Proof of Funds? huhhh?

Question

Looking for some guidance from experienced investors.

Hey everyone I have an accepted creative offer on a triplex in Winston-Salem, NC and need to provide proof of funds by Monday. I am a newbie and have never heard of POF untill now!

Offer structure:• Contract Price: $445,000• $385,000 cash at closing• $2,000 Due Diligence• Seller financing: $60,000• 7% interest• 30-year amortization• 24-month balloon• Promissory note• Seller to contribute up to $5,000 toward closing costs

I'm exploring private capital to fund the $385,000 needed at closing. For those who have structured deals like this:

• How do I provide proof of funds by monday
• What's the best way to raise the capital on a tight timeline?
• Would hard money make sense here, or would you avoid it?
•

I'm open to advice, introductions, or potential partners. Thanks in advance!

Jehu Matthews · Answer

Hello everyone, thank you for your responses. I was able to vacate the deal without any financial losses. I have never received so much feedback on a post. For everyone who had some kind but critical feedback I thank you again. For those who were abrasive and rude, please reflect on your words and keep in mind the following. I am very young and passionate about real estate. I have no one to hold my hand through underwriting or acquisition or property management. I am on my own trying desperately to figure it all out. I want to be successful in real estate and build a legacy for my family at a young age so that the rest of my life can be devoted to helping others climb the laddder and raising my kids-to-be. If you have anything else you reccomend for me on my journey please let me know. Thank you

Mark Cruse · Answer

Sounds like a fake post. If not, a newbie in a triplex, who has no idea what POF is, is a recipe for disaster.  You have a deal, but are trying to figure out how to raise money for it?

Jeff S. · Answer

The answer to your question is very simple, @Jehu Matthews.

You committed to bring $385K in cash to close this deal.   Simply provide a bank or brokerage statement with your name on it, showing at least a $385K liquid balance.

What?  You don’t have $385K in liquid cash?  Why did you make this commitment and what was your plan to obtain it?  In your title, you wrote, “huhhh?”  Are you surprised the seller is asking you to show you have the cash to perform?  Where was this money going to come from when you made your offer?

I’m sorry to be harsh, Jehu, but “huhhh?” is not creative financing.  One common question here is whether you should be looking first for money or for deals.  You’re learning the lesson that you don’t commit to a deal with no assurance you can pay for it.

With experience, finding money is not difficult and typically involves developing relationships.  You might work on those at the same time you look for properties.

Michael Carbonare · Answer

Jehu, you're in over your head.  This has disaster written all over it.  Slow down.  Walk before you run.

Chris Seveney · Answer

if the seller is expecting $385,000 cash at closing and providing seller Financing I believe they interpret this deal as you have that cash and they will be in first position lien. They most likely I'm not assuming to be in second. Also if you find a lender for $385k they will want you to put 20% down and not have a seller carry

might want to have another call with this seller

Stuart Udis · Answer

Is seller financing supposed to be second position? If so, you turn over a loan pre-approval or lender relationship lender indicating confidence in funding the loan aware of the seller financed second or alternatively show a bank statement with money in your bank account. Anything else is fraud.

Very curious what information/education you relied upon before entering into this agreement?

James Wise · Answer

This might be shocking news to you, but the world does not revolve around you. You seem to think your success, your goals, your ambitions, are the only thing that matter. What about the seller? You lied to them and jerked them around. That behavior is unacceptable.

Vijay Friedman · Answer

@Jehu MatthewsJehu, congrats on getting a deal under contract. Since you have a proof-of-funds deadline, I'd focus on speaking with lenders or capital sources that can quickly determine whether the transaction structure is financeable. Also, make sure everyone involved understands the seller-financing terms so there aren't any surprises during underwriting. Hope you're able to keep the deal moving!

Proof of Funds? huhhh?

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