When an REO asks for a Bank Statement and you don't have the funds?

18 Replies

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If you don't have the funds it isn't a cash offer. You're making an offer contingent on financing and should indicate so on your offer.

Partner with someone who has the big bank statement. If it is a great deal, you will only make half the profits, but half of a great deal is better than all of a deal that did not get done.

A statement and a letter from your funding source may be the best you can do. We had a family member with a chunk of money in their account and used that approach.  It may take some explaining that you/the fund source will provide the funds to the title co prior to close (so cash deal) even if you separately prepare loan docs (I've had the title co atty prepare and file docs outside the closing process). You can pay with financed cash without putting a financing contingency on the purchase contract, but you risk your earnest money and your reputation as an investor who can close a deal if something goes wrong with your funding source. 

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If you know someone at the bank you can always have them type of a proof of funds letter stating you have access to whatever amount. I did that for a friend on an REO and they didnt have a problem.

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Originally posted by @Christian Bors :

If you know someone at the bank you can always have them type of a proof of funds letter stating you have access to whatever amount. I did that for a friend on an REO and they didnt have a problem.

Unethical and possibly even fraud if the "friend" does not have deposits or open lines of credit with the bank totalling to at least what you stated in the proof of funds letter. I do get such letters from my bankers, but I also do have the account statements to verify, so that they aren't being asked to commit fraud of any sort. 

When I first started wholesaling and didn't have the cash I partnered with an experienced investor who did have the cash in her bank account. She allowed me to make the offers in the name of her LLC (so it matched the bank statement).

Jonathan C., 4 Brothers Buy Houses | 7035965311 | http://www.4brothersbuyhouses.com

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find a hard money lender, qualify with them. Get approved and use their approval to write your offers. I am an REO listing agent and see this tactics used by many investors. Legal and ethical

Originally posted by @Account Closed :

During this partnership how do i modify my existing corporate structure or do i create a joint venture/ co-op for the funding option?  How would i structure that legally?

 No you wouldn't typically modify your "existing corporate structure." Most investors would just do a joint venture agreement for this specific deal, or simply do it as a loan. 

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/

@Steve Babiak well in my case the letter was for my friend. He did have access to his parents heloc. I know his parents and I was the person who actually set up the line of credit so I was very comfortable with typing the letter. If the banker knows someone is backed with funds I guess it comes to a comfortablity level. In my case there were no issues but i can see how under different circumstances this could cause a problem.

Are there any wholesalers that have performed a Double Closings in a wholesale deal? And is it ethical and is this a legal transaction in your state?

Thanks,

Clinton

Originally posted by @Clinton Smith :

Are there any wholesalers that have performed a Double Closings in a wholesale deal? And is it ethical and is this a legal transaction in your state?

Thanks,

Clinton

 Double closings are just two separate transactions -- a purchase and a sale -- and therefore should be legal in any state.  That said, you'll be hard-pressed to find a title company or closing attorney who will allow you to use the proceeds from the second closing to purchase at the first.  You'll likely need your own funding for the first closing.

Originally posted by @Christian Bors :

http://www.biggerpockets.com/renewsblog/2015/03/30...

@Account Closed

As a seller, I'd be fine with any of those three things...as long as it included a large, non-refundable earnest money deposit in addition. Without a POF or a non-refundable earnest money deposit, your words are just words...

I agree with Nelya Calev about getting approved for a hard money loan. If the numbers work, they'll usually provide proof of funds the same day.

(I've found Bridgewell Capital out of Orlando very responsive as long as you meet their underwriting requirements).

So you have POF for your offer, then, if the deal moves forward, you have more options with regards to funding it.

Just don't take advantage of your HML and only use them for proof of funds. In many cases, it makes more sense to use their money anyway (certainly better than splitting profits 50/50 on most deals).

Medium mfg logo resizedJeff Copeland MBA, The Multifamily Guy | [email protected] | 727‑235‑7988 | http://themultifamilyguy.com | FL Agent # BK3326487

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