Are All-Cash Buyers Good or Bad Opportunities for the Real Estate Industry?

According to the National Association of REALTORS, 33% of home sales are completed by all-cash offers. All-cash offers may seem like a great opportunity, but there are some down falls.

All-Cash Buyers

Pros:

  • Creates competition within the housing market
  • Typically causes home prices to increase, boosting the economy and values of homes
  • Can be attractive to sellers as it can decrease the chances of barriers during the closing process

Cons:

  • Ties up capital during the project, especially lengthy rehabs
  • Difficulty refinancing non-mortgaged properties in first year
  • Lowers cash reserves making financing other projects more difficult
  • Finite cash limits the amount of projects you can do at once
  • Will impact hopeful first-time homeowners negatively in the future as it makes the housing market less affordable

While all-cash purchases can be helpful to rehabbersreal estate investment strategy, it is important to remember that as a rehabber, you get a better return on invested capital by going a different route.

What are other pros and cons that you find associated with all-cash buyers?