All Forum Posts by: Drago Stanimirovic

Hi Don,

You’ve nailed one of the most important rules of passive investing: diversification. By not putting all your capital into one deal, you protect yourself from major losses and keep your portfolio more resilient. Your example highlights this perfectly. Losing 85% on a single REIT would've been devastating if you were all-in, but spreading out across 10 investments turned the overall outcome positive because of the winners.

Here’s a few extra key tips to avoid big losses in passive investments:

1. Focus on cash flow: Invest in assets that generate consistent income. This cushions potential value drops.
2. Syndicator vetting: Only partner with syndicators who have a strong track record in different market conditions.
3. Market and asset class knowledge: Understand market cycles and the specific real estate types (multifamily, industrial, etc.) you're investing in.
4. Avoid chasing trends: Just because a market or asset is “hot” doesn’t mean it’s solid.

You’re right that this approach doesn’t cap your upside, quality diversification can still generate huge returns while managing risk.

Best regards,

Drago

Hi Xavier,

It’s great that you’re ambitious and have a clear vision! Here’s a solid strategy to start:

1. Duplex Strategy: Living in one unit, renting the other, and then leveraging that equity is a smart way to begin. This gives you experience as a landlord and minimizes housing costs while building equity. Perfect for getting started.
2. House Hacking: Continue the cycle—rent, refinance, buy another property—scaling up each time. This way, your rental income supports your next purchase, and you don’t need to save as much for down payments.
3. Financing: Focus on improving your credit and saving for future down payments. Once you’ve built enough equity, refinance and pull cash out to acquire more properties.
4. Leverage Knowledge: Learn about tax benefits, depreciation, and using LLCs to protect your assets as you grow your portfolio.

If I were your age, I would’ve networked more with real estate investors early on and diversified faster. Leveraging equity from early investments into more properties is key to scaling up.

Stay focused and I can help with financing when you’re ready!

Best,

Drago

Hi Chara,

You have a solid equity position with about $700k available. If you’re aiming for growth, house hacking by building the 5-bedroom home could generate strong rental income and increase the property’s value long-term. However, it comes with higher risk and upfront costs.

If you prefer diversification, using equity for a down payment on a new property spreads your risk and potentially opens up additional revenue streams through rental or appreciation.

It comes down to your risk tolerance and long-term goals. Want higher reward? Build. Prefer steady growth? Buy another property.

I can assist with financing options on either route, let me know if you'd like more details!

Best,

Drago

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