Buying homes for cash

133 Replies

Originally posted by @Matthew Olszak :

@Kiel Martin

Not trying to be confrontational at all, more-so just curious as I love the low class c space. You mention retirement in x years, what's your plan for that? What is the ultimate disposition of your acquired properties?

I'll 2nd someone else who said to learn to do your own title work on these very low value assets. If your county recorder has records online, pull those, make sure whoever is on the last warranty deed is who is selling to you, verify no liens like mortgages or municipal fines/water bills, verify no other encumbrances through the city, county, etc. Do a survey if its customary in your area and affordable. If everything checks out just have an attorney draw up the deed and record it yourself. Unless you are doing multiple deals a month the time spent isn't going to be excessive.

WE take it one step farther I draft my own deeds..  all you do is take the last recorded deed.. and switch the names.. legals dont change our deeds out here we can get from the title company they just give us blank ones no problem..  thats how I bought pre foreclosures it would have never worked if I could not draft my own documents..  NOW to be fair title companies down stream may not insure because the deed was not prepped by a title company or a lawyer.. but if your just paying cash no biggee.. Also for us we were one of the larger clients at the title/escrow company so they honored my deeds no problem.  But it can be an issue for one offs  as there is so much fraud out there. 

Matthew ,  I understand that in IL only attornies can draw deeds and maybe mortgages  ..  I wanted to do my own and that was what I was told.  out here not the case. 

If you are going to go into low income areas and invest I think it is important for you to be a leader in the community you are investing in. Don’t walk past the trash. Find a way after dark to make the graffiti in the neighborhood disappear. Consider paying $100 to the local community watch person in the neighborhood who is a member of the church up the street that has a cleanup effort. Encourage your neighbors to fix up their homes. Pay the kid that lives a few homes over to mow your lawn. All of these efforts will pay dividends.

There is a lot of great info and professional insight in this thread. However, I stopped responding some time ago aside from here. It's quite apparent that the vast majority were attempting to help because we have all been in the same boat at some point in our journey. At some point though, if you know what you are saying is falling on deaf ears there is no legitimate reason to continue. I mean some pay tens of thousands of dollars for guidance and expertise from experienced professionals and this individual doesn't want it for free. Most of us know several of these types who tried to enter the business. Most I knew came through prior to the 2008 crash and we know what happened to most of them. I always want newbies to succeed, especially in the minority community but there has to be some sense of appreciation or receptiveness with it. In those cases I just say like the dude from the move 'Taken'; GOOD LUCK..................

@John Underwood , I opened my first computer business when I was 16years old. I watched my brother chase women and talk about dreams. The next morning he would get up, lie to the women he would say to "I love you" every day while bragging about how he slept with three of his girls in one day. He would convinve them to take naked pictured, and then he would show it them others. I watched him distroy woman's trust and affect their lives in a very negative fasion. I also understood that he was just a selfish prick, and what I did not understand was why women catered to him. And then I realize, it was not him that was attrative, it was the lies and hope that he promised them that sealed the deal. Once he slept with them, everything changed. I myself have been working everyday, self improving, and moving forward. I learned from my family and my brother whom i would never be. And I watched tons of people change their goals from people telling them it would not work. I wrote three mini books just to show others in the Networking field, how to succeed with business. This was my mission, and I put the books on amazon for anyone to purcahse them. And 90% of those books i give out. Something my brother would never due, becuase he was not benefit from it. 

I spent my entire life listening to people tell me what I cannot do, and luckily I did not listen and had great success in achieving my goals. This was something that I never thought i would be when I was 16. But it is the negative things in life that sometimes drives us the hardest. I got to a point when I found out that that listening to nay-sayers is the recipe for diaster. A philosophy i found out the hard way. Now, i motive others to go after what they want, with discpline, and with success = time + sacrafice. I have opened and shut down 4 companies and real estate will be my 5th. This is why I opened my HVAC business and became an expert in IT. This is a 20y goal that I am now at the 3rd stage of. I joined this site to get answers to questions that I might have, not to fight with people. Which is why I told JD to back off. Yet one my very first post, I got someone telling me to open a HVAC business which is so easily to succeed in, anaylaing me, telling me that what I was saying was not adding up or making sense,that my plan will not work (which I have not even discussed in detail), and now being told that I need to stop being combative.


My brother had a interesting skill which would make others feel like their where the aggressers when he was the one manipulating, lying, stealing, and causeing havoc. He would get woman to apologize to him for the stuff he caused. I realized that he was the worst guy out there. The one would distroys emotions so he can benefit by getting laid. I also realized he was the worth person that I have ever met. He was the distroyer of lives and hope. It got to the point that I had to stop talking to him all together because all his girlfriends would call me to ask me about where he was and what he was doing. When I would not answer them or asked them to stop calling me about him, they would turn around and tell my brother how I was trying to break them up. Because of who he was, he believed it and it was not long before I told him that we were done being brothers. That was back in mid 1990s, and I have not spoken to him since. Yet, he tried so hard to get a hold of me for years. Because he alwasy won in his mind. But in reality, my older brothers was weak, and filled withj words like "You cannot do that", "That is impossible", "You have to be rich to make that happen", "The white man will not let you", "that will never work", and so on. You get what I am saying here?


Now I join here to get answers from skilled-people. And look at the conversation that is being traded back and forth about closing cost. And in life the skilled ones who are willing to help are in a pool of those, even if skilled, are not willing to help. They dictate to others what can be done or not and call it advice or help. Like I said before, there is a philosophy to my history of business and goal setting. A philosophy that you do not see me pushing, because i have spent my entire life helping others without asking for a dime. And if there is one thing I know, is what real help is. 


I learned at a young age that there are people who answer your questions, and those who answer with their personal feelings, because they just "Know it all" or they "know you will fail". And once again I am mentioning how we are talking off topic. 

When someone ask me how to start a business, i do not say "you will be better off not starting one" or "you better not start one"

The one who was conbative, was not me. I am the one who asked to the combative person to back off. And once again, I am wasting cycles explaing my actions. No other forum, have I ever experience this in. And yet there some who directly answered my question and was very helpful, and I was more than thankful. 


For some reason, you wanted to point out how I was combative. I am curious, how did you invision that conversion was going to go?


I am sorry, did i come to the wrong place? Or jsut ingaging with the wrong responses. 

Now, does this sound combative to you? I am 46 years old, I am a business man, I am someone who would get up at 3am in the moring to help someone achieve what they are trying to do. And i never expected it in return and never will. But I am also a person who does not tolerate others trying hard to discourage others. Nor am I person that lays down and takes it.


Hope this was helpful. I am solo business person and do not use partners for everr partner has their owb agenda and life is hard enough as it is to deal with others' problems and financials. Another hard lesson I learned the hard way






@Jay Hinrichs , wow, and I mean wow. This is a direction I never thought about taking. I cannot thank you enough for this. This is the type of information that I was hoping to get from joining bigger pockets. You gave me something to really think about and to research. Again, all i can say is wow. I knew I came to the right place? Thank you so much, i do not think you relaize how excited you just made me. This is a skill I will be learning, even if I do not have time to do it for my properties, it is a catagory I just now became interested in.

@Jonathan R. , oh my freaking LORD...... this is brilliant. Talk about a light bulb going off. This is wahy past the thoughts that I was having. I focused on the proprty aspect so much, not once did i think about involving myself with the community and help beyonf housing. Now this fits in with my mission statement 100%. Jonathan, that you so much, you just made a huge impact on my mission statement. This alone was worth joining biggerpockets. I am already invisioning services that i could provide within the community that I buy in. Thank you for creating a sense of me thinking outside the box. And I meant hat sincerely

Originally posted by @John Underwood :
Originally posted by @Kiel Martin:

@John Underwood, thank you for that response. Very much appreciated.

 Sometimes I do my own title research and if it looks good, I type up my own deed, have seller sign it at the bank where it can be notarized and file it with the Register of Deeds. Done.

I have bought a house for cash in one day.  If its a super deal I'm not waiting for a week to have a closing. I have a simple Quit Claim Deed my attorney blessed that I use.  

Stuff I buy typically has a payback from between 1 to 4 years. 

Nicer houses I fix and flip.

YUP prepping these documents is super simple.. the legal descriptions dont change its just copy and paste from the last recorded deed and inject the sellers name as the person or entity on title and the buyer whatever entity you want to buy in.

in my foreclosure rescue days ( when it was legal in OR and WA ) ALL of our deals were done within 48 hours of the foreclosure sale ( seller most motivated and no competition from those who dont know how to do these deals this way which is 99% of investors)  We typed our own Deeds got the seller to a notary or mobile Notary had my secretary run the deed to the court house and record it  DONE.. in the mean time i had a courier service running the Cashiers check to redeem the property to the foreclosure attorney DONE.. knowing how to do your own title and escrow is were the money is for those who want to take just a little more effort and not think they need attornies and escrow companies to do real estate transactions.  Although I thought in SC an attorney had to prep deeds .. maybe i was told that so they would keep making fee's  LOL. 

@Mark Cruse , I starting my realestate back in 2006. I paid for my wife to get her realestate license, and everyday, I had three tables filled with listings from the MLS. I anaylzed all those properties every day while getting 4hrs of sleep and running my HVAC business. I chose to not buy that year and would tell every real estate agent that the price for that house was not worth it. 2007 was worth, and I told my wife, something is off with these prices and we are going to have to wait until there is a shift. And then 2008 hit, and all the low income people who bought years prior, could not afford their new mortgage payment with their variable rate. Next thing you know, too many homes that I was visiting for service their HVAC units, were in positions where they were trying to cut their loses by selling or walking away. It was the only time, I had experienced such a thing where my customers were affected so heavily by. I still remember asking a lot of my customers how they could afford such a home from where they use to live. Thinking that all these people found new fanstatic jobs.


I refused to buy in 2006 and 2007, because it was about "could i maintain this over a 30year period", and the answer was always no. And as someone who never bought a house before, could even see that a variable rate made no sense. But others only saw the down payment. If I had listen to the so-called experts, and not refuse to buy becuase the price was out of this world..... then I would not be saying today that I made the best decision of my life to you now. I made that decision because of the research, and what I have learned from my past businesses. This is what life is, you live and learn. But the binary aspect of yes and no and right and wrong does not exsist. Even if you want it to so badly.  

Yours and others comments did not fall on def ears as you assumed. It was just advice I decided not to just lay down and comply to. And the moment you belive what my tone is, must likely it will not be accurate. Why do people believe that advice is meant to be taken because you have been there? Does that make your advice correct? You do not know my history, yet you should be able to take out of context what I have been doing for the past 30years. These types of comments shows in clearity that those types of people see advice as a binary substance. If I do not do what you say, then I must be def or must be someone who does not listen. A high reason why I stay away from my family. You should of heard from my family why I should not have done everything that I have done. Even though my salary is more than they will never make. 

Or maybe I am someone is anaylzing who I should be listening to. Maybe i respond the way I do to see who is capable of sticking to the topic at hand. Or who is capable of providing the information that I need. Na, it cannot be that, because that would mean I am someone who does not see right and wrong, but see actions and consquences. 

I have learned from every response here, and within this post, I know who I can ask future questions to. Not eveything is what it seems, and as others are trying to tell me what i can not do.... all I am doing to looking for people whom have it in their nature to communicate relevant information which will help me with my mission statement. Like I said, I am discipline and in my 46 years, I have learned that philoshopy plays more of a factor than numbers. Numbers are not people, and there is nothing in our world with people. I really have no idea why you posted what you did this time, but like I said before......agendas have their own self-propulsion mechanism deep in the subconscious that form a self-worth (ego) perspective, which is blind to the ones who are pertraying it. 

Originally posted by @Kiel Martin :

@Jonathan R. , oh my freaking LORD...... this is brilliant. Talk about a light bulb going off. This is wahy past the thoughts that I was having. I focused on the proprty aspect so much, not once did i think about involving myself with the community and help beyonf housing. Now this fits in with my mission statement 100%. Jonathan, that you so much, you just made a huge impact on my mission statement. This alone was worth joining biggerpockets. I am already invisioning services that i could provide within the community that I buy in. Thank you for creating a sense of me thinking outside the box. And I meant hat sincerely

Jonathans advice is rock solid.. I built the second new construction on the wrong side of the tracks in Charleston SC.. I had lent money there to flippers before i entered.. they were constantly getting broken into and robbed etc..  When we started our project my GC Partner first thing he did was go knock on all the doors next to or within a few houses of where we were going to build.. introduce himself .  bring gifts as he figured out what would work for each  ( nothing extravagant)  make sure they had his number and call if anything looked weird so these folks got invested in the project..  35 new builds 7 years later I can tell you we have never had a break in or theft KNOCK on wood cant say that about our rentals though i have had more condenser units stolen than i have digits.  But that's another story.. your neighbors will be your best ally or your worse enemy U decide.

Your closing cost is set for what ever your closing attorney charges you, if its cash. I just pay 550/house. I buy 150-200k dollar homes though. 

no, its the same amount of work for them to close on 50k or 500k house. All they have to do is a do a title search, and and transfer the deed. No greedy banks to take a bunch of fees. 

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That OOS property Class rankings are usually vastly different than the local market they live in.

7) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state.

9) Class B usually also okay, but needs more attention from owner and/or PMC

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most great PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

I understand that nobody really likes debt and debt payments, but I find there is nothing better than making money off other people’s money.

Imagine you could buy $1 billion worth of homes with nothing down and you would make $1 million a month in profit. You rather say “no I pass on the deal because I don’t want any debt”? 
Now if after 1-2 years this $1 billion worth of homes appreciates by 10%, you would have made 100 million right there off other people’s money!

Originally posted by @Jim Spatzenfeld :

I understand that nobody really likes debt and debt payments, but I find there is nothing better than making money off other people’s money.

Imagine you could buy $1 billion worth of homes with nothing down and you would make $1 million a month in profit. You rather say “no I pass on the deal because I don’t want any debt”? 
Now if after 1-2 years this $1 billion worth of homes appreciates by 10%, you would have made 100 million right there off other people’s money!

Well, as long as we are coming up with imaginary hypothetical situations, how about if we continue your scenario for a few more years where a GFC-like event hits, no one pays rent and you lose all your properties to the bank?  Conversely, the other option is to buy $0.2 billion worth of homes with cash and when the same GFC event hits, you get to keep all your properties and remain living the high life?

I'm not saying I don't believe in leverage, because I'm leveraged up to my neck for my local properties. However, for OOS, I agree with @Kiel Martin's strategy to use all cash as a way of mitigating some of the risk.

I'm actually very interested in seeing how this turns out and sincerely hope the OP checks in from time to time.

… how about if we continue your scenario for a few more years where a GFC-like event hits, no one pays rent and you lose all your properties to the bank?…

If no one pays rent then you lose your “free and clear” property as well to the tax foreclosure auction.

However, even during Covids 1 1/2 free rent years I only had 1 total non-paying tenant (out of around 50), so if something worse than covid happens the  the end of the world might have arrived anyways…

I started out all cash until I realized how much more I could gain with other people’s money (OPM).




Originally posted by @Drew Sygit :

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That OOS property Class rankings are usually vastly different than the local market they live in.

7) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state.

9) Class B usually also okay, but needs more attention from owner and/or PMC

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most great PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/...

 Nail on head !!!

Originally posted by @Kiel Martin :

@Moises B. Thanks for this information, now I have to ask, if I am going through a realtor, will i have to worry about wholesalers. I do not have wholesalers in my thought process, but would like to know who wholesales could affect me. If you have time, please elaborate. Thanks in advance if you have time. 

 If you're going via a realtor, then you shouldn't worry too much being they "should" have a fiduciary duty not to swindle you - -though, still do your homework.  To answer your question, if you're going via a realtor, no you don't have to worry about wholesalers. Right now honestly, the prices even at 20-30k are high in some areas of Baltimore - because you have to take into account rehab cost.  Materials are relatively high. So you're looking at 70K+ on average give or take on some of these rehabs. So you're looking at being 100K+ give or take all in - in some cases...just make sure your numbers work to whatever your criteria threshold is.  I may sound jaded, I trust no one LOL  Hope this helps. 

Originally posted by @Kiel Martin :

Hello all. I have never purchased a house and I am about to. I plan on purchasing rental properties with cash from $15k to $40k. What I was curious about is the closing cost of these types of homes, is it really on 3%. The homes that I am catering to is outside the city, but not denying myself to inside the city. Also, any advice for investors in baltimore would be great. I am new to all of this so any advice is appreciated. 

Hi, I don't think anyone answered your question. I currently own 12 units in Baltimore City. Paid around $30,000 or so for them around 4 or 5 years ago. Looking at one of my HUD-1's. I bought one unit for $28,160 and paid $2358 is settlement charges. $1395 for title charges. $848 in transfer taxes, and $115 is recording fees.

As others pointed out dealing in the lower price units can be very tricky. Horrible tenants that trash your place, don't pay rent, very high turnover expenses, high maintenance costs due to the age of the units and also low rents. So what every 'Numbers" you are running for your plan, I would cut them by 60-70% to get your real cash flow. 

@Kiel Martin I have a friend that bought 10 homes in Youngstown, OH for $15k each cash. Section 8. They rent for $500/mo after taxes insurance and property management. He did buy them a few years ago so they might be more expensive now. Definitely a depressed area, at least it was at that time.