Proof of Funds we may not have thought about

Rina....thanks for the info.

Just an FYI, my last,(which was also my first)deal was a short sale, and yes I had to show proof of funds. BUT, if you are indeed going to buy this short sale and not assign it, when you go to get your loan do NOT cross off the acct #'s, because the bank funding your loan will not accept them. This happen to me, and I had to re-scan and re-email them with the acct numbers visible...

Just to be clear....During the OFFER process, YES cross them out! This is how I do every offer, when I need to show proof of funds...

...but when you go to get your loan and have to show proof, leave them visible.

Good to know.

Rina

Hey, thanks for the info. thus far, our local banker as set up mortgage loans for almost all of our deals; we've been paying them off early when we sell a property and he is even now more willing to do loans.BUT, he still does everything by personal guarantee( I recently established D& B score, vendor credit)I wonder if you think I might ask this banker to establish an account in our LLC name for Proof of funds only for offers, and not actuallyplan to access THAT money. . .ideas?
richie rich

On my short sales I have the lender only show what at that point I am offering. Don't show your hand to the seller.

Then if need be I have the lender change the amount. On the last house I bought he made up several amounts that I was good for so I need not come back and get a new one.

I just wanted to make sure I understand what you both are saying in regards to the proof of cash letter. Are you using this POF letter ONLY to make an offer to the bank for their short sale which gives you time to secure a loan to buy this property? Is their a subject to clause about obtaining financing?

Have either of you been successful in assigning or doing back to back closings on shorts (or for that matter) REOs. I have read through the threads that a lot of banks frown on us being the "middleman" and re-selling the property (that same day in the case of back to back closings).

I would like to use the Coastal funding method of them providing the proof of cash letter but they INSIST that the end buyer has already been found and will close the same day (hence, the back to back closings) so Coastal gets their money back (with their fee of course).

Your thought please.

Thx,

Neil

Yes, I am using the account statement as proof of funds ONLY to make an offer (for some reason they insisted on it to submit the short sale offer). I do not plan to touch that money. I will have an end buyer in place or alternate financing for purchasing the property. I’m also practicing including and/or assigns (assignees). I figure the more times the banks see it, the more accustomed and maybe receptive to it they might be. Especially if they see a few of them go through without a problem. The worst they can do is refuse to leave it in the purchase agreement. Then you decide what YOU want to do.

My regular title company (that I’ve worked with MANY times) STILL says they can’t do a double closing or an assignment. They said they can’t even work with a local RE attorney?? So, reluctantly I called another in town, and even though their first response was “What’s that?”, they said they would be willing to try anything . So, I guess I have a new title company.

I think I might do a practice assignment by using and/or assignees from my name to my company’s name on the one I’ll be closing on this month (unless my end buyer is ready to go). I figure that’s an easy baby step in the right direction and will “ease” us into the process. Should be a piece of cake after that.

Hope others can learn along with me. Sometimes I feel like a guinea pig, but what the heck. Lol

Rina

Hoosierman wrote:

On my short sales I have the lender only show what at that point I am offering. Don't show your hand to the seller.

Good point. The way they USED to write it up for me was just a general "(My name or business name) has sufficient funds available to cover the purchase of (such and such an address), something along those lines. But that's when I had already gotten preapproved on a refi of another property and actually had the cash available to me. Now, even though I have properties to refi, the bank is getting more picky and wants to know WHAT I'm buying too. That's why I think I need to call my new mortgage broker friend.

Thanks again for the advice.

Rina

I can understand your point about the bank. They wanted to know my whole financial life story!

But talking with my bank their investment accounts have dried up because of the larger amounts down and higher credit scores they want. I always thought a bank was there to lend money? LOL

I have been brainstorming and researching trying to figure out how to come up with a POF letter if I'm not able to obtain one thru the normal channels ie: bank,HML,bank statement because of bad credit. I have found some sites on the internet that will give you a POF letter for a fee. For example, one site offers to create a real bank account for you in your name and actually put the amount of money in the account that you need for the POF letter. You cannot touch the money but you will have a real bank statement in your name that shows you have this much money and it can be verified. I have seen a few sites that have videos on youtube, one of which that comes to mind charges $99.00 a year and says you can create as many POF letters as you want as long as you have a membership. My question is has any of you used any of these methods? It seems a little questionable to me but all the sites claim this is perfectly legal. I'm just wondering if anyone has tried this...Any input welcome

Jeremy

I had a post up about a week ago about this topic. Dean left out this important item from his new book. This is a significant item that is needed especially for new investors and there needs to be more resources for getting the proof of funds even if someone has no credit, bad credit, no job, etc. The proof of funds is definately needed if your are going to lock up properties and assign them. Hopefully Deans next book will include this important topic.

I am yet to use them but will start to. Go to Coastal-funding.com. This thread has appeard in all the forum topics. You can download a POC letter for FREE. Then you use this to show your seller/bank. Coastal is not an HML in the true sense they instead "rent" you the money for 1 day. What this means, if you do use them, that you have to have an end buyer in place B4 they would fund the 1st transaction. They REQUIRE that they get paid back via the 2nd close with your end buyer the SAME DAY. You need to find an escrow co that does double closings.

If you dont use them and assign/wholesale the deal, good for you. But this is one way of to show proof of cash.

Hope this helps.

Neil

thanks i think i just missed out on a special deal because i could not come up with one. found a duplex asking 115 would accept 93 worth 225 and just remodeled but i know there are more.

Speaking of using your I.R.A., does anyone know of a good way for me to use mine in my REI business? Anyone work with an investment firm that specializes in using self directed I.R.A.s short term?

Thanks,

Mike
MD Home Acquisitions L.L.C.

As we all heard of coastal-funding for a POF letter. Let me add one more to the list where you can get a POF letter:

realestatedayfunding.com

I've researched them before and to my knowledge any profit you make from a real estate deal has to go back into your IRA. In other words, you're building your porfolio, not collecting profit for personal use.

Ryan

Does anyone know where and how to use a self directed IRA to purchase real estate. Do you know of any investment companies or deals. I know the principle must be returned and if you take the profit from the deal you are taxed on it. I don't want to do that, I just want to grow my IRA. I have an offer to invest for 12 months at 11% but I think I can do better and do not want to tie up my IRA for 12 months. Any ideas or suggestions?

I am in the "making offers" phase and have now hit the obstacle that I need a POF letter to even submit offers when a property is offered through a RE agent. Because of this, I started looking into various transactional funding companies and saw that every one I've researched won't give a POF letter without having the end-buyer in place.

So, is what you're saying in your post that Coastal Funding WILL give you a POF letter and that you only have to supply them with end-buyer information if your offer gets accepted and you then decide to use them to fund your deal?

Thanks for any input/advice you can give me,
Suzi

Rina,

I have a title company and the president's husband will write a pre-approval letter to be used for proof of funds. When we close on the deal, he funds the purchase and then the title company does the second closing the same day and I will get my money then. He takes a small fee for the use of his money. I can use it for even 72 hours if necessary.

Tim

Hi Tim, will the letter say that funds shall be used for transactionalfunding only (back to back closings)?

Hello everyone,

I just happen to stumble upon this topic by chance. I was searching through forum topics and this came up and now here I am. I am new to this and I have not made an offer yet......yet. What is this proof of funds exactly? With these companies you have mentioned do you even need them to assign or do you need to have your buyer (assignee) provide one to complete the assignments? I am looking for clarification because I just want to be as prepared as a new investor can be. I hope everyone is doing great and I look foward to hearing from you.

Richard
Bothell, WA

Proof of funds is just something showing that you have enough $ to buy the property you are looking at should an offer be accepted, whether it be cash or approved financing. Most of the time it's just a matter of what they have to put in their file, so the seller/agent/bank couldn't care less WHO's funds they are seeing. It can either be a letter from a lender (bank, HML, PML) or a bank statement or IRA statement, just anything showing that you have access to funds foe closing the deal.
My agent actually tells the seller that we will show proof of funds upon acceptance of the offer. We say the same about the earnest money. We have never had a seller (bank or otherwise) make a fuss about this.

You can use your end buyer's POF if you are assigning or wholesaling a deal.

And yes with the transactional funding (like Coastal), you must find your own end buyer and have them in place to use Coastal's funds (but their letter is free, from what I hear.).

Rina

That is a great service you found through your title company! Thanks for sharing!

Rina

Rina,

Thank you for the information. This is why I love this site. My son even is having fun with me on it. He loves Dean's blogs. Like I said earlier I had no idea about proof of funds so another piece of the puzzle has fallen into place. Thank you again for your knowledge. Have a great rest of the weekend.

Richard
Bothell, WA

Thanks for the information and leads on this subject. I will let you know how I make out. Appreciate every ones input.

I started working with an agent and I'm utilizing Matt's 25:1 formula. My agent (who has not worked with investors in the past) wants a notarized letter of POF or pre-approval letter from a reputable bank. Since I'm making 20+ offers at once, Coastal Funding and other transactional funding companies won't work because they want a single address for intent to purchase.

Does anyone have suggestions on how to obtain a 'general POF' letter?

Here are my options thus far:
*Find a relative who has the funds to 'partner' with to get pre-approved
*Talk the agent into over-looking the POF letter
*Dump the agent and find someone investor-friendly
*Or (creative thinking) - negotiate with someone on my buyers list to create a POF letter in return for first look at any accepted offers

Let me know if you can help!