Use hard money to act like cash and beat out other mortgage offers.
The real estate market is hot. An asset-based loan can get you in the game. For those of us who have been doing this for a while, we know that when the real estate market is on fire like this, it won’t change anytime soon. Inventories are low, the number of home buyers is relatively high, and the mortgage rates are low. The only hope for relief will be increased home-building, which is finally ramping up, but that will take time to realize. So, what can you, as a real estate investor, do in the meantime? If you have been following along with us, you know that Cash is King.
With the market at a frenzied pace, thinking creatively about getting your offers accepted is paramount. Not everyone has the funds on hand to make a cash offer. However, from a seller’s perspective, cash offers are almost always preferred over financing. There are two reasons for this; first, financed deals often take longer to close, and second, the bank imposes all kinds of stipulations and hoops for the buyer to jump through. Even if the buyer does everything the bank wants, they can still walk away from the loan at the last minute.
From a buyer’s perspective, if you have the cash, you have more negotiating power. As a result, you can often put an end to a bidding war quickly in the event the opponent is financing. In addition, sellers will usually accept a lower price offer when cash is involved, saving you potentially thousands. These factors explain why so many clients are interested in making their large down payments act like cash.
Here’s How it Works
- Buyers come to us with 30% or more down payment funds. The buyers get approved by a lender of their choosing, pending the property.
- The buyer finds a house they like, writes a cash offer, we provide them Proof of Funds for a Line of Credit.
- When the offer gets accepted, we secure a private mortgage on the property and wire in cash they need to complete their cash offer.
- Once the sale is complete, they contact their lender to refinance their mortgage with us.
An asset-based loan can be a unique way for buyers to stand out in a crowded market. Experience, market knowledge, and creativity are unbeatable combinations in this market. Make sure you and your team are utilizing all three.
We are always looking for new and creative ways to help our clients get the properties they want. If you or a client of yours needs more information about this process, contact me by clicking here or call 248-385-3750.