How to Make a Cash Offer

Question

Hi BP! I’m still pretty new to all this, and I’m looking to buy a rental with a cash offer if possible because it will be competitive. But I need hard money for the purchase (plan to BRRRR). How can I use hard money to make it a cash offer? I talked to one hard money lender and they still require an appraisal. Is it just lender based?

Tom S. · Answer

@Caleb Helms HML is still a loan, not a cash offer.  Cash is only if it's in your own account, so be careful making any offers if it's not truly cash.

Darius Ogloza · Answer

The question is whether you really "need" hard money or "prefer to use" hard money.  In our market, these days, offer that are not all cash  are almost sure to fail.  We make all cash offers but write into the contract that we may substitute some of the consideration with hard money provided it has no effect on the closing, etc.  The key here is that we can do the all cash deal if the proverbial sh*t hits the fan for some reason.  Also, we know hard money lenders that are willing to do drive by appraisals.  They are out there.

Bruce Lynn · Answer

@Caleb Helms   Hard money is not cash.  Cash is Cash.  If you are using hard money this is a financed deal.  Lots of investors get this mixed up.  You might fool some people, but most agents are pretty saavy to this.  On any cash offer we want to see good proof of funds....like a printout from your bank account, a statement from your stock broker, something like that.  We want it current with someone we can call.

We don't mind if you want to use financing, but when you offer cash you need to be ready to close in cash in case your financing plans don't work out.

Caleb Helms · Answer

@Scott Winter yes that sounds like exactly what I need to do. I have a plan now. Thanks!

Duncan Hayes · Answer

@Caleb Helms HM is technically not cash, but is considered cash by investors in part because of how quickly those deals can be funded; versus 30-60 days for funding from a conventional lender. The speed of closing associated with funding from a HML usually allows for you to secure more of a discount from the seller.

Hope that helps.

Caleb Helms · Answer

@Will Barnard good explanation. Thanks!

Scott Winter · Answer

@Caleb Helms

What @Duncan Hayes says.

The purchase contracts I’ve seen give loan options:

Conventional

FHA

VA

Cash

Other

Therefore, investors typically check cash, but you can write in Other: hard money loan.

Caleb Helms · Answer

Yes it does @Duncan Hayes, thanks!

Navid A. · Answer

@Darius Ogloza I also live in Marin. Would love to connect! Sent you a DM. Thanks

How to Make a Cash Offer

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