One of the benefits of paying cash for an investment property in Omaha is the ability to close quickly! There are other benefits too, and you can get started faster than you might think!
While there are advantages and disadvantages to making a cash offer for an investment property, using cash means your offer is cash and you won’t need to obtain a mortgage. This will likely make your offer more competitive than others, because the deal can close more quickly without the red tape that underwriting a mortgage involves. In addition, while your offer is a certainty, other buyers who require financing can’t make a guarantee they’ll be approved for financing.
Make a Deal
When you identify a property you’re interested in buying, reach out to an experienced realtor to enlist their help. They can find out if there are other offers being considered and they can help walk you through getting an appraisal, if you want to include one as part of the deal. To ensure your cash deal is the most appealing, it’s best to be very organized in advance and that you’ve got your upcoming costs covered. Then working with your realtor, you can carefully craft your cash offer, making the best impression possible for the seller’s needs.
Gather Your Funds into One Account for Simplicity
When it’s time to make the offer, you need to have ready cash when you present your offer. To take full advantage of paying cash for your Omaha investment property, it’s best to have all of the funds allocated towards your investment together in one account. And it’s a good idea to have a “proof of funds” statement issued from your U.S. bank, showing you have the cash in the fund and ready to be used for the purchase.
Budget for Buying
Closing is not the time to find out about a surprise expense you aren’t prepared to meet. Before signing on the dotted line, make a budget for the purchase and be certain you’ll have the cash to cover any additional expenses involved in closing. Examples of these costs might include title insurance, property taxes, homeowner association fees, and the like. One other way to sweeten your offer is to offer to pay for the seller’s closing costs.
Draft Your Offer
You’ll want to work with your experienced realtor and have your financial statement in hand for the seller to review. Along with the offer, it’s wise to include a modest deposit or “earnest money” to show the strength of your commitment to the deal as well. Remember, when you’re offering cash your offer has the advantage of certitude with the seller, enabling you to make a lower offer than a buyer who needs time for financing and approval. Even though your offer may be a little less than others, sellers usually like the ease of working with a cash buyer.
If the home is new or was recently updated, you can sweeten the offer and speed things up even more by skipping an inspection requirement. Also, since you don’t need financing from a bank, an appraisal won’t be required (although you may want to schedule one). Remember, time is money though. Due to the advantage of having your cash in hand, you can set any closing date that will satisfy your seller’s immediate needs. So, instead of the typical 30 or 45 days or more with a conventional mortgage closing, you can write your offer to provide them with cash in hand after only 10-14 days.
Sellers find quick and sure cash offers more appealing, hands down! This means that you have the advantages on your side when it comes time for the seller to consider all of their offers.
Naturally, without all of the parties involved in the traditional home financing process, your deal will move much more quickly through the system. Once all of the requirements of the contract have been met, you can pay cash for the investment property quickly, as needed.
No Potential Cogs in the Wheel
With mortgages come steps that take much more time and cost buyers additional money. Among these steps are inspections, appraisals, and the mortgage approval process which can lead to even more delays or even worse, be denied. As a cash buyer, you can make your offer more appealing to the seller, and skip some or even all of these steps.
While there are nice advantages gained when you pay cash for a Omaha investment property, as with everything, there are a few negatives.
Eggs in One Big Basket
Because you’re placing what’s probably a good amount of your cash into the investment property purchase, it won’t be available for other opportunities that may come along. Especially if you need or want to make some improvements or repairs to the property. But this may definitely be worth it in the long run, with the property appreciation and/or rental income you may be receiving after the purchase.
Buyers who leverage their funds through a mortgage are able to take deductions on the mortgage interest for their investment. As a cash investor, you won’t be able to take advantage of these deductions.