Financing cash acquisitions

[Jimmy H.]

It is well known that "cash is king", and making a cash fofer with limited financing can often get you a discount off of an asking price that you may not have been able to get using financing.

My question is: How hard is it to finance properties you acquire with cash?

I know every different type of financing and every different type of property will have different needs and hurdles to clear to acheive financing. But, all else equal, given the same property type, loan type, lender, etc. Is it harder to finance a property you own out right rather than to line up financing for acquisition.

It seems to me that lenders would be quite pleased lending on cahs owned assets as its easy to set their desired LTV , etc. So it seems to me that it should be easy to finance free and clear properties. But if not, if it is harder to finance properties after acquisition - why is that the case?

My obvious thought is (if you have the cash) to acquire in cash as a "bargaining tool" and then leverage the property after the fact to get most, say 70-80% or so, of your cash back?

[J Scott]

I use a small, local bank that will finance or refinance (even a day after purchase) up to 75% of the purchase price.

They'll refinance 65-70% of the all-in price (purchase + rehab) if the house is being held long-term.

Loan terms are either:

- 36 months interest only at Prime + 1.25% (minimum 6.75%); or

- 36 months fixed at 7.5%; or

- 60 months fixed at 8.5%.

Not a great option for very long-term holds, but great for flips, lease-options or short-term rentals.