Cash Offers...where does the cash come from!?

[Santiago Flores-Alvarez]

Hello everyone!

I constantly hear and read of investors making all cash offers. However, I'm confused if it's actually that these investors have all that cash saved up or are they using some type of loan? How is it that this seems to be a widely used strategy for negotiating yet having enough cash on hand to buy a home is difficult. Perhaps there are certain loans or other methods people use to allow them to make cash offers without themselves having the cash? Any insight is much appreciated!

[Tom Shallcross]

Hi @Santiago Flores-Alvarez, good question and multiple answers below: 

1. Yes some folks have cash and buy a property at a time with it.  

2. It comes from a retirement account or equity line against an existing property 

3. If buyer has a track record, he/she may has private investors that fund the deals

4. Acquisition line from a local bank after gaining credibility 

5. Hard money line that the buyer is confident will close so they make a cash offer without the motg contingency and leverage the hard money financing risking the upfront earnest money if HML falls through.

Not an all-exclusive list, but these are the main ones that pop into my head.