Buying a property all cash

[Cerise Goldberg]

What are the pro and cons of buying an investment property all cash ?

[Andy Eakes]

@Cerise Goldberg I'm sure you could write a whole book on this subject, but the answers will depend on your strategy of choice. In a BRRRR strategy deal, buying distressed properties with all cash and fixing them up enough to increase a properties ARV, allows an investor to do a cash out refinance after rehabbing is finished. The goal is to pull your original money out (Initial money down and then rehab costs), essentially owning the property without any of your own money in the deal and having the ability to repeat the process all over again. I would say that 90% of all cash deals involve the BRRRR strategy in one form or another. Fix and flip would be the same process, only you wouldn't do a refinance or rent out the units.

Other than that, I know here in San Diego where I am located, the market is so competitive (5-10+ offers on anything under $1.2 million) that in order to stand out to a seller, a buyer may offer cash to have their offer accepted and close sooner. 

Cash offers usually win out over any other offer, so usually if you can swing it, it's a play that gives you quite the advantage. I guess the con would be if you needed the money in the deal and weren't able to refinance for whatever reason. Then you would be without cash and/or options to invest that money elsewhere. 

I hope that helps!