Paying cash for homes

[Kelly Lund]

I am trying to understand how buying houses for cash works. My understanding is that you see a distressed home. You approach the owner, offer to pay cash for their home. What if they owe the bank money? What if they are upside down in their mortgage? What am I missing?

[Deborah Pyburn]

@Kelly Lund there's not a short answer to your questions because there are several ways an investor could structure a deal depending on the scenarios you proposed. If they owe money to the bank, an investor may check to see if it's one of the rare assumable mortgages still floating around or if they can do a lease purchase while the original owner maintains the loan. If they're upside down, the investor will evaluate their risk tolerance and determine if it's a deal worth saving or passing on. Not everyone who calls you from a yellow letter or bandit sign has a home worth investing in and you have to make sure the deal makes sense for you and ideally has multiple exit strategies.