When to use your own cash?

[gsuidiot]

Make sure you consider the risk involved with having your money tied into a flip.  The market is in a volatile position and everyone getting started needs to prepare for the worst case scenario,  the house not selling.  Consider a medical emergency arising while all of your money is tied up in a house. 

You can consider a mortgage somewhat of an insurance policy.  If tough times arise, they can only foreclose...it's only money.  I'd rather be healthy and bankrupt than dead with $100k.

If you're established and could get by then use the cash.

[Tien]

The only time I will ever use my own money for anything is fixed costs:

marketing
phone
gas
etc etc


Everything else I use private lenders for flips.

Everything from buying the property, staging it, prepping it, advertising to sell it is done with private money.

There are tons of people out there with lots of money sitting in the bank getting low returns that would gladly lend you money.

[Dave T]

Torxx,

You misunderstood what bluemoon said. 

I always bring cash to the settlement table when purchasing a property.  I never pay retail, so I never ask the seller to carry back financing.  The seller is always paid the purchase price in cash, in full.

It is irrelevant to the seller that I got the cash by selling/exchanging/refinancing one of my properties, borrowing from family, by taking a cash advance on my credit card, by pulling cash out of my money market account, by selling some of my stocks, by tapping my equity credit line, by getting a personal loan at my bank, or by some combination of the above. 

Most of the time, I bring a lender's money to the settlement table in exchange for a mortgage on the property I am purchasing.

No matter how I got the money, the seller is always paid in cash. 

[Torxx]

 Dave T.  Thanks for the response……my point was not about what the seller would think, but, more along the lines of trying to put more profit in the investors pocket and/or being able to act very quickly by eliminating lenders turnaround time altogether. Also, my assumption is that cash is available to the investor (me) if need be, regardless of other real estate endeavors. Obviously, most investors’  would not use their own available cash for an income producing purchase, but, for a quick turnaround deal it seems to make good sense.

Let’s say you have $250k in cash available to invest in whatever… Let’s also say you area at the level of doing one R.E. flip deal every two or three months because of time constraints….Dosn’t it makes sense to use your own cash  (not the banks cash, which is not actually considered cash ) on the deals. That is unless you have an investment vehicle that will beat the rate of return you hope to realize with RE deals in the same period, i.e stocks, bonds, futures, horses, poker, etc.