When Pete started shopping around for investment property to buy, some of the best deals he saw advertised were cash only real estate deals. And, being a relatively new investor, he was pretty cash strapped. Heck, I know more experienced real estate investors who don’t have loads of cash just lying around.
But, what separates Pete from them is that he’s not afraid to ask questions—even of successful investors he barely knows, like me. So, after reading my guide on buying your first investment property, he did just that. He called me up to ask how he’s supposed to overcome this financial roadblock so that he can get on with building his career. So, I told him.
What Are Cash Only Real Estate Deals?
When a seller or their real estate agent advertise that they will only accept cash offers on a house, there is usually at least one good reason why—if not more. It’s possible that the seller has watched too many offers from lender-backed buyers fall through and is done dealing with banks. If they’re also financially distressed and need to sell fast, then waiting on a bank that will take a long time to close definitely won’t do.
Of course, it’s also possible that the home is in such disrepair that it simply doesn’t qualify for financing. Structural issues, a mold infestation, and fire damage, for example, will make any lender leary. And, when it comes to some major fixers on the market, you should be wary, too. No potential money pit is worth any amount of cash.
But, many of all cash deals you’ll want to buy, renovate, and sell will be fixers that could provide potentially good returns. Some will simply be smaller, older, out-of-date homes that, with a modernized kitchen and a pet-friendly yard, might sell pretty fast and for a very pretty penny. These cash only real estate deals are potentially worth your money—if you had the money lying around to buy them, right? Well, maybe.
One misconception about cash only real estate deals is that the seller actually expects to have cold hard cash placed in their hands at the close of escrow. In actuality, what they may be expecting is a fast cash-like transaction without a lender pulling the strings—and, potentially, pulling the plug. So, providing a certified check, cashier’s check, or wire transfer to the title company qualifies. And, that allows the title company to then issue a check to the seller quickly and cleanly.
Yes, you do have to have money available to fully fund the account held with the title company. Without fast access to the full amount of funds, you could be shut out of buying some of the best deals around. But, you’ve actually got another cash-like option that can help you stay competitive and keep a motivated home seller happy.
Use Hard Money for Cash Only Real Estate Deals
Hard money lenders can fund cash only real estate deals. Often made up of other investors or run by private companies, these lenders simply don’t operate with the same red tape that banks and credit unions do. Their main concern is whether or not you have a deal that they can potentially make money on, too. For that reason, they can help you close quickly by providing the funding you need fast. In fact, some of the best hard money lenders in the nation can close escrow by sending money to the title company in seven days or less. Obviously, that’s faster than most traditional lenders; but, it also beats out a lot of “true” cash buyers.
Another benefit of using hard money loans for real estate investments is that, even when deals don’t require an all-cash close, being able to fund escrow quickly will make your offer look better. Distressed homeowners, in particular, prefer to sell their houses fast so they can get out from under their financial burdens and get on with the rest of their lives. If you can help them meet that goal, they’re more likely to accept your deal. And, really, in this business—particularly if you buy, rehab, and sell property in a competitive market —you’ll need every professional edge you can get in order to nab some of the best investment deals available.
Finding a reputable hard money lender that will work with you as a new investor, however, can be tough. And, without a lot of experience and know-how behind you, you may not get the best rates. But, I know a way that can help you get around these and other obstacles that may come up.
The Easiest Way to Find Funding for Investments
Like many new investors, when I first started buying, renovating, and selling properties as a career, I didn’t have a way to buy cash only real estate deals. But, I didn’t let that stop me. In fact, it motivated me to reach out to a more experienced real estate investor, like Pete did with me, and ask how he overcame his financial roadblocks in the beginning.
And, thanks to that long-ago chat, that’s how I came to join HomeVestors as an independently owned and operated franchisee. As a franchisee, I have access to a proprietary lending portal that is a part of HomeVestors®’ software, UGVilleSM . This portal is unique in that it allows me to enter the details about a property into the system once in order to get multiple quotes from previously-screened hard money lenders.
So, I never have to worry about the reputation of these lenders. But, I also don’t have to worry about being able to fund my deals with the best hard money rates. With the HomeVestors name, and entire franchise team, behind me, potential obstacles I might encounter are easier to overcome. And, that’s given me the competitive edge to start investing professionally from the beginning.
For an easier way to fund your deals fast, join the team that can help you from the start. Contact HomeVestors to get access to the UGVilleSM lending portal today!
Each franchise office is independently owned and operated.