The $9,000,000 Conversation

I had one of those conversations yesterday that reminds you why what we do matters so much beyond just quoting rates or opening doors.

I have a client who is 61, semi-retired, and has built a beautiful life over the past few decades. She owns a home in Los Angeles worth about 3.5 million. She originally purchased it for 800K and put another 300K into it over the years. Today, she still owes about 300K with a payment of about $3500. On paper, she has done incredibly well.

But in reality, she felt completely stuck.

She wants to move to the Central Coast, downsize into something around 1.25 million, and finally enjoy her life. She has a small pension, a large SEP IRA, three kids, and four Grandkids who live from Ventura to San Jose. She wants to be close to her kids, have freedom, travel, and peace of mind over the next 30 years.

The problem was taxes.

If she sold her $3.5 Mil home today, she would be staring down roughly $500K in capital gains taxes. That alone was enough to keep her frozen in place, living in a house that no longer fits her lifestyle, in a neighborhood she no longer enjoys.

So instead of treating this like a transaction, we treated it like a strategy.

Here is what we structured together with her and her agent.

We are getting her approved for a cash-out refinance on her current home for about 1.55 million. After paying off her existing loan, she will net approximately 1.25 million in cash. That allows her to purchase her new home on the Central Coast now, without having to sell.

Once she moves, she will rent out her Los Angeles property. Based on market rents, she and her agent expect about 15K per month. That rental income will cover the mortgage, taxes, and Insurance on both properties and still leave her with about $1200 per month in positive cash flow.

Now she is living where she wants, with flexibility, and without triggering a massive tax event.

The longer-term plan is where this really gets powerful.

After renting the property for about two years, she can sell her Los Angeles home, do a 1031 exchange, and transition into a small apartment building. If she purchases something around 4 million at a 6 percent cap rate and rates remain similar to today’s levels, she could generate roughly 20K per month in income. With financing, her payment would be around $13,800, leaving her with about $6,200 per month in net income.

So in one move, we helped her drop her $3,500 monthly payment on her LA house to $ 1,500 (Taxes and Insurance) on her new home, create over $6,000 per month in income, and reposition her into assets that support the lifestyle she actually wants.

On top of that, she will pay down roughly 28K per year in principal on the investment property, building even more long-term wealth. And when she passes, both properties can be transferred to her children at a stepped-up basis, potentially eliminating capital gains taxes for them.

Most importantly, she is no longer stuck.

She gets to live where she wants, travel, enjoy her life, and still take care of her family. She will also increase her income by $100K annually with our plan.  

This is why it is so important for your clients to speak with a trusted advisor early in the process. What looked like a simple decision to stay put was a much bigger opportunity to create a full financial and lifestyle strategy. The agent who referred me said he had been working on her since last summer, but she wouldn’t do anything because of the tax bill! Well, we changed that!   

This one conversation will likely turn into over 9 million in transactions between the eventual listing, the purchase on the Central Coast, and the future investment property. But more importantly, it changed the trajectory of her life and brought her closer to family and financial security!  

These are the moments that remind me this business is not about rates or transactions. It is about solving problems, creating options, and helping people move forward with confidence.

If you have clients who feel stuck or unsure of their next move, I am always happy to be a resource and help map out a strategy like this.

That is where the real value is.

Please let me know if you have any questions or if you or any of your clients, friends, or family members need my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

We had a bad morning for interest rates today and a terrible day yesterday, but we recovered this morning’s losses and made up a little bit of ground. It’s gonna be choppy until we have some peace in the Middle East! Did I write that? It’s been crazy there for 1000 years!    

Loan Programs

• We do loans on Non-warrantable condos!  
• We offer 12-day escrows for pre-approved buyers, including conventional, FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5s.
• Conventional loans up to $832,750 are in the mid to high 5’s.
• High-balance loans from $832,751 to $1,249,125 are also in the high 5 and 6s.
• Jumbo loans above $1,249,125 are in the high 5’s and 6’s.
• ARMS in the 5’s and some in the 6’s
• Bank statement loans are available again with 10% down, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,325,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

Nada today!  

**Bad News for Condos***     

Seco Villas – YUP! Insurance issues, and we just closed one a month or so ago, and all was good!  

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. We don’t know when something has changed, and it would be impossible to track everything day by day, but we don’t mind looking up a few items each day.  

The full state of California’s naughty list has been added to:

MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.    

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!

Sincerely,