My partners and I are going to be making some offers on some REO properties this week. Some of my partners have the bulk of their available funds tied up in a 401(k) right now. When paying cash, how long does the closing process take? Should they have their money out ASAP or do they have some breathing room?
Well, you'd need a bit more than a week, but better to get started on this:
Look into moving your retirement funds into self-directed accounts. You'll be able to invest your retirement funds into real estate deals rather than borrowing against them (you can only borrow up to 50% or $50K, which ever is less).
Seek out someone who can help you avoid the issues and maximize your flexibility and returns.
Thanks, @David Dachtera ! I'll relay the advice.
I'm in the middle of my first REO flip project so I don't know if my situation was the norm or not but in my experience you have plenty of time. I made my initial offer on the REO property on March 22. There were multiple bidders so there was a series of "highest and best" requests from the bank's realtor. It seemed to take a week or more between each request for the bank to review the offers. When I finally did manage to close the deal it took several more weeks for the bank to get all of it's affairs in order. We didn't close until June 6th. About 11 weeks in total.
This was an all cash deal and two things were needed that could have blown the deal if we weren't prepared.
First was proof of funds. For me this was an investment account that showed a balance higher than our offer. That money wasn't accessible overnight but it proved we had the means to make a cash offer.
Second was a 10% earnest money deposit within 3 days of acceptance of our offer.
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