Has the lending process ever kept you from landing a good deal?

2 Replies

I understand that one of the advantages to paying all cash for a property is the fact that you don't have to go through the process of acquiring a loan. It can take weeks to be approved for a loan, and some sellers don't want to have to wait that long in order to get their property.

I have two questions:

1) In the seller's point of view, how important is it for the buyer to want to pay all cash for a property? Is it generally preferable to a seller that the property be purchased in all cash? I'm trying to get a better idea of how much of an edge is given to investors willing to pay all cash versus those who do not. 

2) For experienced REI's out there, I've love to hear any stories you have about challenges you've faced when getting a loan. How much of a bottleneck/inconvenience has it been for you to go through the lending process? Has it kept you from securing deals in the past?

@Eric T.

1) It's better to have a cash buyer.  You can close quicker.  The closing costs are significantly cheaper.  Buyers often ask Sellers for a portion of closing costs.  This can be a 5 digit number.  Having all cash means that the transaction "should" go smoother.

2)You lose deals when loans are involved.  Some bankers don't get loan approvals in time, others don't get their paperwork done, appraisals take weeks, your loan terms change for the worse last minute and you really need to close.  These and more are reasons to find someone with money to back you privately.

@Casey Mericle Thanks for the response, and your points make sense. Still, I like the idea of a conventional loan just because I feel that it's one of the most reliable financing methods (in terms of being able to count on the bank to provide payment once the loan's approved). I have no rental properties of my own and am just learning about REI. As a newcomer, I'd be nervous working with a private lender because it seems more open-ended to me. I imagine that you'd really need to do your due diligence to learn what you can about this lender in order to form a trustworthy relationship with him/her. So it's too bad that conventional loans tend to have the downside of taking more time to be approved.

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