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I have to sell my house or my rental because my wife is sick and I need to pay for cancer treatments. This is actually a call that I recently had. So welcome back to the real estate revolution. I wanted to break this down of some options and some thoughts that either you as a seller or you as an agent really need to think through when there is an emotional potential sale on something. So I met with Jeff recently. He came through. He's a past client of one of my agents, one of my team members. And that was the conversation says, hey, Ben, I need to sell my house. And we bought it a couple of years ago. It's been a rental and it has a tenant in place currently. So let me break this situation down for you and then I'm going to give you the three strategies that are not widely talked about or thought about because it has to do with financial literacy and thinking about how do I move the chess pieces. That's what I'm a master at, is moving the chess pieces and thinking outside the box. And that's what I hope you get out of this particular podcast and video. So you're ready. Let's jump in. Let me just kind of outline this for you. So Jeff owns a property here in Phoenix, Arizona, actually in Peoria. It is a rental property. It's in a 55 plus community. We are currently in the summer, not a great time to sell in the 55 + community. And it has a tenant in place that is there for the next nine months, which can be a little problematic when selling a property because the lease in the state of Arizona stays with the property. Right. Unless you can negotiate for the tenant to vacate the property or buy them out. So that is can be a hurdle in the current market. So let's kind of go through the options and the strategies and let me paint the picture. So Jeff's current property is free and clear. There's no liens on it, no loans on it, is rented for $1,700 a month. The tenant has another nine months in it. And Jeff has this dilemma that and the Property's worth about $300,000. Jeff has this dilemma in asking the questions, which is what is your time frame? Jeff, like, what's the goal to have this money in your pocket? His goal was 30 days. Okay, 30 days in the current market with a tenant in place on a property, that is not a good investment potential for an. We got problems. Right. So to really accomplish that, that's an issue. Right. Because he needs the maximum amount out of it in Order to prepare for cancer treatments for his wife. So, by the way, pretty cool that Jeff invested in real estate early on, and he has these assets to pay for some of these treatments that are going to be outside of insurance. So think about that if you're starting your investment journey. This is one of those things that it can benefit you down the road and you don't even know it. So $300,000 is Jeff's current value, approximately if the house was vacant. Anytime sell a property with a tenant in place, it takes longer to sell, you have less buyers, and it potentially causes financing issues for the new buyer, even if they could keep the tenant in there a little while. So strategy, this is where most people stop is strategy one, which Jeff wants to sell the home in the next 30 days, which means putting it on the traditional market, working around the tenant schedule and trying to get to that price. It's probably if Jeff wants retail out of this property, or if you want retail out of your house, selling it with a tenant in place with an emotional urgency is not going to create top dollar. If that emotional emergency is that urgent, you may have to sell at a discount, which we're going to get into that in just a second. So if Jeff sells his $300,000 property today, he's owned it for less than two years. That has been a rental property. He is going to have some capital gains. So $300,000, he's probably going to sell it for closer to 290 and about a 10% cost of sales. So technically, he's going to be, you know, 260, 270, then the money. So from what he paid for it, 210 to that 262, the profit. Now, keep in mind, he's going to be charged capital gains tax that. So 20% of that profit is going to be taxed, plus he has to recapture depreciation when you sell a rental property. So depending on how much he wrote off, he's going to have to recapture that in the sale. So let's say he has to recapture the depreciation for two years and he made $60,000 his rough tax liability on this, he's got a profit of about 80 is going to be about $20,000. So while he did net 262,000 dol 70, depending on where the sales price is, he's also going to have a $20,000 tax liability, taking his net profit somewhere into the 240, 230 range. Okay, does that make sense? So those are some of the things that you know, question wise that we need to think about before we sell a property. Is there an alternative? So in most cases, this is where it stops. Jeff has it in his mind to sell the house. He's told the agent that that is, which is what he told us. This is what I need to do. How fast can I do it? This is where I get really personal with people. And this is where I want to know what your situation is. Because I see if there's another way around this. Because right now selling this house, which I understand the urgency for, his wife is potentially going to cost him between 70 and $80,000 to sell it. By the time you pay taxes, you pay commissions, you sit on the market, all the things, okay, that's what we're fighting against. Now, I want my seller to keep his money. That is my goal. Because I believe in owning real estate and I believe that it can pay for other things, which I'm now going to show you. Now strategy number two. If Jeff truly wants to accomplish this and he is desperate and motivated, going to the retail side going to be harder. Yes, he could drop the price down. Something of that nature may or may not work. But if Jeff wants ease and certainty in strategy two would be Jeff. Here's a number that I think an investor will buy this for all cash. Close in 14 days. No inspections, complete ease and certainty. I think the numbers around 230 to find that investor. Now, either the investor or myself, because I do invest, I know that that number is very possible. Now, it doesn't cost Jeff anything. That is a net number to Jeff. So this is where strategy two comes into play. Depending on the person's sit motivation, this might be an option. Now some people think like, oh, you know, you're ripping them off. Well, I'm not. If I'm giving him ease and certainty, or if you're giving ease and certainty or you're getting ease and certainty, you might be willing to leave some money on the table for that ease and certainty. Right? And trust me, I bought enough homes where that ease and certainty worked out really well for the seller and really bad for me because we ended up with maybe a chunked sewer line or needing a new roof or a new AC or whatever. Seller took advantage of that. Sometimes when you invest, there's definitely risk when it comes down to it. Sometimes it works out, sometimes it doesn't. So now that strategy can be executed very quickly if he wants to. Here's strategy three and four. Okay, now let's go back to strategy two real quick. On the all cash sale, there are many, many agents that are not connected enough with the investor world to be able to throw that number out and know what somebody's willing to pay for it because they're not investing in real estate themselves. So when I throw that number out, it's usually a very good possibility that either I will buy it or another investor will buy and we can make that very easy for the seller. That is an option we offer every time so that our sell sellers don't have to go talk to a bunch of cash buyers and get a bunch of low ball offers, kind of go through that process. So let's go into some of the financial strategies that we deploy for our clients that I want you to be able to deploy so that you're helping your client out. And I'm going to show you the reasons why this is so beneficial to you. So now we get to strategy three and here's where we start asking personal questions. I want to know, Jeff, you said 30 days, that's great. We're not going to be able to execute that higher price in 30 days. You could take the lower price. But tell me about your other assets sets because you obviously own this rental property free and clear. What else do you have? Well, they do own their primary residence free and clear. So now we have a couple of options that are going to be really important because Jeff, while he is very in tune and very in line with owning everything free and clear, no debt, that's great in some cases. I'm a big leverage person and I believe that you can leverage and move things around. And again we're playing chess with leverage and properties and that's what the game is. Right. So we're always moving things. Nothing's ever sitting. So Jeff has a free and clear rental property which he could go through and do a cash out. He cannot do a HELOC in this in on a non owner occupied and he locked as a home equity line of credit, but he can do a cash out refinance on this. Now when you do a cash out refinance on a rental property, there are a couple of things you need to understand. One, the banks will typically loan you between 65 and 75% of the appraised value. When you get an appraisal on a cash out refinance, they typically will come in lower than what maybe the estimated market value is because they're a little bit conservative on it. So be prepared for that. I told you $300,000 what the house is probably worth on the open market, the appraisal is probably going to come in somewhere between 280 and 290. Now 70% of that 280, which is the number that I use, Jeff can pull $196,000 out at 7% interest. Your interest rate is always a point or will be a point or a point and a half higher on a cash out refinance, non owner occupied. They just charge you more for it. Just, just, that's the problem. Okay. Now Jeff's principal and interest payment is going to be $1300 a month. And keep in mind the tenant is paying 1695. So even with property management and some expenses, Jeff will break even or cash flow. And he has his $200,000 that he wanted for his wife's treatment. Okay, we've solved all that. Now this is an expensive route. Now what if rather than that, he's got his $200,000 out tenants covering the debt. Great. It's not costing them anything. And they still own the real estate. They did not pay the cost of sale. They did not pay taxes on, they didn't anything. They just pulled the cash out of it. Okay. Not a taxable event. Perfect. Now what if we could do one smarter? What if I could save Jeff a little bit more money and give him a little bit of a peace of mind and we put this strategy together. I actually advised Jeff to go through and do a home equity line of credit on his primary residence. And here are the reasons why. A home equity line of credit, let's say his house is worth 500 grand. He can probably get a $400,000 line of credit in about seven to 10 days on that property. Now once that line of credit is set up, it's like a credit card. You're only paying interest or payments on the money that you use. So it's cheaper than what the tenant is. And the rate is probably about the same on a home equity lines, probably in that 7 to 8%. But you're only paying for what you use. So now he's got some cushion. Okay. As his wife's treatments go on, he can pull a little bit of money out, pay on that money. But here's the cool thing. Remember, they still own the rental property free and clear. That is producing about $1,700 a month. Well, let's just make that a net, net zero for everybody, but everybody is taken care of, of. Right. So now they have $1,700 cash coming in from this rental property that's owned free and clear. They have a HELOC on their house which they've pulled out 50 grand and their payments $400 a month. Okay. They still have this money that can offset whatever the expenses of this. So it's a wash. Here's why this is so important. The wash means that he utilized the piece of properties or properties he owns to borrow the money he needs while the tenant is actually paying for the loan. So he still owns the property. He didn't spend 60,000 dol dollars in cost of sale and taxes to do it. He still has the equity in that property. He still owns it. He still has the tax benefits of owning it and we're not selling it. He has the home equity line of credit which gives him some savings grace with his wife, but it's also being paid for by the tenant. That's pretty great if you understand how to move the pieces. Now what I've done for the seller is I've given them a couple of non emotional options that allows them to pick and choose what is best for them. Now how good does it feel to know that I have all these options? I have four strategies in front of me. One is going to work the best, which one is going to make me feel the most comfortable and how do I execute one of those? Now if Jeff comes back and says, hey, I appreciate you giving me all of these options, I just want to take the $230,000 and be done. Okay, we can do that. Jeff, I would either, you know, put the house on the market and try. Okay, we can do that. Right? Or Jeff might say, hey, I'm going to go to the bank and see how this works. If it doesn't, then we have to go this direction. What we've done is I've given you all the options, I've given the seller all the options and I've built a trust with the seller by giving them those options because I'm trying to get them to keep the property, then show them how that property benefits them to pay for those future treatments. Yes, it's leveraged against one house. So there's all these moving pieces in knowing how to do it and how to put it there. And by the way, if he does decide, you know, this was actually what I advised him, get a home equity line on your house, utilize that if you still want to sell the proper the rental property, let's plan to sell it in May when the tenant gets out and then you can pay off that home at equity line of credit if you want to. Right. That's the option. My goal for them would be to keep the property and move things around and be good with that. But some people don't like the leverage, and that's okay. He has options. I want you to have options. And this is how I strategize with people all over the country where in this particular case, Jeff's paying us $7,500 in consulting. I gave him those options, and now he's saving $100,000 and keeping his house, getting the tax benefits, all the things. Right. So is that a great trade or what? But is your agent giving you this advice? If you're an agent, are you giving this advice if you're not? This is where financial literacy and things come into play in our business. And by the way, by giving these options, I am building a client and a referral base for life because of all the things that we've done and gone through. And we've also figured out how to utilize some of our knowledge as consulting fees, which is an increase in income as well. You see, not everything has to be sold to create income. It's the knowledge that you have and the options that you have that that is going to create additional income. And you're gonna have to get to the point to where you're okay asking somebody to invest in your knowledge in order for these strategies to go through. Right now, if we sell the house, great. We're gonna earn a commission doing that. So if you are looking for a strategy or you have a complicated situation, whether you're an agent or a seller or a buyer, this is what I do on a daily basis. And by the way, if you have an agent, you can still work with that agent. I can help them execute the strategy, I can help them execute what's with it and how to move the pieces around. And this works in so many different facets. So if you're looking for a strategy like this, please reach out to me either via email, dm, text message, any of those. All the information is all here on my Instagram podcast. And let's connect. If you have a complicated situation, doesn't matter what price point it is, anything like that, you want to know all of your options so that you can be prepared to do the best option, not just for right now, but also in the future. Hey, I hope you enjoyed this seller strategy session. So a couple of things that I want you to think about is number one, if you want to follow along the numbers and you want to write it down, take some notes, check out the YouTube channel. This is on there and it does have all the numbers and all the things to follow through with, so you can actually see how it plays out. And also follow me on Instagram. And if you're looking for more learning training on the investment side, Wendy and I have created an amazing online community called thelimitlesscircle.com it's a small monthly investment. We've got a Facebook community. We're doing live calls. In it, we're teaching you how to be wealthy, how to be smart. And so of the tips and tricks we've learned along the way, from being broke to what we currently value now. So I hope you check it out. Thanks for joining us and I will see you later.