Friend Wants To Buy With All Cash
Simple question. I have a classmate who wants to know how her friend can buy property and he's never had legitimate job but has the cash to buy. She was thinking about starting a business for him separate from her but no real good ideas and wonders how long would this take? She wants to start immediately looking for property to buy. Any serious ideas? 
[addsig]
Remember cash is king,but when dealing in cash you have to be able to prove where it came from for purchases over $10,000.00. The government takes a dim view of drug and illegal foreign currency being used.
I don't really get what you're asking.
If you have $100K and a property is selling for 80K, you just write out a check at closing and the property is yours.
Same as a car....You can have the worst credit ever seen, and drive a car of the lot if you give them cash.
Is that what you're asking, or am I missing something???
I re-read your post. Is this the same question that you're trying to ask:
"How can someone who's never had a job buy real estate"?
You said that he was using cash. My guess is that he uses methods that don't require his own money.
Cash deals can close in a heartbeat, but that isn't necessarily desirable. Entranced by the cash, a seller could be tempted to forget to mention important details like liens, title defects, etc. which make an attorney's advice and title insurance all the more important. Especially if money's not an issue, don't cut corners just because you can, unless money's REALLY not an issue...
Well, that is what I'm talking about. Money is not a problem for him and he has not had a job. But the thing that I thought might be done was that there was a way to make it acceptable. I had a friend who recently bought a house and he's the type of person that keeps large sums of money in his safe and not in a bank and when it came time to put money down his broker told him to give him the money and he did something with it I'm not quite sure, but the story goes... he gave it to his brother-in-law who in turned then gave it back to my friend. I don't know all the details but the broker was able to get a large sum of money into his deal w/o it being a problem. I just thought there was a way that brokers knew of that could get the deal done w/o all types of bells and whistles going off. Just asking. Someone told me when that the broker was doing some legal and it wasn't a scam or anything. These are two different people and the situations are not the same. I was wondering if anybody knew of anything that creative.
Well that cleared it up nicely!
I would say "Go for It" and don't ever look back.
Greetings Val,
A lot also depends on what your friend is wanting to do. Buy a home for themselves? Buy investment property? It too depends on HOW they buy the property and what type of loan they will need.
But there are all kinds of different lenders and programs available, with different requirements. Some allow a portion of the down payment to be a "gift", some don’t require any income verification, some are "No Doc" which don’t require any documentation, etc.
A friend of mine buys a lot of his properties cash, and afterwards puts a "refi" loan on them (which have different requirements). Sometimes the cash goes through a family trust, sometimes through stocks and options, etc. But there are usually ways it can be done that are legal, legitimate, and fully disclosed.
Good luck!
Val, Your friend could open a business account as an LLC (pretty easy), or as an individual investor but it is important to note that any deposits must be less than $10,000 (you have to start watching The Sopranos). Lenders want to see at least 2 months bank statements. If he has great credit scores a sub-prime lender will do a no-income ,no-asset, no-employment loan . Otherwise, a hard money lender will look at his credit but if he has large cash reserves ( 2 months paper trail), he will have their attention and most likely the loan. By the end of 2 years he can be considered as an investor even according to Fannie Mae guidelines. Hope this helps.
Why not start a LLC and make the LLC the trustee of the property in a land trust?
This gives some measure of anonymity and privacy.
One thing you really want to avoid is money laundering and becoming an accessory after the fact which is exactly what you will be if your friend is acquiring his cash through illicit means and you are actively trying to help him hide these profits through legitimate investments or by setting up a shell company for him.
If you want to really freak someone out, go lay 80k cash out on a table to buy something. Most legitimate businessmen do not do business like this nor would they do business with people that handle their affairs like this. It's just too suspicious. Don't let greed cost you something more precious than money, time.
5-7 years, 3.5 with good behavior.
Mcole, DGrosse and GWmson thank you all! Especially about the accessory after the fact info! Yeah, I was kinda leary about asking the question because I didn't want anyone to think that I handle business like that. I totally believe in being ethical and moral! My classmate knows that I do creative deals and I told her I would ask around. That was good input and I'm glad that I have this site to bounce ideas off of. I'm not trying to participate but wanted to let her know what the pros and cons of this type of transaction were. She was thinking in lines of getting him started in a business in order to show employment for himself. I'm hoping that my life will be witness enough for her. Not into counseling but I did want to help her out and some good info came out of this string. I'll relay the info and I'm sure it's alot more than she had to begin with. Thanks for all the comments!
Shaloam
[addsig]
Somebody with a lot of cash and has never had a legitimate job is not someone you need to be giving advice to. Trying to use the money to make it legit is called money laundering. Stay away. if he has all this money with no way of proving where it came from the ignore all this advice about LLC's and such.
I reread your postings and I had a question. When you say that he has not had a legitimate job are you just trying to say that he has not gotten a w-2? Was he self employed with a some type of service business and saved? If so then the advice in the posts are okay.[ Edited by WheelerDealer on Date 02/13/2004 ]
Just a minute. Just because he has an unidentified source of income does not of itself put him beyond the pall.
My father, spent his entire life unemployed. He had a dedicated career trying to consume more alkahol then my sainted mother. I think it ended up in a draw. Neither of them really did much other then pretend to be Anthropoligist er something and wander the world. Their income came from the families that paid them to stay away. Both charming people, drunk or sober they were loaded with friends.
Of course their career advice and guidance was suspect, their concept of the good life was a decent supply of stuffed olives for Martini's, they did become expert in the creation of the perfect Martini, not shaken but stirred.
They bought a few properties in their time and merely obtained the type of loans which did not care for papers, they were only interested in past performances. Did they make their payments? That they did. Sort of a violation of the Alkaholics pledge, but that they did.
Amongst my varied and strange clients are a few that when they buy properties I have to select from my lenders the correct one for them. Adjusted downpayments, series of deposits into escrow under $9,000. Then a non doc loan. But in view of the amount of the downpayment the interest rates are competative.
I know, I know but sometimes in these type of situations a broker can select from those who would lend, the perfect loan for he who is having a problem explaining his sources of income.
There is a middle aged man, dark, good looking super charming, who is a contractor of sorts. His properties are mostly female with a few persons whose gender is undefinable. His income is really difficult to trace. Tips? Service contracts? tithings to his own personal church? who knows.
He bought a house the other day dealing direct with the owner. Overpaid about 30% but then he overcharges for his services. The Owner took back a 75% to equity lst Trust Deed. This little instrument was assigned to one of our larger banks at a few points of discount to compensate for its competative rate of interest.
The Contractor of sorts now lives in a lovely house on the hill. His assets are still mobile and nubile and everybody loves everybody. For money. That includes the bank.
He is the only man I know of who wears a mink coat, and, looks good in it. It's the big white fedora hat that blows the image.
I advised the attorney who structured the transaction. Why? Cause he went to Harvard and belongs to the DownTown Club and is, in the area of most transactions, challenged!
There are a few new arrivals on this site that make him look like what he is. A gentlemen who took three times to pass the bar and then by Osmosis.
In the Mercantile Society almost anything is possible, given time, money and a touch of hutzpah.
Observe they fellow man but judge him not. Lucius
<IMG SRC="images/forum/smilies/icon_cool.gif"> <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by Lufos on Date 02/13/2004 ]
Whose to judge. The times they change, its the game that keeps getting played over and over. Just now, in these times, the penaltys get stiffer. Be carful not judgemental
[addsig]
Lufos, you are hilarious! But point well taken! And to answer the earlier question, I do not know anything about the person who has the cash. My classmate is the one who knows him and she asked me, and I asked you all! Whatever he does - all I know is he has cash and he wants to buy. But being that real estate has so many creative funding opportunities, I thought it would be worth to it to investigate the subject! I actually am trying to work on another deal with a homeowner who has no job, no source of income and victorian property in West Oakland who was given this particular property and after having it a very short while was able to refi the property two years ago, since then he has had fire in the front, got paid the insurance money worked with a contractor who did not pull permits on a 1894 (century old) property and added a deck on the back, stripped the inside, rewired the place (w/0 permits mind you) and then ran off with the rest of this guys cash (so he says) and now he's in foreclosure and has considerable equity but does not want to sell! So you go figga!
Anything is possible in this business. Rules of the game seem to change all the time!
[addsig]
All cash? I thought that was against the law!
All cash? I thought that was against the law!