Pre-approved on a 30-year fixed for my 2nd investment property- do I have a chance against investors with cash?

Question

Right now I am looking into my second investment property.

Ideally, I wanted to obtain an investor loan with a low rate as I know buyers prefer cash.

Unfortunately, it didn't look like I would be able to obtain financing through this route- I'm only 26 and while I have great credit, I don't have quite enough. So I obtained approval for another 30 year fixed.

Deals are really hard to come by these days, especially in Denver. So, do I stand a chance on getting a good deal with a 30-year? Should I re-group and look into other ways of obtaining financing?

Mike H. · Answer

Try HUD deals. They don't give any preferential treatment for cash vs financing. Biggest number wins. :-)

Robert Steele · Answer

Bing! Bing! Bing! Bing! We have a winner!

Glenn Espinosa · Answer

I understand Jon's post and I've had problems with financed offers using hard money in the past.

Nowadays I make cash offers (personal bank statements) and remove financing contingencies BUT put in an addendum that reserves my right to use financing if I prefer to do so. This allows me to use hard money or private lenders if necessary but ties me to the property in the case that I do not have anyone lined up.

Jon Holdman · Answer

Not sure what you're thinking of as an "investor loan" or how that changes your situation.  A financed offer is a financed offer, regardless of where the loan is coming from.  Sometimes people think hard money loans are cash.  They are not.  Even with hard money you need to state the offer is financed and you should include a financing contingency.  If you make a cash offers, sellers will typically want to see a bank statement in the same name as on the offer showing you have the cash to make the purchase.  And they typically expect a much large earnest money.

Arjun K. · Answer

"Just be ready to make offers the second you see the listing - most worth looking at here aren't lasting 1 day, so you may have to offer sight unseen and evaluate the condition/repair costs during inspection period."

The properties I recently bought were all under contract same evening, generally at the asking price.  Cannot snooze.  Must. avoid. multiple. offer. situations.

Take control in option period, and then snooze.

Deborah Smith · Answer

You do stand a chance.  Phoenix is incredibly competitive right now too.  I am in the same position as you - 2nd investment, 30 year fixed conventional loan.

It took a few bids (a lot less than I expected, actually) and I had an offer accepted.

I agree with offering with fewer contingencies will help you.  I also offered slightly (and I mean SLIGHTLY - $600) over asking price.

Just be ready to make offers the second you see the listing - most worth looking at here aren't lasting 1 day, so you may have to offer sight unseen and evaluate the condition/repair costs during inspection period.

Don't be discouraged!

Reed W. · Answer

Thanks for the advice!

Your statement about "You will probably have to pay more than a cash buyer" is exactly what I am looking into....how much more? How can I get around this?

Arjun K. · Answer

One option is to bid without financing contingencies.  You will probably have to pay more than a cash buyer, but if seller views you as a solid buyer then you can squeeze buy.  Of course, you better be able to close the loan and on time!

Pre-approved on a 30-year fixed for my 2nd investment property- do I have a chance against investors with cash?

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