Cash upfront versus mortgage ?

1 Reply

Hi All, I have just started out on my RE journey and have 2 properties. One turnkey and one other SFR. Both of these properties are financed with a conventional loan at 25% down. I have a question about financing. Say I’m looking at a 150K property. If I have the cash upfront to do an all cash deal, do you think that is better than doing the deal with a conventional mortgage upfront? My thought behind this is that once I make the purchase I can then pull out the money through a mortgage after the sale. Also, this would give me an advantage during the purchase by offering the seller all-cash and therefore a faster closing as well as the potential to make an offer without the mortgage contingency and potentially get a better deal that way. I have very good credit so I’m not worried that I wouldn’t get a mortgage. What are the downsides to this approach? Do any of you use this strategy? Thank you for all your help. ASH

@Ashish Khera , in many markets offering all cash does not hold the sway that it used to. It is a sellers market and while waiving the financing contingency may make your offer stronger than an equal offer with financing, it often does not give you leverage to offer less anymore.  Again, that is market dependent. In my area, sellers know that the deal will get done so they don't have to accept less.

In terms of pulling your money out, you have to wait (6 months I think) before you can do a cash out refi. 

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