There is an article in the Press Democrate today that recaps what has been happening for the last 12 years in regards to “all cash offers” on Real Estate purchases. It reports that beginning in 2000 24% of all homes sales closed escrow with an “all cash” or without the use financing at the close of escrow. We have ourselves have personally seen this trend rising year after year at rapid pace. According to this article and based the end of 2012 the average has risen to 35% or an 11% rise in cash offers since year 2000.
One should note that even though we have personally processed dozens of written “all cash offers” I know for a fact that they are not going to remain all cash after close of escrow. There are a variety of sources that buyers will use to obtain cash to enable them to make an all cash offer which will generally make their offer more desirable to a seller. Some of those sources could include “hard money” lenders, conventional and private party loans and loans from personal retirement accounts. The money is out there just waiting to be used. There are more people than you realize who actually have $300,000 or more sitting ideally in a saving account earning little to nothing in interest so why not put that capital to work in a rental home. The average rate of return before tax benefits is 5% if your purchase properly. With that type of return there is strong evidence to support investigating the owning of rental property. To read the full text of the article click on this link and as always feel free to comment. All Cash