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How Do I Buy a “Cash-Only” Property?

When you see the phrase “cash-only” listed with a home for sale, this means the home is not in the condition to be financed under a conventional mortgage. These are distressed properties, those that have been abandoned for long periods of time, condemned, or have experienced flood damage or other natural disasters. Those looking to purchase a “cash-only” property have two main options; one is to attempt to obtain a Hard Money Loan (HML), which is a short-term high-interest loan (12-21% interest) from private investors. Because the HML is not from a bank, they do not have to follow the same guidelines. This is a good option for a commercial buyer looking to make money off of a distressed property. The option more likely to be used by most is the FHA 203k Streamline loan, which allows up to 35k in renovations to spend. The FHA 203k loan is a government-insured loan, requires extra documentation, and takes longer to close than a bank loan. In “Cash-Only” situations, it’s most important to do a title search and to make sure the owner does, in fact, hold the deed to the property.