When wholesaling, does my end buyer always need to have cash?

Question

I always read and hear about cash buyers when it comes to wholesaling but is that always necessary or can my end buyer finance it another way?

Steve Morris · Answer

OK, so I'm a lender and I look at the property.  Wholesaler doesn't want me contacting the actual owner of the property.

I'm going to lend to someone buying from someone that isn't even going to take title?

Sounds great - Knock yourself out.

Merv Plank · Answer

As a buyer of Wholesale deals I can tell you the wholesalers are much happier with cash. So as a wholesaler I would only sell to cash buyers. Leslie McIntosh has the scars to prove it. But you got it done Leslie. That's great.

Leslie McIntosh · Answer

I just completed one without cash.  The challenge we ran into is the first lender could not close on the property for 3 months and we had to switch lenders.  It took 4 months to close and the owner/seller ended up with an assessment before we got closed.. so Cash is definitely preferable to the seller.

Kyle Mccaw · Answer

@Steve Morris I am not sure I follow your statement. The end buyer is the one getting financed and taking ownership. This is pretty standard transaction.

Kyle Mccaw · Answer

If you are wholesaling you want to make sure the end buyer can close. That could be with cash, line of credit, mortgage, hard money loan etc. Hard money is most common. But cash is preferred.

Barry Pekin · Answer

@Christopher Terry,

As the saying goes, cash is king.  The best investors have accessible cash.  That said, I know several hard money lenders who are completely happy financing a deal if the numbers work.  They will normally assess the deal/property, and if they like it, finance the deal.  Of course, that's one more party involved that can bring the whole deal to a halt.

If I have a buyer who needs hard money, I recommend someone I know and trust.

Kyle Mccaw · Answer

maybe it is different where you are. there only one escrow needed im TX. The whole transaction can be disclosed to all parties.

I have completed many wholesale deals.

Steve Morris · Answer

"I am not sure I follow your statement. The end buyer is the one getting financed and taking ownership. This is pretty standard transaction."

Std wholesaler closing:

Escrow A - Seller "sells" to wholesaler that has assigned contract to true buyer for $X.  Seller doesn't know true buiyer.

Escrow B - Wholesaler assigns contract to true buyer and true buyer pays $X + Wholesaler slice

Seller doesn't know final price and true buyer doesn't know what seller (or wholesaler) gets.  Wholesaler never takes title and is only selling right to buy the property.

Again, the lack of disclosure wholesalers go thru to hide stuff is problematic.  As a broker, where possible its full disclosure to all parties.

Sorry, to make your head spin, but go ask wholesalers why they think they need dual escrows.

When wholesaling, does my end buyer always need to have cash?

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