When buying and selling homes, it always helps to have some extra expertise, experience, and market knowledge on-hands. This is where an experienced real estate investor comes into play.
Here are the pros and cons of working with one:
One of the biggest cons of working with a real estate investor or selling them a house is that they usually buy below the market value. Most investors look to buy homes that are selling below the market value. This helps them bargain their way too. Most investors won’t also tell you what they’ve planned for the property; you’ll never know the actual market value of the transaction.
Let’s say an investor owns the land next to your home and wants to combine the two and start up a mega commercial project. The final payback of the project is considerably higher than what they’d be willing to pay you. Theoretically, they should be paying you more than a family would pay for a place to live—but they don’t.
With a real investor, you don’t always know who is eventually buying the property. This happens because no law requires your investor to tell you who is actually making the purchase. You never know if it’s someone just looking to turn the property into a renting space or planning on turning it into a multi-family apartment.
In most cases, the pros of seeking help from a real estate investor usually outweigh the cons. Most investors don’t care about the condition of your home. In fact, they look for old and outdated apartments, so it’s easier for them to fix and flip those. You don’t need to care if the paint is peeling!
Most investors will also pay upfront cash. This significantly mitigates the risk that comes with most buyers who are applying for a mortgage. Even if a buyer has been pre-approved for a mortgage, you’d still need to analyze their creditworthiness, and they can refuse the funds anytime. In cases like these, an all-cash offer is always a better idea.
All you need to do is ask your investor for proof of funds or a money market account statement. Since it’s an all-cash offer, you can also close the sales deal a lot quicker than a mortgage. Most all-cash offers take up a maximum of two weeks, whereas mortgages may take around 60 days.