How Much Do Cash Offers Matter? Just Closed A Cash Flowing 4/2 BRRRR For A Client!

Question

So I'm a local investor and agent here in Columbus Ohio and earlier this week, I helped an awesome client close a 4 bedroom/2 bathroom single family house for $125k cash. It needs a bit of cosmetic updating - likely $15-20k. However, it should be able to cash flow $1600-1700+ per month. I think this personally was an amazing cash flowing deal which my client will be able to net a few hundred dollars per month and then get most of his cash out from the BRRRR. So happy for his success!

However, I'm very certain I was able to land this deal for my client most likely because he was a cash buyer, but if he was using conventional financing, we likely wouldn't have gotten this deal. Here in Columbus Ohio, it is a pretty competitive real estate market where any "good" deal turns into a highest and best situation with multiple cash offers.

Question for investors who buy deals using conventional financing - how much success have you been seeing and how do you structure your deal to have the most success possible? Thoughts on this?

Joshua Townsley · Answer

Down in SE Florida about 1/3 of transactions are closed cash the last time I checked and whenever we submit cash offers for clients we get actually get responses from the sellers. It is the world we live in.

Bob S. · Answer

I can get as many as I want. I used to get 30%+ net caps, now I get 15- 25% . Its all about your network, and knowledge. There is a reason investor from around the world have been buying in Cleveland for the last 10 years,

John Mullen · Answer

Hey @Jimmy Lieu, nice going there.  In my limited experience, hard money as a cash equivalent wasn't an issue.  That being said, who wouldn't rather have access to to "real" cash haha.

As a side thought, it seems that my personal network of potential investors (at the friends and family level) is holding its applause until I finish my first BRRRR (that I closed with hard money, thanks Adam Messmer).  The sentiment seems to be "do one and prove you're for real, then I'll invest in your next deal."  Much like job applications, some experience is usually required even if the job says entry level.

Marc Rice · Answer

You can have a stronger conventional offer than a financed offer if you structure diligence requests properly I've found.

Shane Kelly · Answer

From an agent's perspective on Cleveland- cash is king. I've seen both sides of the transactions confirming this. Where possible, I will try to only use my cash-buyers as it's so much easier to win deals.

Bob S. · Answer

All my 500 or so deals have been cash, and always will be. I have unlimited people that want to use a loan, I don't deal with them.  However, the best deals are cash as is close in two weeks. I just picked up a 7 unit, net rent about 39k, all in PP 200k, 4/2 all in 75k, (value about 125k,) rent will be 1300ish, 2 br all in 55k, 850 rent, these are great deals that only cash as is would get. So those going through realtors and using a loan, well I am certain in my market are not getting anywhere near as good as deals as I get.

Cleveland as well as your area are very competitive. Those using a loan are competing against guys like me, sorry I/we always win LOL

All the best

Jimmy Lieu · Answer

LOL haha I completely understand the "I/we always win" part for cash buyers! How would you say the deal flow is in Cleveland? I've talked with a few Cleveland Ohio investors and I always hear about these rockstar cash flowing deals. Is it the grass is greener side concept or would you say Cleveland is actually just that good of a real estate market?

Jimmy Lieu · Answer

Absolutely! I agree cash and hard money is important right now in today's competitive market, any good deal I'm seeing is instantly bombarded by multiple cash offers. And yes, congrats on almost finishing that BRRRR of yours!! That's a huge achievement, many more to go!

Patricia Steiner · Answer

About 30% of all transactions completed in Tampa Bay are cash.  It isn't so much that it's cash that wins the deal as it is that cash transactions are easier, quicker, and have a higher closing rate than financing deals do.  You can - and my clients do - win a transaction with financing even against cash offers provided you streamline the terms (what contingencies do you really need?), go in with a closing date commitment from the lender that is fast (we can close in 15 days with more than one of ours - even a banking institution), and with a slightly higher escrow.  What every seller wants is the best price - fast - and to close.  The attraction of cash has waned as so much of it is out there. The old pitch of 'it's all cash' is usually followed by some expection of a discounted price is long over...in my market, there's so little inventory that sellers can have it all - price, short close, few to no contingencies.  Buyers using financing need to use the initial property walk-through to gauge more than they did in the past and present an offer that is comparable in term and conditions to that of the cash offer.

Jimmy Lieu · Answer

What do you mean by structure diligence requests properly? Would love an example!

How Much Do Cash Offers Matter? Just Closed A Cash Flowing 4/2 BRRRR For A Client!

Most Popular Reply