The partial shutdown of the federal government seems to have a tremendous impact on some and barely noticeable, if at all, to others. Of course, if you’re a furloughed federal employee and you’re not on the job, then you’ve got a lot of free timereal estate investing on your hands. To boot, you’ll also be paid for the time you didn’t work. At least that’s the latest announcement. But does the shutdown affect real estate investors?

For investors who are seeking financing, lenders that approve investment property loans have two primary responsibilities, validating the information in the loan application and making sure the loan meets underwriting guidelines.

When a lender evaluates a loan application, validating income is done by reviewing income tax returns and pay check stubs provided by the borrower as well as ordering income tax return transcripts directly from the IRS. When a lender receives a transcript from the IRS, it is immediately compared with the return provided by the borrower to make sure they match up. During the partial shutdown, these IRS requests can’t be fulfilled so the loan application is in a holding pattern.

Lenders also independently verify the identity of the borrower by validating the social security numbers on the loan application with the social security database to make sure they’re one and the same. This validation process is also on hiatus.

That may be bad news for some investors but great news for those not needing financing from conventional sources. That means cash buyers currently rule the roost. Cash buyers typically do because sellers appreciate cash in the bank compared to waiting for a loan to be approved but cash buyers will sometimes come in with a lower offer. The surety of cash trumps loan approval times.

The partial shutdown shouldn’t last very long, as legs of the stalwarts are suddenly a bit wobbly. But if you’re right in the middle of a closing, if you’re seeking a loan, you might be in for a bit of a wait.