Proof of Funds? huhhh?

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2mo

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

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2 Reply

Ken M.

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

2mo

Quote from @Jehu Matthews:

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!

Who'd you learn it from. It could tell us what he had in mind.

Michael Carbonare

Investor · Fort Lauderdale, FL · Member since 2013 · 917 posts · 607 votes

2mo

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

Jeff S.

Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes

2mo

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.

[email protected]979-218-2286

Joseph CacciapagliaBusiness Member

Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes

2mo

I'm curious if you've accidentally switched the numbers in your example. Is the seller really only financing $60K, or is that what they're expecting you to put down? If it's the latter, this doesn't seem like much of a deal, unless it's supposed to be a seller second. If it is a seller second, then you'll want a pre approval letter for the amount you intend to use on your first mortgage, and then a bank statement showing the cash you'll bring to close. Most lenders are going to have a CLTV limitation, so even if the seller will carry a portion, you'll still have to bring some cash as equity.

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

2mo

Quote from @Jehu Matthews:

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!

A for effort, for moving forward, for taking the initiative. 95% of would be investors don’t get this far, so good work.

That being said it appears that your lack of experience has left you unprepared for a reality in today’s market - there are so many wanna be investors out there with no capital - and no access to capital trying to tie up properties with minimum REFUNDABLE earnest money that agents representing sellers uniformly ask for proof of funds or financing approval before their seller’s allow buyers to tie up the property in an escrow that would never close.

Assuming the numbers you submitted in your post are accurate (and not reversed as another poster suggested they might be) and assuming you have neither $385,000 nor loan approval for said amount then your only option is to come clean with the seller and offer to make a significant amount of earnest money NONE REFUNDABLE. This of course places you with a full commitment for the deal rather than an “option” to shop the deal to end buyers at no risk of capital to you.

From the structure of your offer I can guess that you were trying to structure a “nothing down” deal. The reality is that these have become very hard to accomplish because even if you are able to convince a seller to carry a 20% second lien few if any lenders will do an 80% first with you having “no skin” in the game. Sometimes buyers and seller conspire to make it appear that the buyer is putting down 20% when in reality the seller is providing the 20% thru financing. This is usually caught by the lender when they trace the source of your down payment; when it is successful it’s called MORTGAGE FRAUD, and is a felony.

Private Mortgage Financing Partners, LLC

2 Reply

Mark Cruse

Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes

2mo

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?

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2mo
Quote from @Mark Cruse:

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?

there was a day post GFC were the mantra get into contract on a great deal and the money will find you.. that simply is not true today.. HML and most lenders underwrite as hard as conventional lenders do.. only difference is no tax returns and maybe a little more leverage still need accptable fico and cash ..
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Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
2mo
Quote from @Jay Hinrichs:

Quote from @Mark Cruse:

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?

there was a day post GFC were the mantra get into contract on a great deal and the money will find you.. that simply is not true today.. HML and most lenders underwrite as hard as conventional lenders do.. only difference is no tax returns and maybe a little more leverage still need accptable fico and cash ..

That's insane; was it before the meltdown crash? Even then, it seems like a recipe for default. If I'm a HML, I don't want to foreclose on the property due to handing it off to someone who can't operate. I don't get it.
0 Reply

Jehu Matthews

OP

Member since 2022 · 14 posts · 6 votes

1mo

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

Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1mo
Quote from @Jehu Matthews:

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

I went and reread al the responses TWICE and didn't see any that were, "abrasive & rude".
SERIOUSLY!
If you are going to get offended by the slight "ribbing" some gave you, I have no idea how you are going to successfully deal with your first rude tenant.
Regarding your excuse that you're, "young and passionate" - that does NOT fix any mistakes in life.
All the info you need to avoid the mistakes on this deal ARE RIGHT HERE ON BP.
So, how did you miss all this info?
Lack of research.
Nothing wrong with jumping in to learn via "trial by fire".
You should expect pushback though and learn from it.
[email protected]248-209-6824
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
1mo
Quote from @Jehu Matthews:

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

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.
0 Reply

James Mc Ree

Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes

1mo

It's great that you were able to apply the feedback you received.

Reread your prior post after "abrasive and rude..." Consider all of that challenges you face to become a profitable investor. You need to address them to be successful.

Find a local real estate group and a mentor or two. Talk with other local investors about underwriting a purchase. Bring someone along with you to look at properties you are considering purchasing.

Don't use that text as excuses for failing. I can envision some people saying, "I didn't have the experience and that's why it didn't work out." Not in your case. You have the advantage of knowing you have these knowledge gaps before they become pitfalls for you. Shrink the gaps to the point where you feel you are a sufficiently informed investor.

Vijay FriedmanBusiness Member

Miami, FL · Member since 2026 · 766 posts · 122 votes

1mo

Quote from @Jehu Matthews:

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
Jehu, 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!

786-656-0387

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Vlad Krokhmal

Real Estate Agent · Winston-Salem, NC · Member since 2024 · 25 posts · 6 votes

2w

Hey Jehu, I know you wrote you exited the deal, but just retrospectively wanted to offer a potential solution to your problem. I think one way to close the deal might have been to find a partner you could bring in who actually had the cash to fund the deal. If the deal was actually good, you might have been able to find someone. A structure where they fund the cash portion and take the majority of the rental income and then you manage the property, carry the seller financing debt and take the rest of the rental income might have worked.