In the last episode, we showed you how to unlock tax-free liquidity from your properties. But accessing cash is only half the battle. If you leverage up without a safety net, one market shift could wipe you out. Now, learn how to bulletproof your portfolio before it’s too late. In this episode of the 5-Minute PRIME Podcast, host Martin Maxwell reveals the defensive playbook. We’re moving from “how to get the money” to “how to keep the assets.” This is the masterclass on risk management for the high-leverage investor.
Tune in to learn:
- The “Safety LTV” Rule: Why the old 80% leverage standard is dead in a 6.5% interest rate world, and the new “Safety LTV” you must target to survive.
- The ROE Trap: How to calculate Return on Equity to identify “lazy capital” that is dragging down your portfolio’s performance.
- The “Four Horsemen” Stress Test: A step-by-step guide to stress-testing your portfolio against vacancy spikes, insurance hikes, rate resets, and CapEx disasters.
- The “Sell vs. Refi” Decision Matrix: A simple framework to decide which properties to keep, which to refinance, and which to sell immediately.
This isn’t just about growth; it’s about survival. Subscribe now to build a portfolio that lasts.
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Show Notes: Bulletproof Your Portfolio
Key Takeaways
- The New “Safety LTV” (70 is the New 80): In a 6.5%+ interest rate environment, the old rule of leveraging up to 80% kills cash flow. Target a Loan-to-Value (LTV) of 65-70% to keep your Debt Service Coverage Ratio (DSCR) above 1.25 and bulletproof your portfolio against unexpected rate hikes.
- The ROE Trap: Don’t let “Lazy Equity” sit dead in your property earning 0%. Focus on Return on Equity (ROE) over Cash-on-Cash return to balance capital efficiency with safety, helping to bulletproof your portfolio.
- The “Four Horsemen” Stress Test: Before signing loan docs, ensure your portfolio can survive four threats: A 15% Vacancy Shock, Insurance/Tax Spikes, Rate Resets (avoid ARMs), and a CapEx Crunch. Essential to bulletproof your portfolio
- The New Reserve Standard: The old rule of 3 months’ reserves is insufficient. The new PRIME standard is 6 months of expenses plus your highest insurance deductible held in cash.
- The Sell vs. Refi Matrix: Use the decision matrix to determine asset strategy. Properties with High Equity, Low Performance, and Low Tax Basis are the perfect candidates to refinance (extracting tax-free cash) rather than sell (triggering capital gains).
Action Step:
- Audit Your Leverage: Review your current portfolio and calculate any potential refinance deals at a maximum of 70% LTV (Safety LTV).
- Build the Fortress: If extracting cash, immediately set aside enough funds to cover 6 months of expenses plus your highest insurance deductible before investing the rest.
Mentioned in This Episode
Episodes to Revisit:
- Episode 109: “The Accelerator” (Strategic Refinancing)
- Episode 41: Insurance & Tax Spikes
Concepts:
- The PRIME Framework: Manage Phase
- The 2026 Portfolio Stress Test
- The Sell vs. Refi Decision Matrix
Challenge for Today:
Run the “Vacancy Shock” calculation on your portfolio:
- Take your Gross Scheduled Rent and multiply by 0.85 (15% vacancy).
- Subtract expenses and debt service.
- The Result: Is the number positive? If no, take action to pay down debt, raise rents, or adjust strategy to bulletproof your portfolio before taking cash out.
