What exactly does a Real Estate Investor do? Part II When is Cash not the answer?

Good Morning from pkbuyshouses.com,

In part 1 I gave you the short and simple answer to the question "What exactly does a Real estate investor do?" In my eyes we're problem solvers. We help people resolve their Real estate challenges. 

I mentioned in part 1 that we typically pay cash for properties and because of that we're able to close quickly and get the problem dealt with in a short period of time with very little hassle or stress. 

When I closed the last segment I mentioned that sometimes "Cash isn't king". Now why would that be the case? Everybody loves cash. I know I love it and like most of us out there I never seem to have enough of it.

So why in the world would cash not be the best solution? Here are a couple of situations as a Home Buyer/Real Estate Investor that I receive calls about on a regular basis. 

1. Facing foreclosure: Even though the rate of foreclosures has dropped significantly since the collapse in 2007 foreclosures are still higher than they have been historically and because of this there are still a lot of folks out there facing a pending foreclosure due to a variety of circumstances that have affected their financial stability. 
2. Upside down or under water on a mortgage: I probably see this more than any other situation. Basically the seller has a home that has some value however, the value is less than the amount owed on the mortgage or mortgages. 

In these circumstances a cash purchase wouldn't be a fit. Why not? 

In both of these situations the owner owes more than the property is worth.

Let's say you're shopping for a car and you found a nice used car, it looks great, no dings or dents, the mileage isn't low but it's average and it's exactly what you're looking for. Other cars similar to this one in your zip code have been selling for around $5,000 cash. However, the one you're looking at, the owner owes $8,500. What would you do? Would you pay $3,500 more than what identical cars have sold for? 

I think we know the answer to that question and just like you as investors we wouldn't be in business very long if we overpaid for houses. However, that doesn't mean that there aren't solutions that we can offer. We'll discuss those solutions here in the next installation of this blog.

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