You’ve accumulated a substantial amount of cash over the years, and you’re thinking about using that money to buy real estate. You’ve heard that real estate tech companies are offering Cash for ME property. But what does that really mean? And what is the process of buying a home with cash like.
A Cash for ME property is a home that can be purchased for all-cash with no mortgage financing. Many homes are sold this way because they’re in a condition that wouldn’t be acceptable to a bank for a mortgage. The home may need significant repair or it could have been sitting vacant for a while.
One drawback to paying cash for a property is that it’s an illiquid investment. You can’t get your money back until you sell the property which may take months or longer depending on its condition and the state of the market. You also lose the ability to use financing contingencies, which would give you a way out of the contract if something goes wrong with your financing.
In addition to the purchase price of the home, you’ll need to consider maintenance and vacancy costs. To determine these costs, you can use our free Cash for ME Calculator. This tool will help you calculate your projected monthly cash flow and annual cash-on-cash return. To use it, just enter the numbers for each category in dollars. You can reference the two tables for Maintenance and Vacancy values, which are provided below the calculator.
Another downside to paying cash is that you can’t deduct the purchase price of the property from your taxes and insurance, which means you’ll pay more upfront for these expenses. However, if you plan to hold the property as an investment and rent it out, these extra expenses can be offset by the rental income you’ll receive. If you’re planning to sell the property later, you can also use our Tax for ME Calculator to figure out the taxable profit on your sale. This will help you determine how much to include in your offer for the property. If you’re planning to sell it quickly, a lower taxable profit may be better for you.