I recently started a real estate investment company in Baltimore, Maryland. I'm familiar and have experience with wholesaling properties. I was looking to expand into buying properties to rent out and properties to fix and flip.
I just came across a property in a decent neighborhood that appears to be a good deal for a quick fix and flip. The investor is requesting a POF letter and a signed disclosure form before I can even go take a look at the property to make a thorough assessment. This is a first for me. Is it common for an investor to request this upfront even before allowing people to view the property?
Also, I ran across a HML that provided me with a pre-qualification letter but states that it will provide "unlimited" POF letters for $49.95/month. Is it normal for a HML to charge and provide "unlimited" POF letters? Is it a good idea to pay this $49.95 monthly fee?
Lastly. I recently bought a home as my primary residence with FHA lending. Will I run into problems now that I'm trying to get financing approval for an investment property since I just closed on my home a few weeks ago? Should I wait for a few months before trying to buy an investment property?
Yes some will ask. The disclosure is more of a red flag to me. What kind of disclosure, for what?
Personally I think an experienced in investor can simply screen most buyers to see if they have funds to buy, by simply asking a few questions. I might ask for proof of funds only if I am already suspect.
So a question to ask yourself is did you send off signals that made the investor want these documents or is the investor a flake for wanting them?
I wouldn't pay for a proof of funds letter. Generic ones will probably be spotted as a fake anyway. If it is a good deal run it by a hard money lender. They are a good way to screen out bad deals as they will not fund them. This can keep you out of trouble.
Thanks Ned. I asked about the non-disclosure form and was told that it was to ensure that we don't bypass one another during the transaction. I don't think I sent out any bad vibes. Actually, this investor reached out to me. It sounds like to me this investor may have been burned before and now is extra cautious or overly cautious.
I talked to a hard money lender using some assumptions about the property's condition since I haven't seen it and he said that it really wasn't that good of a deal. So its back to the drawing board!
@Latoyia Grant Sounds like an inexperienced wholesaler to me. First of all it's not a non disclosure, it would be a non compete. Also if he or she had it under contract there would be no need for it anyway.
That makes sense. Thanks @Ned Carey!
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