Private money and when to make an offer on a BRRR

[Rivers Ford]

So I've found a great property to purchase that will be our first investment. This property is perfect for a BRRRR and I actually have a connection with a private money lender. I'm meeting a contractor at the property tomorrow to get some more firm numbers. My question is when do I make the offer? Will I need to secure my finances first or get it under contract first? Has anyone ever made a "cash" offer contingent on financing? That really seems like an oxymoron.... I also do not want to jerk the private money lender around because he could be key in future deals as well. What have you guys experiences been?

[Will Fraser]

Hi @Rivers Ford!  Your gut is correct!  Cash offers are inherently NOT contingent on financing.  ALL transactions end with "cash" being used to purchase the real estate, but the difference between the cash offer and the financed offer is who brings the cash.  If it is someone else, then that someone else may have some particular requirements that you need to be disclosing to the other parties of the sale.

In general it is wise to have your financing ducks in a row with making the offer, and with private money lenders this is often a verbal consent to the deal (based on observable facts of the deal).  Once you have this you may have exactly what you need in order to write the offer.  However, you NEED a safeguard against things you discover during due diligence, which is the purpose of the inspection period.  

Things you discover during due diligence may not matter at all, or they can fundamentally change the budget of a deal.  You need this release valve for your benefit (and coincidentally the benefit of the private partners involved in the deal with you).