All Forum Posts by: Drago Stanimirovic

Hi Dylan,

Your strategy to buy a townhouse for $260,000 with an initial $9,800 investment and live in it before converting it to a rental is a financially savvy move. This approach allows you to manage the property closely, benefit from homeowner loan terms, and potentially increase its value with improvements before renting it out.

As you transition the townhouse to a rental, ensure the rent covers all expenses and provides a profit. Also, consider the benefits of long-term capital appreciation and building equity as you pay down the mortgage.

If you have questions about this process or need information on financing options as you expand your investment, feel free to reach out. I'm here to help with any financing needs or further advice you might require!

Best,

Drago

Hi Austin,

As a new landlord exploring self-management, your concern about obtaining signed authorizations for verifying applicant information without a physical signature is valid. Many landlords now use online platforms that integrate electronic signature capabilities to handle this legally and efficiently. These platforms, like DocuSign, streamline the process but can be costly if you exceed the monthly limits.

However, alternatives exist. Services such as HelloSign or even more comprehensive property management software like Cozy or TurboTenant offer electronic signing as part of their application processing tools, sometimes without the same limits as DocuSign. These platforms ensure that you obtain legally binding electronic signatures for the release of information forms as part of the application process.

In practice, while some landlords might accept pay stubs at face value, your approach to verifying employment directly is prudent, especially given the ease of falsifying documents with today's technology. Using electronic signatures obtained via reputable software ensures compliance and authenticity, allowing you to contact employers directly for confirmation, which aligns with best practices in tenant screening.

If you have any specific questions about setting up your application process or need further recommendations on property management tools, feel free to ask. 

Best regards,

Drago

Hi Adam,

Your investment strategy clearly aligns high returns with a commendable social impact, targeting homes for veterans and those in need. The appeal of this deal lies in its low entry barrier and high potential return, made possible by your hands-on approach in sourcing and negotiating directly in the market.

Financing the deal through both personal investment and banks offers a balanced leverage, while your approach to seeing potential in underappreciated properties maximizes value. Achieving immediate positive cash flow indicates a successful execution, and the lesson learned about closely managing startup costs is vital for any investor.

It’s also great to hear about professionals like Midge Maguire who have significantly contributed to your success. Recommendations from trusted partnerships can guide new investors looking for reliable real estate professionals.

If you’re planning further investments or need advice on new ventures, feel free to reach out. Sharing insights and experiences can enhance strategies and outcomes in real estate investing.

Best,

Drago

Hello Bryson,

It's fantastic to see your proactive approach towards real estate investing, especially at such a young stage. Diving into market analysis is a crucial step, and here’s how you can start:

Begin by assessing economic indicators like job growth and unemployment rates. These elements show the overall economic health of an area, which directly impacts real estate demand. It’s also beneficial to look into population trends. Areas experiencing growth in population usually see a corresponding rise in housing demand.

You should then delve into real estate market trends, examining aspects such as property prices, rental levels, and the average time properties stay on the market. Since the BRRRR strategy involves renting, understanding the rental market's dynamics-like rental rates and occupancy rates is equally important.

Local regulations, which you’re getting familiar with in your zoning office internship, are also critical. Knowing zoning laws, property taxes, and landlord-tenant laws will help you navigate potential pitfalls.

To expand your knowledge, engage with real estate investing websites and forums such as Bigger Pockets. These platforms offer a wealth of information and community support. Continue educating yourself through books and online courses tailored to real estate and market analysis. Additionally, participating in local real estate investor meetings can connect you with experienced investors for guidance and potential partnerships.

Building relationships within the industry can often be as educational as formal training. If you’re looking for more specific guidance or resources, don't hesitate to reach out. Your initiative is impressive, and I’m here to support your journey in any way I can. 

Best,

Drago

Hi Guillermo,

Your experience with the single-family residence investment highlights several key aspects of real estate investing. Knowing the area provided a solid foundation for your investment decision, and using cold calling to find this deal allowed you to negotiate directly, potentially minimizing competition and costs. Financing the deal with private money was effective for quick acquisition and rehab, which added substantial value by making the property more desirable for tenants.

The main lesson from this investment was the importance of careful property valuation. Paying too much initially can significantly impact overall returns, emphasizing the need for thorough due diligence and possibly more stringent financial analysis before purchasing.

For future investments, consider leveraging local market knowledge further and refining your property evaluation techniques. If you're planning to expand your portfolio or need assistance with financing your next project, feel free to reach out. We're here to support your investment goals with expert advice and financing solutions.

Best,

Drago

Hi Devin,

You’ve identified a key issue with the Average Rate of Return (ARR) — it can be misleading. In your example, the ARR calculation suggests a positive return of 12.5%, but in reality, the investment suffered a loss of $50 over the two years. Here's why this happens:

The ARR is simply the average of the annual returns, without considering the actual capital invested or how much money is lost or gained over time. In your case, the negative 75% return in the first year, and the 100% gain in the second, are averaged to give 12.5%. But, this doesn’t reflect the fact that the initial investment decreased from $100 to $50 over two years.

The flaw with ARR is that it doesn’t take into account compounding or the actual sequence of returns. The correct way to measure the overall performance of the investment would be through a Cumulative Return or Compounded Annual Growth Rate (CAGR). These approaches consider how the capital has grown or shrunk over time, providing a more accurate reflection of actual performance.

For instance, the CAGR in this case would be negative, as it accounts for the overall movement of the investment from $100 to $50 over the two-year period, indicating a loss.

If you'd like further clarification or assistance in understanding other metrics for evaluating investments, feel free to ask! I'm happy to help with any questions you have, including any financing or real estate concerns.

Best,

Drago

Hi Andrew,

Congrats on starting young in real estate! Here’s a brief guide to your questions:

For getting a mortgage without two years of income proof, you could explore non-QM loans, asset-based loans, or consider using a co-signer. A mortgage broker can also help find lenders with more flexible requirements. For analyzing properties, BiggerPockets, DealCheck, and Roofstock are great tools to evaluate cash flow, ROI, and cap rates effectively. If you're looking for creative ways to secure a down payment, consider partnering with investors, using seller financing, or exploring down payment assistance programs.

As a real estate agent, starting at 18, working with experienced agents for mentorship can be invaluable. To market yourself effectively, focus on social media platforms like Instagram, Facebook, and TikTok, which are great for reaching clients, especially first-time buyers. Building trust will come with continued learning, sharing valuable market insights, and gathering testimonials from satisfied clients.

If you need help with financing or more guidance along the way, I’d be happy to assist!

Keep pushing forward → you're on a great path.

Best,

Drago

Austin, you're thinking about this correctly. Building a new SFH gives you more control over the construction process, allowing you to avoid many of the unknowns that come with buying an existing home. You'll have peace of mind knowing exactly what's behind the walls and that everything is up to current standards. While there are risks involved with building-like cost overruns or delays, these are often more manageable compared to the potential hidden issues in an older home.

If you'd like help exploring financing options for new construction, I’d be happy to assist!

Best,

Drago

Hi Anderson,

Real estate investing is indeed a powerful way to build lasting wealth due to several key factors.

Firstly, steady cash flow is one of the primary benefits. When you invest in rental properties, you can generate consistent monthly income from tenants. If managed correctly, the rental income should cover your property expenses (like mortgage, insurance, and maintenance) while still leaving you with positive cash flow. Over time, as rents increase and mortgage balances decrease, your cash flow improves.

Secondly, property appreciation plays a big role in wealth accumulation. Real estate typically appreciates over time, meaning your property could increase in value even if you don’t make any major improvements. This appreciation allows you to build equity, which you can later tap into by selling the property or refinancing to buy additional assets.

Real estate also offers significant tax advantages. For example, you can deduct mortgage interest, property taxes, operating expenses, depreciation, and sometimes even travel expenses related to property management. These deductions reduce your taxable income, which helps maximize your profits.

Finally, real estate provides diversification for your investment portfolio. Since real estate tends to have a lower correlation with the stock market, it can serve as a stabilizing asset during economic downturns. Even when the market is volatile, rental income often remains steady, providing a buffer to offset risks in other areas of your investments.

If you're interested in financing options to begin or expand your real estate portfolio, I can assist with that as well. 

Let me know if you'd like more detailed guidance on getting started!

Best,

Drago

Hi Brian,

You're on the right track, but to determine if you're truly generating cash flow, it's important to look beyond just your mortgage payment.

Here's what to consider:

• Income: You're receiving $2,100 in rent, which is great.
• Expenses: Besides your $3,232 mortgage, you likely have other expenses like property taxes, insurance, maintenance, utilities (if you cover any), and potential vacancy costs.

If your total rental income exceeds all of these combined costs, then you're generating positive cash flow. However, if you only consider the 65% of your mortgage covered by the tenants, you're not necessarily cash flow positive. You still need to factor in those additional expenses.

If you'd like help diving deeper into the numbers or need any advice on financing options, feel free to reach out!

Best,

Drago