Do you ever purchase commercial properties with cash only?

[Redstar1324]

For those who have purchased large commercial properties, do you ever do so with cash only?

Would it be worth the opportunity cost of tying up such cash?

What is your experience with this, even if you haven’t done so personally?

I am currently reading about a very large firm that I know (not The Blackstone Group) that borrowed 66% of the purchase price to buy a $136 million building in Brooklyn.

Sorry for so many posts, I’m just trying to learn…

[Gold_River]

Hi,

 Some of the reasons to pay with all cash are a property that is closed and vacant, a property which is non conforming, a property which needs to be subdivided to create two or more properties, or a property that has been red flagged by the building department which is substandard. 

Sometimes we pay all cash upfront to own and control the property to plan out a remodel or new construction project. Typically a lender likes to see ownership and skin in the game to provide construction financing for new or remodeling purposes.

          GR

[Dan732]

Cash is king

Cash is good leverage on properties that banks would run away from, distressed, vacant, title problems, etc

[Redstar1324]

@Dan732 post:3

Cash is king

Cash is good leverage on properties that banks would run away from, distressed, vacant, title problems, etc

What is the largest property you’ve ever bought in cash?

[Redstar1324]

@Gold River post:2

Hi,

 Some of the reasons to pay with all cash are a property that is closed and vacant, a property which is non conforming, a property which needs to be subdivided to create two or more properties, or a property that has been red flagged by the building department which is substandard. 

Sometimes we pay all cash upfront to own and control the property to plan out a remodel or new construction project. Typically a lender likes to see ownership and skin in the game to provide construction financing for new or remodeling purposes.

          GR

Do you usually refinance after buying and improving a property with cash?

[Gold_River]

Hi,

Yes, refinancing is pretty common after using cash, hard or private money or construction / rehab financing to remodel a property.


             GR

[Redstar1324]

@petergrant

Many investors choose to pay all cash for an investment property. Around a 24% of investors use 100% cash to finance their real estate investments. To be clear: even when investors use terms like “All Cash,” the truth is, no “cash” is actually traded. In most cases, the buyer brings a check (usually certified funds, such as a bank cashier’s check) to the title company, and the title company will write a check to the seller. Other times, the money is sent via a wire transfer from the bank. This is the easiest form of financing, as there are typically no complications, but for most investors (and probably VAST majority of new investors), all cash is not an option. Additionally, the return given from an all cash deal will not be the same as when leveraged. Let’s explore this further via an example. Other, less, have the money in bills and coins, the most of them it is black money and try to avoid the taxes, undervalue the houses.

Well I know they don’t bring a briefcase of cash to the closing.

Yes, the return would be different. If it was an all cash purchase, the income would be greater because there is no loan payment.

[Gold_River]

Hi,

Redstar please do not pull quotes off of another thread as we have no idea what context was intended when the original post line is not available!

Petergrant did not post in this thread!!!

          GR

[Redstar1324]

@Gold River post:8

Hi,

Redstar please do not pull quotes off of another thread as we have no idea what context was intended when the original post line is not available!

Petergrant did not post in this thread!!!

          GR

That was not intentional.

I have no idea how that happened.

[jeany5]

It really depends on how much money you have saved up and how much money you have to live on. Everybody is different.