Cash Purchase

7 Replies

Hey everyone-  Long time lurker, first time poster.

(Hopefully) quick question:  I am looking to buy a pretty low-cost investment property in PA with cash.  My only real experience in buying a home was the standard 30-year mortgage on a primary residence route.  When buying in cash, what can I expect at closing?  I'm trying to budget out any additional costs beyond the property/repairs and see if this is a feasible option for me.  I'm figuring inspection, title fees, title insurance, etc. are going to come into play, but not sure what else may be waiting for me at settlement.

Thanks in advance!

buying cash is fast and easy. you should use it to your advantage, so lower offer.

you'd spend at most 1500 out of pocket when buying cash.

Buying in cash will make it very simple.

But you do want title insurance without a doubt.

@mi and @RonnieSC1- Thanks a lot for the insight!

Less charges at settlement, much quicker, less drama

Buying with cash, particularly if it is on a discount, allows you to use that cash on an unlimited number of houses...and in the end, you never have to actually spend it.  Chances are, as an investment property, you will be getting a large cash flow from it.  That large cash flow will allow you to cover the payments when you refinance your "cash" right back out...to use again on the next house.  Just keep repeating this as long as you can/want, and when you refi the last deal, you get all your "cash" back.

There's a little more to it...it's always in the dtails, but I think you get the jist of it.

Joe Villeneuve
REcapS Systems

In PA, transfer taxes are a big closing expense. 

Pro-rated property taxes, pro-rated utilities, U&O (Use & Occupancy) inspection fees, deed recording fees, wire fees to pay off existing mortgages - just some other things that you might see. 

@Geoffrey Rittenhouse the transfer tax is typically split with the seller. However in distressed situations and REO transactions the buyer may be required to pay the full transfer taxes of 4% of purchase price.

The seller is typically responsible for the U&O ($107 in Philly), but again in certain cases the buyer is responsible for this cost.

I would budget an additional $3,000 for title, homeowners insurance and other closing costs.

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