Cash Buyers of Single-Family Properties Seeking Subsequent Financing
By Robert Greenberg, VP Marketing, B2R Finance
All-cash property purchases fell below 1 million last year for the first time in three years.
A total of 944,892 single-family properties and condos were sold to all-cash buyers in 2014, down 13 percent from 2013, according to data from RealtyTrac. The all-cash sales represented 31 percent of all single-family property sales during last year — a four-year low.
Nearly 4 million properties have been sold to all-cash buyers over the past four years, led by sales in Florida, California, Michigan, Georgia and Arizona.
Interest from institutional investors — those buying at least 10 properties within a year — and all-cash buyers is waning as lower priced and distressed-driven properties have declined in availability.
Also of note, 8 percent of cash buyers in the last two years have subsequently taken out a mortgage after the initial purchase, according to a RealtyTrac analysis of nearly 1.5 million all-cash purchases of single-family properties nationwide from January 2013 through December 2014.
On average, the original cash purchase prices were 93 percent of the purchased property’s full market value, and a subsequent mortgage was recorded an average of 202 days — nearly seven months — after the sale.
The county with the highest percentage of cash sales with a subsequent mortgage was San Francisco County, Calif., where 24 percent of cash buyers took out a subsequent mortgage; followed by Denver County, Colo. (21 percent); Marin County, Calif. (20 percent); and San Mateo and Santa Clara County, both in California and both with 19 percent of cash purchases with subsequent financing.
Seeking financing after an all-cash purchase allows investors to unlock equity from their existing portfolios.
B2R Finance has been active is helping investors refinance rental property investments with asset-based lending, which doesn’t rely on the traditional debt-to-income ratio used by most lenders in the residential space, rather we consider the full appraised value and cash flow of a rental property, providing up to 75 percent LTV of the property value.
It’s a funding alternative that allows investors to unlock equity and provides new flexibility to rental property investors, including all-cash buyers.
For more information about how B2R can help you obtain rental property financing to grow your business, just call 800-227-8107 or visit www.b2rfinance.com/borrowers and follow us on Twitter @B2RFinance.
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