7.5 Reasons Cash is Power in Real Estate

OPM- Other people's money. One of the first things you learn about real estate- use Other People's Money. That's all fine and good, but have you every learned that Cash is King? And that when you are the King (or Queen), then you have power? So, Cash = King = POWER. How?

Let me tell you how CASH is POWER:

1. Cash Buys You TIme- Want to do more transactions? Use cash. Instead of waiting 2, 3, 4 weeks or more to wait for a bank to approve you for a loan, pay with cash today. How many more deals can you do if you are not waiting an extra 2-4 weeks per deal?

2. Cash Gives You Influence- Send out an e-mail (or tweet) letting your bird dogs and business associates know that you have $250,000 in the bank and that you are looking for great deals. Be ready to take action as the offers roll in.

3. Cash- Private Sellers Love It! Do you think a seller would prefer an offer contingent on financing, or cash? Duh. Will they take less for cash tomorrow than financing in a month or more that may or may not come through? YES!

4. Cash Towards Hard Money Loans- Hard money is expensive, right? Try coming in with a chunk of your own cash and negotiate terms. Clear Day Capital borrowers who drop from 75% LTV to 60% LTV reduce their costs of a loan by 1/3!

5. Cash Discounts from Vendors: EVERYONE takes cash discounts. Don't want to pay up front for incomplete work? Work with the title company that closes your transactions and have them hold the funds so the vendor knows that they're available. When the work is done, have the title company cut the check and have the vendor sign a lien waver.

6. Cash- Banks Want It! You'd think that banks would have enough cash, but they will cut deals for REO properties and short sales if they know there is cash to close immediately. Good luck trying to time a conventional loan with a short sale.

7. Cash Keeps You Out of Trouble: There will ALWAYS be unexpected expenses and unexpected delays in income. When you have cash reserves, your business can "whether the storm." Author Charles Givens, who wrote "Wealth Without Risk" put it simply: "A prolbem that you can solve by writing a check isn't a problem."

7.5 Cash Makes You Feel Good: Don't believe me? Try a couple of experiments:

Experiment 1. You have and extra $25,000 in your bank account. Close your eyes and think about how it makes you feel.

Experiment 2. Go to the bank and cash a check for $1,000 in $20 bills. Hold them, count them, feel them in your hands. How does it make you fell?

What If You Don't Have Cash?

Go find someone who does. Get a cash partner. Work with a hard money lender who can provide money fast. Set aside reserves from profits of each project. Keep building reserves until you get all the benefits of a cash buyer.

Do you have an expample of when cash got you a great deal? Post it and share.