Newbie here!
When using hard money, in the offer, should I write it as an all cash offer or an offer subject to financing?
Try subject to first.
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[QUOTE=babu7775;891130]Newbie here!
When using hard money, in the offer, should I write it as an all cash offer or an offer subject to financing?[/QUOTE]
If you have the hard money in hand or it’s a done deal (your lender has made a commitment to you?, it’s an all cash offer.
If you have yet to make a deal with the lender, it’s subject to.
Subject to financing would be my suggestion.
present cash or private
If you are able to evidence or avoid providing proof of funds + negotiate enough time to complete all due-diligence (Including your lenders) + create a back door contingency for yourself; then by all means, present a cash offer. Cash equates to strength. On average, 90% of R.E. Licensees are part time, seeing less than a transaction a year. The general consensus with the inexperienced Realtors is; if hard money or a private lender is used, then “It must be a weak deal” And in many cases it really is, because most buyers do not approach their Privates until a deal is on the table, and the collateral has yet to be underwritten. Traditionally, unless one has a history with a private and understands their underwriting tempo and time of month-appetite relationship, funding can be unpredictable. If you are buying from an owner-direct, then by all means, present a cash offer, as you can sneak in as many backdoor contingencies as you need….just in case your Private declines the collateral or the transaction
You can make an offer…
You can make an offer "subject to getting financing"
or even “subject to getting financing of X at Y%”
BUT… is that really what you want to do… ??
The secret is to… KNOW YOUR EXIT… before you sign
up the deal…
How are you going to exit the deal before you
GET INVOLVED…
And then create as many exit scenarios as possible…
(here are some exits)
- retail it to homeowner for with new loan
- retail it with owner financing
- Flip it wholesale to the retail crowd
- Flip it wholesale to the Investor crowd
From there… there are a ton of nuances…
of financing the deal…
But, can be broken down into 4 principal plays…
Find private or institutional money
Sell the Note…
Use the existing finanancing…
get the seller to finance the deal…
with worst being #4 flipping the deal for quick cash and
moving to the next deal…
And now back to… our regular scheduled programming…
So, are you wanting to sign up the deal “subject to getting
financing” because you are scared you won’t get the deal done?
If that’s the case… then insert the clause… into your contract…
“subject to Verification and Acceptance of all numbers”
That is a better out clause… and you can still contract to
purchase as a cash deal…
Not to mention… Once you get rolling you will quit worrying
about getting the money… once you have signed up really good deals…