When people talk about paying with “CASH” does this literally have to mean that they have this amount in a bank account, or can this be a number of things, such as 401K, HELOC, even a prequal. letter from a HML? Thanks!
It usually means that the seller doesn’t want to wait forever to close. If you can close in a week, it shouldn’t matter where the funds come from.
In my case, it is a certified check drawn of of personal funds.
Keith
it means paying with a cashiers check that you purchased, using money from any number of sources i. e. your bank account, friends and family, credit cards, helocs, private lenders, etc. helocs, credit cards and other unsecured lines are my favorite sources, bc they are revolving and interest only (usually)
Keith, does offering cash seem to bring in more deals? My wife and myself are about to sell a family business and get a pretty good amount of money. It will be a good start for a new business, such as REI. Any advice would be appreciated
Thanks ;DWeldon
Having cash in hand will give you an edge on a few deals, mostly situations which require a fast closing. Think distress sale situations.
On a typical deal where a seller is OK with a 3 week or 30 day closing, then cash is not so important. It’s cash at closing to the seller whether the buyer had it in the bank or he borrowed 100% from a mortgage company.
WGGJR,
As far as MORE DEALS, I don’t know because we go at the pace that we go. We only do one property at a time, get it rented, and then move to the next…when we are ready for the next deal, we’ll find it!
Keith
Thanks for the input. The reason I asked is that I am wondering if I should use my own money or the banks. I would not have to worry about carrying costs (at least the mortgage) if I used my own money. Thats only if I flip. If I was to hold and rent then I would probably Refinance for 80% of ARV. That way I’m not out out of pocket so much and if I get a good enough deal I may even be ahead a little. Just trying to get my ducks in a row. I guess it depends on my exit strategy. I will probably be mostly doing “fix & flips” and would like to do as many at a time as humanly possible. Of course i will limited by my cash and work crew. I will need to use the banks money to do several at one time cause I don’t want to drain my cash reserve. Of course I am just dreaming at this time, I haven’t done a deal yet cause I’m waiting to sell our family business.
Thanks ;DWeldon
if u r gonna do one deal at a time and can buy with ur cash, then refi, i don’t see that as any kind of issue. i know a few investors that do that. it’s is basically like using hard money without the points and ANY apr…u can close FAST and that is good, as u can refi however u r gonna need to find a lender that will allow u to refi with out much title seasoning, and then u have the waiting period for ur conventional closing on the refi. other than those two obsitcles, i don’t see how it cannot benefit u. good luck!
thanks tony!
instead of refinancing, which implies paying closing costs, consider getting home equity lines of credit on the properties. you can get them without closing costs, and draw money when you need it
Cash can be a powerful negotiating tool with many people. If you sit across the table and write out a check with your offer and put it in their hands, then they have something to lose if they don’t take your offer. It carries a different amount of weight than a verbal offer that may fall through ( we have all seen deals fall through between offer and close ). Its like negotiating over a vehicle with 100 dollar bills. When you start counting them out, you can see the green fever in the eyes of the salesman. :o
Doesn’t work with everyone, but more often than you think.
DB
Cash helps edge out your competitors. You can always choose to finance later, but cash costs less and is less hassle for the seller. If you can pay with a heloc or other quick method within 7-10 days, sellers may choose to discount or go with your offer over others.
exactly just adds validity to your offer. I know of a couple of investors that have partnerships with some big HML’s(good lenders with no to little apr) and they win the offer the majority of the time because they have cash, even if their offer is a little lower. Creates a good advantage over others if you have the funds