike conventional loans, DSCR loans typically allow you to hold properties in an LLC or Trust, providing liability protection. You could form a single LLC for all properties, which is easier to manage but carries shared risk, or you can create an LLC for each property, which offers better protection at the cost of more administrative work. Additionally, transferring properties into a trust for estate planning purposes is possible if needed.

To maximize your leverage, I recommend exploring multiple DSCR lenders for better terms and working with a real estate attorney to structure your LLCs for both protection and lender compliance.

Let me know if you’d like more details or assistance with financing!

Best,

Drago

Hi Jennifer,

For reserve funds without tapping into your home equity, here are the best options:

1. Business Line of Credit (LOC): Flexible, revolving credit for your LLC. You borrow only what you need and pay interest on that amount. Ideal for unpredictable CapEx expenses.
2. LLC Business Loan: A lump-sum loan with a fixed payment schedule. It can provide immediate reserves, and the properties’ income may help qualify for the loan.
3. Bridge Loan: Short-term financing to cover immediate cash needs. Best for short-term use, as rates are higher.

Given your strong W2 income, excellent credit, and LLC structure, any of these should be feasible. Let me know if you'd like more details or assistance with financing options!

Best regards,

Drago

Sure Varika, we lend in 44 states. 

Let me know if you need any help! 

Best,

Drago

Hi Justin, 

you're off to a great start with this creative acquisition strategy, especially for someone new to real estate. Taking over the property subject-to (Subto) the existing mortgage is an advanced tactic and can be highly effective when cash flow or equity potential is strong. However, navigating the legal and financial complexities of Subto deals requires careful attention, so I’d recommend working with a real estate attorney to ensure everything is structured correctly.

Securing private money for the closing is a smart move, but ensure your terms allow for flexibility in case of unexpected repairs or delays in cash flow. Since you're new to this, building a reliable team of professionals, an experienced agent, a lender, and a property manager→ will be crucial for long-term success.

If you need assistance with financing or further guidance on scaling your portfolio, feel free to reach out. Happy to help!

Best,

Drago

Hi Logan,

It sounds like your clients executed a fantastic strategy with that property! By purchasing at $133,000, renovating, and renting it out for 5 years, they maximized both rental income and appreciation. The timing of the sale at $315,000 shows how combining a long-term hold with a flip can be a highly effective approach in the right market. Renting allowed them to cover costs and build equity, while selling in a hot market helped them capitalize on the home’s increased value.

Let me know if you’re interested in financing options for similar deals, happy to assist!

Best regards,

Drago

Hi Varika,

Both options have merit, but it depends on your goals. New construction in appreciating areas offers long-term value growth, minimal repairs, and potential tax benefits, but often comes with higher purchase prices and slimmer initial cash flow. Older properties typically offer better cash flow due to lower mortgages and rents that exceed expenses, but may require more maintenance and updates.

If you prioritize immediate cash flow, older properties might be better. If you’re looking for long-term appreciation and lower maintenance, new construction could be ideal. It’s key to balance both when building your portfolio.

Need help with financing? Let me know!

Best,

Drago

Congratulations, Kevin! Managing a duplex can be a smart way to start building your real estate portfolio. Here is some additional information to ensure success:

First, tenant screening is critical, focus on creditworthiness, rental history, and stable income. A reliable tenant minimizes issues and protects your cash flow. Next, maintain professional boundaries with clear communication and a strong lease agreement to set expectations upfront.

Proactive maintenance is essential. Regular inspections and preventative work can save you from costly repairs. Establish a solid reserve fund (3-6 months of rent) to cover unexpected expenses or vacancies, which are inevitable over time.

Make sure you're well-versed in local landlord-tenant laws to avoid legal complications. Automating rent collection is another smart move, it reduces headaches and ensures timely payments.

For future growth, having access to financing options will be crucial. Let me know if you need assistance with that or any other aspect of your investment journey, happy to help!

Best regards,

Drago