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Proof of Funds via "Funding Partner"

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Matt Liu

Jersey City, New Jersey

Sep 13 '12, 10:40 AM


I have a Proof of Funds letter from my father, my "funding partner" that says
"xyz funds are available for immediate transfer or use by MattLiu at my discretion."

The problem is when I went to make an offer, one realtor said what happens if we are about to close and funding partner's discretion decided that it is not a good deal.
He makes a good point.
How do I get around this. Do I have to make the letter approve of the address each time?

Thanks!



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Sep 13 '12, 10:59 AM
4 votes


Are you trying to make "cash" offers? If so, include a copy of a bank statement with the same name showing the cash is available.

Otherwise, you're doing a financed offer. Put in a financing contingency and include the letter and a bank statement from your father. The words "at my discretion" necessitate the contingency.



Jon Holdman, Flying Phoenix LLC


Jesse Tsai Donor

Rehabber from Las Vegas, Nevada

Sep 15 '12, 11:52 AM


If you're just trying to make cash offers, and to get past the Realtor's concerns, a bank statement and Photoshop would be the solution.



Medium_sunbase_logoJesse Tsai, Sunbase Group
E-Mail: [email protected]
Telephone: 702-479-5791
Website: http://www.sunbasehomes.com


Ann Bellamy Verified

Real Estate Lender from Tyngsboro, Massachusetts

Sep 15 '12, 02:55 PM
5 votes


@Jesse Tsai, are you actually suggesting that he take a bank statement and change the name? I can think of several words to describe that and none of them are good. Maybe I misunderstood.



Medium_small_logoAnn Bellamy, Buy Now, LLC
Telephone: 800-418-0081
Website: http://www.buynowhardmoney.com
Hard money lending in NH and MA, and for free networking in MA, http://www.BlackDiamondREI.com


Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Sep 15 '12, 05:56 PM
4 votes


While you're at it in photoshop, why not change the dollar amounts too - after all, one lie usually leads to another ...

On second thought and more seriously, forget photoshop ...

It is acceptable to hide the account numbers, by using a photocpy and blacking out most of the account number - that is the extent to which a bank statement should be altered.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Jesse Tsai Donor

Rehabber from Las Vegas, Nevada

Sep 15 '12, 06:32 PM


Now my idea, was just an idea.

It may not necessarily be a good, or a generally accepted idea, but it is an idea.



Medium_sunbase_logoJesse Tsai, Sunbase Group
E-Mail: [email protected]
Telephone: 702-479-5791
Website: http://www.sunbasehomes.com


Mitch Kronowit Donor

SFR Investor from Orange County, California

Sep 15 '12, 06:38 PM
2 votes


Is there somebody going around telling people you can make "all cash" offers without having the cash? No wonder so many real estate agents don't want to deal with "investors".

If you do NOT have the cash in your possession or under your DIRECT control, you're NOT making a cash offer. If somebody else has the cash, then perhaps THEY should be making the all-cash offer.



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Sep 15 '12, 06:42 PM
2 votes


Originally posted by Jesse Tsai:
Now my idea, was just an idea.

It may not necessarily be a good, or a generally accepted idea, but it is an idea.

I think I'd have to put it in the terrible idea category. Don't know that its actually illegal, but its certainly dishonest.



Jon Holdman, Flying Phoenix LLC


Matt Liu

Jersey City, New Jersey

Sep 15 '12, 11:00 PM


What about having your funding partner go in on an LLC with you. That way when you make offers, you make it using the LLC name. There's still the possibility of disagreement when it comes to actual disbursal, but at least legally, technically, this is a legit work around, no?



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Sep 16 '12, 04:56 AM


Originally posted by Matt Liu:
What about having your funding partner go in on an LLC with you. That way when you make offers, you make it using the LLC name. There's still the possibility of disagreement when it comes to actual disbursal, but at least legally, technically, this is a legit work around, no?

That works.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Ankit Duggal

Real Estate Investor from Clifton , New Jersey

Sep 16 '12, 06:04 AM


@Matt Liu You can place your father name on the contract with you and then amend the buyers name to just your llc during attorney review. That is another way around it if your father does not want to own the LLC with you as there can be tax implications for him to do so.



Jeremy M.

Saint Louis , Missouri

Sep 16 '12, 07:07 AM


This is close to what I did when I made a offer on a reo property. But I didn't use my fathers bank statment, I'm using what's called a transactional funding and they wrote me a short statement saying I am qualified for the funds and they had the adress of the house on the statment as well . Just made my first offer last Friday and the listing agent didn't have a problem with it. But I'm also a licensed agent so I went stright to the listing agent instead of missing around with a buyers agent. Your end goal would also have something to do with how ur buyin the property also.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Sep 16 '12, 08:02 AM
2 votes


Originally posted by Jeremy Mcdaniels:
This is close to what I did when I made a offer on a reo property. But I didn't use my fathers bank statment, I'm using what's called a transactional funding and they wrote me a short statement saying I am qualified for the funds and they had the adress of the house on the statment as well .

A transactional lender is no different than any other type of lender -- conventional, FHA, private, hard money, best friend, etc. Therefore, any offer made with transactional funds should be made as a financed offer, not a cash offer.

There is no guarantee the transactional lender will actually come through -- they may do an appraisal and nix the deal, they may go out of business, they may get hit by a car, etc. It's just a loan, and the offer should reflect the fact that you're getting a conditional loan.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Justin S. Donor

Real Estate Investor from Chandler, Arizona

Sep 17 '12, 10:57 AM


I have a Proof of Funds letter from my father, my "funding partner" that says
"xyz funds are available for immediate transfer or use by MattLiu at my discretion."

The problem is when I went to make an offer, one realtor said what happens if we are about to close and funding partner's discretion decided that it is not a good deal.
He makes a good point.
How do I get around this. Do I have to make the letter approve of the address each time?

Thanks!

I use a similar type private letter and I've only been questioned once on it. I submit it waiving appraisal contingency and showing their POF within the last 30 days. As a backup, I also have a traditional hardmoney lender that provides me with a traditional prequal letter, which has never been questioned.



Medium_rezamp_buscard_whiteJustin S., Rezamp, LLC
E-Mail: [email protected]
Telephone: 4806780446
Website: http://ReZamp.com
Powerful software that discovers real estate deals for you 24 hours a day, 7 days a week.


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