Clarifying Question--"Cash Buyer"

[Adam Lewis]

Hey BP! Quick clarifying question for a new investor coming closer to making the leap into marketing to find deals (postcards, yellow letters, etc). When you find an off market deal and say you will buy the house for cash, you are obviously a "cash buyer".

My question is, as a "cash buyer", is that literally cash in an account? I am confused by stories of investors marketing and sending out letters to find deals to wholesale to a cash buyer and then buying the property to rent out themselves instead. Does this mean that they simply had the cash on hand? Or is it possible to still be a "cash buyer" if you took out a loan or used private money?

Thanks in advance!

[Matthew Olszak]

@Adam Lewis "Cash Buyer" has become a very diluted term. Previously yes, cash buyer meant that you had the money in cash ready to transfer from your account. That morphed into "as good as cash" like a hard money loan. Then that morphed into "quick close". Then the term was just completely abused and offers submitted as cash with no real cash in hand, just to lock up the property in a contract while financing was found.

It depends on the properties you are going after and your level of ethics. If you bid on an REO - you can bet they'll want to see an account statement and at least around here, 10% EMD. Going after distressed homeowners, you can probably swindle the "cash buyer" term without having anything in the bank if your ethics allow you to drop down to that level.

Most wholesalers have nowhere near the necessary cash in their accounts and rely on the fact that most unrepresented homeowners don't know any better to request proof of funds. So they rely on the hope that they can find another investor with cash, or even another investor with the ability to get the deal closed with a loan. The "Cash Buyer" term is usually just an enticement to get the seller to sign the contract and isn't usually binding that you have to buy in cash.