I don’t understand why it would make a difference telling the seller you can buy for cash. I have great credit. Can’t I get a conventional loan from the bank in a fairly short period of time and sell for cash at that time. I’m obiously very new at this. Thank you for your helping me to understand this.
Telling a seller that you have the funds and will be buying cash helps solidify the offer that you’ve made.
Normally, no you cannot get a conventional loan from a bank in a “short period” of time. It normally takes several weeks. You can close on a property this afternoon if you have cash…
Also, if you have a seller that is really pressed for time (or BELIEVES they are really pressed for time), a cash offer can be VERY powerful.
Cash works better with highly motivated sellers. It always is nice to ask if I can close in three days what is the price of the house? On the other hand if you have great credit you can not only get one great conventional loan but chances are you could get 2-5 of them if not more… The golden rule of CASH is KING always works. Here is the other thing that is nice about CASH if you can afford to buy with cash you can get a great rate on a HELOC (Home equity line of credit) and get your investment property down to a 4-6% rate! Paying you a higer spread every month. Then you can use the HELOC to obtain another property at a low rate and then use that HELOC to buy the next and so on and so on… Till the banks say NO MORE!!
I guess the question here is what are your goals with this?
Hey Reoconsultants, if you close in three days do you bother with inspections, appraisals and title searches?
I don’t know if Robb does but I bother with the inspection and the title search…I have a good awareness of RE value in my area, so I only do an appraisal later when I go to refi the property (and only 'cause the lender says so…).
If you have great credit and know you are going to be buying (or want to be buying) why dont you just go and get a pre-approval for a loan before you look. With the pre-approval down here (Orlando) loans can be turned around in less than 2 weeks.
With an open branch, my cash withdrawl can be turned around in less than 5 minutes…
Yeah I do them all!! HAVE A GREAT TEAM!!
Good discussion here. I want to jump in and throw you all a question. Here’s an example.
Purchase price is 30K.
Appraised at 50K
It’s used as a rental right now. Straightforward property. No garage. No basement. Rents are at $425.00 a month
Taxes are at $800.00 a year
Insurance at 30 bucks a month
Buy it for cash.
Is it possible that when I close on this transaction that I can go into a conventional loan down the road to basically “re-fi” out of my credit line? Do banks like to see the 3-6 months seasoning before doing this? Thoughts please,
Its a small loan and many brokers do not want to deal with loans that small since its still the same amount of paperwork and headaches but alot less money in their pocket…
Who said anything about brokers. I’m pre-approved thru a bank already to go with the loan since they keep the loans in house and don’t package them. My purpose is to buy with cash to get me the best possible deal.
all I do is get a loan approval letter from my bank, valid for 6 months here in South Africa, to the amount I may loan.
This gets approved according to your income and credit status, here you need to have a cheque account to have status. A credit card alone is no good. You can even negotiate the better interest rate on this approval letter with your bank, thus a lower rate will show you pose less risk and obviously more money for you.
My feeling is that it helps to tell un-informed motivated seller you buy in cash, but actually it makes no difference when they receive the full cash amount of the loan in any case.
To answer the question on small loan amounts:
Its true my first stand I wanted to finance for only $3000 for 2000sg.meter, but this amount was to small. What I had to do is finance a personal RPC loan from my banker, at obviously a higher interest rate. (4% higher) The deal was still worth it, so I did it, but beware of such pitfalls as it may cost you more than you think.
My stand is now already 4 times the value of purchase within a year! ;D
i agree with reoconsultants. paying cash and getting a heloc is the most cost effective way to go. you can get a heloc with no closing costs, and draw cash when you need it. plus its interest only, and your minimum payment goes down as you pay toward principal.
Heloc Heloc Heloc the cheapest way to go at the time
Here is the other thing that is nice about CASH if you can afford to buy with cash you can get a great rate on a HELOC (Home equity line of credit) and get your investment property down to a 4-6% rate! Paying you a higer spread every month. Then you can use the HELOC to obtain another property at a low rate and then use that HELOC to buy the next and so on and so on… Till the banks say NO MORE!!
How are you getting a HELOC for 4-6% rate? Just curious, maybe I am not understanding what you mean. My HELOC has a variable rate and is usually 1% above market rate. Graciez