HOW TO GROW YOUR WEALTH BEFORE RETIREMENT

A real estate agent recently introduced me to a client who owns a rental condo in California. He was looking to pull out some equity to invest in a two-unit rental property—a strategic move to grow his assets before retirement.

The Numbers:

Condo Value: $720,000
Mortgage Balance: $185,000 @ 2.5% interest
Total Monthly Costs (incl. taxes/HOA): $3,400
Monthly Rent: $3,750
Equity Available: Substantial

He wanted to pull out $350,000 for a down payment on a $1.3M duplex. Initially, a home equity line of credit (HELOC) was an option, but with investment property rates around 9%, that meant $2,625/month in interest alone—too costly.

So, we explored a cash-out refinance:

New Loan: $540,000 @ 7.25%
New Monthly Payment: ~$3,683
Annual Negative Cash Flow: ~$20,000 — which could provide valuable tax deductions (pending CPA advice).

The Result:

The client now has the capital to buy a two-unit income property, expected to appreciate to $2M in 10 years (assuming 4% annual appreciation), while his condo grows to ~$1M. Both mortgages will be partially paid down or refinanced when rates drop.

Estimated Retirement Asset Value:

~$3M in real estate with reduced mortgage debt = $1.5M+ in net wealth

✅ If he had kept only the condo, his gain would’ve been much lower—limited appreciation, no tax strategy, and less rental income.

The Takeaway:

With smart refinancing and strategic acquisitions, you can significantly increase your assets by the time you retire—even in today’s market.

Thinking about your own retirement plan? Let’s talk.

(415) 225-7920, or email: mannykagan@comcast.net

Best wishes,

Manny Kagan,
President,
Pacific Bay Financial Corporation
Your professional mortgage broker since 1983

NMLS #205637
DRE #00874630