First-time buyer prep (couple)

While cash buyers are prevalent in today’s marketplace, most of my clients (I am a buyers rep) finance their purchase and do not have a problem getting their offers accepted (even against cash bidders). If you have a strong financial profile and are organized and motivated, you will be in a good position to win a competitive bidding process, even if you are financing. With your situation, I think bidding all cash might actually work against you since it will be readily apparent from your bid that you’d be putting all of your eggs in one basket, with little to nothing left over. You do have a solid income, but every seller will want to see something substantial left in your bank account after closing, especially for a co-op.

I think you’d be better off getting purchase financing from a mortgage lender and then borrowing from your in-laws to pay for renovations or paying for them out of your remaining savings. Generally speaking, you get better rates when you finance a purchase rather than through a cash-out refinancing or HELOC and you are also able to borrow more. Your income and savings should also qualify you for a good rate for the size of apartment you are intending to purchase.

Dan Gotlieb
Digs Realty Group
digsrealtynyc.com

Since you're assuming 1k/sf, you're probably buying a co-op. Just remember that getting that HELOC to repay the inlaws isn't necessarily easy -- you'll have to go through the co-op board, which will have to approve your financing just as it would have approved your purchase financing (I'm not an attorney, but in practice this is the way it works).

ali r.
{downtown broker}

Another strategy to compete against all-cash offers would be to give up mortgage contingency. In your case you have your in-laws as a backstop, so in the unlikely scenario (given your financials) that you can't get a loan from a bank, you can just fall back to plan B.

Also, like dandigs said, rates tend to be higher in cash-out refis and HELOCs, so why not borrow more from a purchase loan and use your savings for renovation instead of down payment? 50% down sounds like a lot to me especially given the low rate environment.

Feelhong hit a key point: By giving up the mortgage contingency, you put yourself on a nearly equal footing with all-cash bidders - at least with regard to financing. Other bidders may be more attractive to a seller because other aspects of your financial profile (e.g. post-closing cash reserves) could cast some doubt on whether the Board will approve you. So definitely stick to that savings plan for the next year. The listing agents for apartments you view should have a pretty good idea of the Board's guidelines; and while those guidelines can't be shared explicitly, you can get some pretty clear signals about major items like cash reserves, income ratios, financing limits and the treatment of gifts and other non-arms-length money sources.