Better deal with cash?

[Jack K.]

I'm considering a strategy that would utilize a line of credit (say $75k) to purchase properties in the $30k-$75k range. Once purchased, I would utilize the LOC to update the property and then advertise for rental. Once rented, I would get a commercial mortgage on the property and pay off the LOC. And then repeat the process over again. And again:-). My question is what discount I can (generally) expect to get by making a cash purchase? I've heard 15-20% off list but I would like to validate those figures with the BP community. Thoughts?

[J Scott]

Percentage off of list price isn't a very useful metric, in my opinion...

For example, if two nearly identical houses in the same neighborhood are listed for $100K and $200K, respectively, and you can get a 10% discount on the $100K house and a 40% discount on the $200K house, which one is the better deal? (Answer: the one where you only got 10% off the list price).

That said, it's true that cash will generally get you a better deal, whether you're purchasing from private sellers or from corporate sellers/banks.

But, just because you can get a *better* deal by paying cash, it doesn't mean that any specific deal is necessarily any good. You want the good deals, regardless of how you're paying for them...