Cash Deals
2 min read
When Cash Makes Sense
While this course focuses on creative finance, sometimes a cash offer is the best solution. Our deal calculator analyzes every property for both creative and cash options.
Cash deals work best when: The property needs significant work, the seller needs to close extremely fast, or the numbers don't work for creative financing.
Properties That Attract Cash Buyers
- Distressed properties - Major repairs needed that banks won't finance
- Vacant homes - Empty properties that need immediate attention
- Estate sales - Heirs want fast resolution without managing property
- Code violations - Properties with compliance issues
- Fire or water damage - Insurance claims or uninsured losses
- Hoarder situations - Cleanup costs make traditional sale difficult
How Cash Offers Work
Property Analysis
Investor calculates After Repair Value (ARV) minus repair costs, holding costs, and profit margin.
Cash Offer Made
Investor offers a price that makes the deal profitable after all costs.
Fast Closing
No bank approval needed. Closing can happen in 7-14 days.
As-Is Sale
Seller doesn't need to make any repairs or clean up.
Cash Offer Formula
Most cash buyers use some version of this formula:
Cash Offer = (ARV × 70%) − Repair Costs
- ARV = After Repair Value (what the home is worth fixed up)
- 70% = Investor's margin for profit and holding costs
- Repair Costs = Estimated cost to fix everything
Example:
- ARV: $200,000
- 70% of ARV: $140,000
- Repair Costs: $30,000
- Cash Offer: $110,000
Cash vs. Creative: Which is Better?
Neither is universally better. The right choice depends on their situation:
| Factor | Cash Offer | Creative Finance |
|---|---|---|
| Speed | Fastest (7-14 days) | Fast (14-30 days) |
| Price | Lower (discounted) | Higher (often full price) |
| Property Condition | Any condition | Usually livable |
| Ongoing Connection | None (clean break) | Yes (payments over time) |
| Best For | Distressed properties | Properties in good shape |
Our Calculator Shows Both Options
When you use our deal calculator, we analyze the property for both cash and creative options. This way you can compare and choose the path that works best for your situation.
Sometimes the best deal is creative financing. Sometimes it's a cash offer. And sometimes, a traditional sale through an agent is the right move. We give you the information to decide.
Check Yourself
Q: What is the main difference between seller financing and subject-to?
A: Seller financing means the seller acts as the bank (no existing mortgage). Subject-to means the buyer takes over an existing mortgage that stays in the seller's name.
Q: What is a balloon payment?
A: A large lump-sum payment due at the end of a loan term, after smaller monthly payments have been made.
Q: When does a cash deal make more sense than creative finance?
A: When the property is distressed, needs major repairs, or when the seller needs to close extremely fast with no ongoing connection.
Q: What does "first position" mean?
A: The first position note gets paid first if anything happens. This is usually the existing mortgage or primary loan on the property.