May is planting season—when farmers sow the seeds they hope will feed them for years. It’s not glamorous, and the results aren’t instant. But they know the real payoff happens later—quietly, under the surface.

It’s a good reminder for advisors: this is the month to help clients think ahead. The markets may be noisy. Rates might be high. But strategy planted today can shape outcomes for seasons to come.

In this issue:

• Why cash buyers are on the rise—and what it’s costing advisors

• How new tariffs and sticky rates are squeezing affordability

• $800K preserved. $95K saved. One advisor’s smarter path to a $2.5M purchase.
  

Industry Insights: The Hidden Cost of Cash

In today’s high-rate market, more buyers (especially older, wealthier ones) are skipping financing altogether. According to the National Association of Realtors, 27% of all U.S. homebuyers in 2023 paid all-cash. Most were debt-averse, flush with equity, and eager to avoid the friction of rising rates and long underwriting timelines.

Among luxury buyers, the trend is even more pronounced. Redfin reports that nearly 47% of luxury homes were bought all-cash in early 2024—the highest share in over a decade.

To many clients, this feels clean. Quick. Wise. But often, it’s a high-cost decision masquerading as a simple one.

When a client wires $500,000 to buy a home outright, they’re not just acquiring property—they’re locking up $1.6 million in future liquidity. For the advisor, that translates to $165,000 in lost fees over the relationship. One transaction. One missed conversation. $1.8 million gone.

Why This Matters for Clients:

• Liquidity Vanishes: That $500K leaves the investment plan—and with it, flexibility, compounding, and reallocation power.

• Tax Strategy Dies on Arrival: No debt means no mortgage interest deductions, no strategic leverage, and no structured depreciation.

• Financial Rigidity Sets In: Real estate is sticky capital. It’s hard to access, expensive to unwind, and unforgiving in volatile markets.

Why This Matters for Advisors:

• Planning Disrupted: A core asset leaves the strategy before you even get a call.

• Trust Erodes Quietly: The client sees it as a transaction—not a decision worth your involvement.

• Revenue Lost, Invisibly: Not through churn or mismanagement—but through omission. The client didn’t forget you. They just didn’t see this as your lane.

This trend isn’t slowing down. But it is a fixable problem. The solution starts by framing cash decisions not as real estate transactions—but as planning moments worth pausing for.

Advisor Tips: Countering the “Cash is Simpler” Mindset

By the time you hear “We’re paying cash,” the wire might already be in motion.

Clients aren’t being reckless—they’re being reactive. In a high-rate environment, the logic is intuitive: skip the mortgage, avoid the headache, and move fast. But what feels simple in the moment often undermines the long-term plan.

Here’s how to reframe the conversation—before it becomes a missed opportunity:

1. Re-center the Decision
Ask: “Is this part of your financial plan—or just the next move?”
It’s a gentle nudge that repositions real estate as a planning conversation, not a transaction.

2. Quantify the Tradeoff
Help clients see what they’re giving up: liquidity, market growth, and tax-smart flexibility. A $500K cash deal may cost them $1.6M in future optionality.

3. Normalize Planning-Based Financing
Remind them: smart people use strategy—not because they need debt, but because they value control. Keeping capital working is a feature, not a compromise.

You’re not pushing product. You’re preserving optionality.

Macro Watch: Tariffs, Rates & the Liquidity Squeeze

If your clients are feeling squeezed by high rates and rising costs, here’s why: the policy environment just turned up the pressure.

Last month, President Trump announced a series of sweeping tariffs, imposing a 10% tariff on all foreign imports, with "reciprocal tariffs" targeting specific countries like China, which faces levies exceeding 50%. These tariffs are already impacting the housing market and mortgage rates.

Higher Homebuilding Costs

The National Association of Home Builders (NAHB) estimates that recent tariff actions have added approximately $10,900 to the cost of constructing a new single-family home. This increase is squeezing builders' margins and exacerbating the housing affordability crisis.

Sticky Rates, Delayed Relief

Mortgage rates initially dipped on Fed optimism, but now they’re bouncing back. The average 30-year fixed has climbed back to 6.90%, and economists warn that tariff-driven inflation could delay any Fed rate cuts.

Translation: “higher for longer” is still the base case—and clients need to plan accordingly.

Affordability Under Siege

First-time buyers and upgraders are getting squeezed. According to the National Association of Home Builders, tariffs are cooling demand, but not fast enough to meaningfully lower prices—especially in markets with tight supply. That means affordability is eroding from both ends: higher costs and higher rates.

Advisor Takeaway: Strategy Becomes the Differentiator

These aren’t just headlines—they’re pressure points on liquidity, flexibility, and long-term planning. In this kind of market, clients can’t afford to act out of habit. Every dollar locked in real estate, every unstructured cash deal, every financing shortcut carries more risk.

Your voice matters more than ever. This is your moment to lead with clarity—and give clients a plan, not just a purchase.

Success Spotlight: Preserve Liquidity. Avoid Taxes. Control the Plan.

The Client

A high-income professional looking to purchase a $2.5M vacation home in Lake Tahoe. She was referred to Leveridge by her financial advisor to help structure the transaction.

The Challenge

She originally planned to put $1 million down — using $200K in cash and liquidating $800K in securities.
But that approach would’ve triggered a major capital gains tax hit, reduced long-term compounding, and created unnecessary drag on her overall wealth plan.

The advisor wanted to preserve portfolio assets, keep the financing efficient, and explore tax-aligned ownership options.

The Solution

We partnered with the advisor and collaborated with the client’s CPA to support the cost segregation strategy. Together, we engineered a multi-step plan that reduced the tax load, preserved capital, and created clean downstream flexibility:

• Down payment reduced from $1M to $625K

• Client contributed $200K in cash, and $425K via SBLOC against her brokerage account

• $1.875M second home mortgage structured for rate and term efficiency

• Post-close, we coordinated a cash-out refinance on a low-leverage investment property

• Refi proceeds used to pay off the SBLOC — restoring full liquidity and keeping the investment portfolio intact

• Ownership vested in a Single-Member LLC with a formal promissory note

• Cost segregation analysis + 40% bonus depreciation executed under 2025 IRS rules

The Results

• ~$124K in projected tax savings via accelerated depreciation over two years

• ~$95K in capital gains taxes avoided by not liquidating $800K in securities

• Full investment portfolio remained intact and growing

• Liquidity fully restored post-close

• Stronger after-tax cash flow and long-term ownership optionality

• Advisor stayed in control of the client relationship and planning process

Want to help clients avoid the hidden cost of cash?

Whether you’re guiding a purchase, a rental, or just keeping an eye on future moves — we’re here to support you with strategy and lending, on your terms.

Reach out anytime to submit a client case or talk through a real estate scenario.

Because when strategy is missing, so is the advisor.
Let’s make sure your clients never have to choose between real estate and a real plan.