What does this mean?

Question

Financing: X Property is being offered on an All-Cash basis, allowing for unrestricted financing options to a new investor.

Does this actually mean all cash, no lenders?

Thanks in advance for everyone's input!

Michael Le · Answer

To add to what Bryan and others have said, they are clarifying that it is available to cash offers to make it a more attractive offer to buyers. Buyers don't want to assume loans in this environment. However, some sellers have yield maintenance/prepayment penalties on their current loans that can be significant and so have to sell it with the old loan in place. Sellers that are forced to sell that way have to sell at lower prices. Them clarifying this issue upfront means they are expecting to get full value offers.

Brian Adams · Answer

@Brian Keeler, what this means to you as the Buyer is that you can buy the asset all cash or bring your own financing to the transaction.

You don't have to assume the Seller's financing.

I am not following how others are saying you are getting duped or being a sucker.

Brent Coombs · Answer

The "sucker" term I used comes from my own made up story about how some Sellers and Buyers operate. I suspect that THIS particular seller wants not only a no-financial-contingency, they also want an as-is Offer: "pay on this date - no exceptions - otherwise you're in breach of contract"! (But, how much of that story is really made up?)

Whereas, they are also telling you (superfluously), that once you pay them, YOU can allow yourself to fall for the "I'll Offer you this much so long as my partner agrees and my Lender comes through and it passes every inspection I ask for over the next three months" tricks that Buyers LIKE to include in order to feel free to walk away at the slightest pretext - BUT, don't expect to buy this property with "sucker" terms like that in OUR Contract with you! Hope that cleared up my point?...

Drew Reynolds · Answer

I agree with @Brian Adams - in the world of apartment investing where debt financing is currently plentiful and inexpensive, having a loan that needs to be assumed is a drag on pricing.  Having an unencumbered property gives the investor maximum flexibility in how they wish to structure the debt - this is a benefit to both buyer and seller.  The buyer can pick their choice of lender, leverage point, etc. and the seller maximizes their potential buyer pool because of this.

Brian Keeler · Answer

Thank you so very much everyone!

Brian Adams · Answer

@Brian Keeler, no - not much confusion at all.

Yes you are correct that you would bring the capital from your investment group.

Brian Keeler · Answer

In a way I am glad there might be some confusion on this topic.  This way, I'm not crazy for asking!

Unless I am doing a loan assumption, wouldn't I always be bringing my own financing to the table?  Is it not a typical, say, 75% LTV from my mortgage lender and my investment group put up the remaining 25%?

Brent Coombs · Answer

I'm not saying that. If you want to buy FAST, but sell SLOW (for lots more), that may well be an option for you, provided you've REALLY done your homework on how good a deal it is for all cash.

But they're telling you: if you're not interested to (or can't) close quickly for cash - go away!

Brent Coombs · Answer

Yes. That's how I read it. The Seller wants proof of funds - no financial contingency!

They mean: once YOU close on it, you can offer contingency terms, if you like being a sucker!...

(Ha! Bill must have beaten me to the trigger by seconds. Scary how similar our writing is). Cheers...

Brian Keeler · Answer

I don't like being a sucker! So typically, one would want to stay away from deals like this?

What does this mean?

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