"Cash only" covers HELOC?
Many sellers ask for "cash only" for their properties. If you have a HELOC that has enough line to cover the price, does that qualify to be a Cash only offer?
Quote from @Yash Warke:
Many sellers ask for "cash only" for their properties. If you have a HELOC that has enough line to cover the price, does that qualify to be a Cash only offer?
Yeah, if you already have the HELOC then yes.
Quote from @Yash Warke:
Many sellers ask for "cash only" for their properties. If you have a HELOC that has enough line to cover the price, does that qualify to be a Cash only offer?
Yes you can use your HELOC. What is the goal though? Sounds risky using all of your HELOC for the purchase. Why not do a combination of both HELOC and Hard Money so you can have enough for reserves and renovations
@Yash Warke, similar to how hard money is technically a loan but most sellers consider it as cash, I would assume a HELOC that covers the purchase price is suitable for most owners seeking "cash" offers. As others have noted, using a HELOC for the full purchase seems risky, I would run your numbers religiously before submitting offers.
Goal is to buy my first rental investment property. I agree using HELOC for the entire amount to own it outright is risky, as it may leave me short on funds for renovations/rehab (is there any other tofu involved?).
What does it take to go down the hard money path? It is my first time doing this, so not familiar at all.
I might just steer clear of cash only properties and consider only deals that require a minimal downpayment with a conventional loan.
@Yash Warke HELOC funds qualify as a cash buy but if you are using HELOC funds as a down payment and a loan for the rest, lenders have seasoning requirements and/or may not allow you to use these funds to purchase. The total purchase would be considered borrowed loan (down payment plus first lien position) which greatly increases the risk to the lender.
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Lender CA (#02115256) and NMLS (#1993906)
- Investor Property Loan
Quote from @Yash Warke:
Many sellers ask for "cash only" for their properties. If you have a HELOC that has enough line to cover the price, does that qualify to be a Cash only offer?
A line of credit enables you to write a check. It's the same as paying with actual bills and coins, a money order, or a cashiers check. It is considered cash.
I have bought a few properties using a good chunk of my heloc and some of my own cash on hand. To the seller it's just cash, so they really don't need to know any details of your own internal financing. Always come in strong and brag about your experience if you have any. Let them know that this deal will close and close fast.