A Lot More Cash Deals Rather than Financing (What's Going On?)

[Tony Tran]

Hi BP,

Since I started investing in my current market (that is, for a couple years now), financing has never been an issue with many Sellers. Not until lately, out of all the offer I made (even though the listings say financing OK), the Sellers want cash! It is weird to see more of an influx of more required cash deals. I know, I know...cash is always KING, but what is going on that I am not seeing? Or is it just an "outlying" that I came about.

The reason why I am bringing this up, is because home prices are steadily increasing, rent is increasing, Obama cutting FHA cost, rates are still low, etc. These factors should steadily push the Buyers into a "financed" market.

What is going on? Has there been a shift in the market that I am not sure about?

My current markets: GA and SC metros

Thank you,

Tony

[Brian Burke]

It's quite likely that you are witnessing the side-effects of large private equity firms working in your markets buying up large quantities of rental homes. They pay all cash and are very aggressive. When their activity becomes well known, sellers set themselves up with an expectation that their house will sell to one of these groups for cash.  It's likely that you are a baitfish swimming in a pond full of sharks.  Your best options are to either become a shark or swim in a different pond.