I can't get any deals without proof of funds

Graham , WA · Member since 2018 · 11 posts · 4 votes

I can't get any deals with out proof of funds and I can't get proof of funds without having a deal under contract. Completely stuck on this one. I found a deal through a listing and am planning on wholesaling it but of course I can't submit an offer without having proof of funds. I like the ideas of having the funds to back me in any case so I am glad I am learning this now, but how do I go about this?

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Jon Holdman

Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

"Proof of funds" means a bank statement in the same name as on the offer showing enough cash to close the deal. You usually only need that on a cash offer. If you're making a financed offer then you need a pre-approval letter from a lender showing you can close the deal.

But sounds like you're trying to wholesale deals that are on the MLS where you're dealing with knowledgeable sellers. I know people do have some success doing this, but I don't really get it. If you're paying something close to the listing price you're not really adding much value. A buyer could have just bought it off the MLS. If you can get a low-ball offer accepted, though, you are potentially adding value. But really if you're trying to wholesaling you need to be doing marketing of some sort to turf up your own deals.

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Alex Price
Cleveland, OH · Member since 2018 · 133 posts · 59 votes
8y
@Carlina Burford I'm assuming you are going through a lender and seeing it is backed by your credit and income, not sure why they are not able to issue a letter of pre approval to you.
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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
"Proof of funds" means a bank statement in the same name as on the offer showing enough cash to close the deal. You usually only need that on a cash offer. If you're making a financed offer then you need a pre-approval letter from a lender showing you can close the deal.
But sounds like you're trying to wholesale deals that are on the MLS where you're dealing with knowledgeable sellers. I know people do have some success doing this, but I don't really get it. If you're paying something close to the listing price you're not really adding much value. A buyer could have just bought it off the MLS. If you can get a low-ball offer accepted, though, you are potentially adding value. But really if you're trying to wholesaling you need to be doing marketing of some sort to turf up your own deals.
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Alexander FelicePro Member
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y
do you have the funds?!? if not then you don't' have proof of funds.
Trying to wholesale off the MLS is going to be hard, they are specifically asking for POF to weed out those who don't have funds.
You need capital or better access to capital
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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Carlina Burford
Its my time to agree with @Alexander Felice today. Since you don't have funds you can't get proof of funds. You are asking to solve an impossible question.
Putting aside the wholesaling deals from the MLS debate, you could connect your buyer to the deal and get an assignment fee. The buyer then closes on the property the way that best suits them and you go on your merry way.
That all presupposes you have a buyer though...
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Carlina Burford
OP
Graham , WA · Member since 2018 · 11 posts · 4 votes
8y
Ok, thank you guys!! I am now looking into transitional funding and looking into other hard money lenders. Though I have learned that the deal I was looking for POF, is a bit of a dead lead without straight cash. The house needs to be torn down. They have had the house offered on and accepted 3 times, but has not passed inspection. You can literally feel yourself walking down as you walk from one side of the house to the other, plus the house is just not square. I knew this and was going to offer low, get it under contract and then put it out to see if anyone would be interested. Being very transparent that is should be a tear down house.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Carlina Burford:

I can't get any deals with out proof of funds and I can't get proof of funds without having a deal under contract. Completely stuck on this one. I found a deal through a listing and am planning on wholesaling it but of course I can't submit an offer without having proof of funds. I like the ideas of having the funds to back me in any case so I am glad I am learning this now, but how do I go about this?
get POF from hardmoney lender.. but it will say they will lend a certian % then you need a bank statement showing you have the rest.
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Warren Currier
Developer · Union Point, MA · Member since 2015 · 63 posts · 31 votes
8y
If, "The house needs to be torn down" you may be implying that its worth is the land value, or less, as there's the cost of removal.
Why will people show any different interest in the address after you, "get it under contract and then put it out to see if anyone would be interested... Being very transparent that is should be a tear down house" ??
Looking at the town where you are it seems there's no shortage of land, assuming your target is there.
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Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
8y
this is like the batman slapping robin meme:
"I wanna buy something" SLAP "You have no money!"
6 Reply
Warren Currier
Developer · Union Point, MA · Member since 2015 · 63 posts · 31 votes
8y
If a deal is set up properly you do not need to have money to buy it. You need to create a good agreement with the current owner....
And then you need to be able to act on that agreement, aka sell your position fast.
0 Reply
Wayne Bolen
Leander, TX · Member since 2014 · 55 posts · 24 votes
8y
@Carlina Burford if the owner has had 3 accepted offers presumably from a bank (based on the fact it failed inspection), I'd be extremely surprised if they were to accept your offer based essentially on the land value. I'm not trying to be rude, just curious as to your method as it doesn't make sense to me.
0 Reply
Carlina Burford
OP
Graham , WA · Member since 2018 · 11 posts · 4 votes
8y
Originally posted by @Warren Currier:

If, "The house needs to be torn down" you may be implying that its worth is the land value, or less, as there's the cost of removal.
Why will people show any different interest in the address after you, "get it under contract and then put it out to see if anyone would be interested... Being very transparent that is should be a tear down house" ??
Looking at the town where you are it seems there's no shortage of land, assuming your target is there.
That’s the conclusion I have come to but I wanted the experience going as far as I could while I don’t have many leads. It was good to be able to find a hard money company that I like and learn about transitional funding. I learned a lot today.
1 Reply
Dustin Frank
Real Estate Agent · KS · Member since 2017 · 157 posts · 71 votes
8y
Check out COGO Capital online. They will write you a pre approval letter for however much you need for about ten or twenty bucks. I used them once, it took about five or ten minutes.
0 Reply
Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Carlina Burford You may want to try a hard money lender. Usually, they'll issue a proof of funds letter for your wholesale deals. Another option is to find a partner. Good luck!!
0 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
8y
Any local hard money lender should be able to get you POF.
1 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
Without of showing proof of funds from major lender or local reputable broker we do not even show properties or pocket listings. Likewise, without 3% EMD and proof of funds that has been validated we do not even process the written offer. It is incomplete.
3 Reply
Jorge De Jesus
Katy, TX · Member since 2017 · 372 posts · 140 votes
8y
Hardmoney lenders offer POF. If you are trying to wholesale it’s fine to scrub the MLS but don’t let that be your only lead gen. If you want to buy, still get the POF but make sure you do have funds, holding is not cheap even though someone else is paying down the mortgage. Flipping isn’t cheap either, unless you have a partner to help mitigate risk you still need reserves. Get POF from hard money but think long and hard about what you will be doing with little to no money in the bank
1 Reply
Warren Currier
Developer · Union Point, MA · Member since 2015 · 63 posts · 31 votes
8y
0 Reply
Grant Rothenburger
Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
8y
Originally posted by @Dustin Frank:

Check out COGO Capital online. They will write you a pre approval letter for however much you need for about ten or twenty bucks. I used them once, it took about five or ten minutes.
Hopefully they are actually pre-approving you?
1 Reply
Warren Currier
Developer · Union Point, MA · Member since 2015 · 63 posts · 31 votes
8y
@ Grant Rothenburger
Good point but I'm pretty sure they're talking about buying a piece of paper that says 'whatever'.
1 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
8y
Originally posted by @Grant Rothenburger:

Originally posted by @Dustin Frank:
Check out COGO Capital online. They will write you a pre approval letter for however much you need for about ten or twenty bucks. I used them once, it took about five or ten minutes.
Hopefully they are actually pre-approving you?
They clearly aren't, so the real question here is since it's going to be a worthless document anyways, why not just make some BS up in MS Word? Any experienced agent can spot these "Preapproval Mill" documents a mile away, may as well save the $20.
3 Reply
Grant Rothenburger
Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
8y
@Chris Mason This is the first I'm hearing of this. Until now, I didn't know that was a thing.
0 Reply
Warren Currier
Developer · Union Point, MA · Member since 2015 · 63 posts · 31 votes
8y
Carlina Burford wrote about a house she saw listed somewhere and then the conversation became all about funding. Perhaps I'm really out of it but I don't understand how one NEEDS to prove that they can fund a deal in all cases. Are we simply assuming that she'll need to prove that she's got the money to buy the place? Somewhere I read (ie here) that this house is leaning or something and it has not passed inspections. My words may be off but I do not remember having to prove I had the money to buy a house I bought for $945K. I wrote and offer and the offer was accepted. The "I can't get any deals with out proof of funds" seems like a statement that is NOT based on experience, and the, "...and I can't get proof of funds without having a deal under contract" sounds ridiculous! If I have money in a bank and I go to that bank and ask for a statement stating that I have this money in my account such a declaration is easy to get AND it actually is less strong than my own bank statements on that same account that shows the money is aged. Sounds like this is a case of trying to pretend when pretending is not the answer. "Completely stuck on this one" ??
There's more, "I found a deal through a listing and am planning on wholesaling it but of course I can't submit an offer without having proof of funds". It seems like the potential with a house that is leaning may be be found in consulting with a foundation company or a house moving company. Talk to these people and get a price for fixing it all and then do whatever else a real buyer would need to do. Armed with this make your way to the owner and present a well-written offer without any contingencies.
Packaged correctly the owner of the property may want to proceed with you. Get the right paperwork signed and give them something to seal that the offer is accepted and you may have something to sell.
You need to do some legwork and apply some real creativity and followthrough.
In closing:
She writes: "I like the ideas of having the funds to back me in any case so I am glad I am learning this now, but how do I go about this?"
You can pull this off without 'having the funds to back me' and in doing so you will show people (esp., those with money) that you have a certain set of talents, and that itself will attract funds.
0 Reply
Nghi Le
Investor / Lender · Seattle, WA · Member since 2014 · 1k+ posts · 730 votes
8y
@Carlina Burford
There's no need for transactional funding in our state because nobody here does double closings (due to the excise/transfer taxes); the wholesalers just assign the contract.
Also, there's never a need to pay for a POF letter like @Dustin Frank mentioned... they're pretty easy to come by. I definitely don't recommend COGO as a lender as they're pretty expensive. We have plenty of hard money lenders in our state (I've borrowed from 15 of them myself). If you need referrals for a local hard money lender who can give POFs easily, feel free to PM me. You normally have to be pre-qualified in order to get the POF, but you don't need to have a deal in hand to do that.
@Jon Holdman A lot of wholesalers in our state tie up deals off the MLS at really low prices and sell them at a price that's still below listing. That still adds value and I don't mind paying a good negotiator a fee.
Also, I know we've argued about hard money not being considered a cash offer, but in our state it pretty much is. POF letters will work for cash offers. Every flipper I know that uses hard money will check that cash checkbox under the financing option. And most flippers here use hard money because they can't buy an ugly, moldy, unlivable, 700 sqft house for $400k in cash.
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Carlina Burford
OP
Graham , WA · Member since 2018 · 11 posts · 4 votes
8y
Originally posted by @Nghi Le:

@Carlina Burford
There's no need for transactional funding in our state because nobody here does double closings (due to the excise/transfer taxes); the wholesalers just assign the contract.
Also, there's never a need to pay for a POF letter like @Dustin Frank mentioned... they're pretty easy to come by. I definitely don't recommend COGO as a lender as they're pretty expensive. We have plenty of hard money lenders in our state (I've borrowed from 15 of them myself). If you need referrals for a local hard money lender who can give POFs easily, feel free to PM me. You normally have to be pre-qualified in order to get the POF, but you don't need to have a deal in hand to do that.
@Jon Holdman A lot of wholesalers in our state tie up deals off the MLS at really low prices and sell them at a price that's still below listing. That still adds value and I don't mind paying a good negotiator a fee.
Also, I know we've argued about hard money not being considered a cash offer, but in our state it pretty much is. POF letters will work for cash offers. Every flipper I know that uses hard money will check that cash checkbox under the financing option. And most flippers here use hard money because they can't buy an ugly, moldy, unlivable, 700 sqft house for $400k in cash.
Thank you Nghi!
1 Reply
Carlina Burford
OP
Graham , WA · Member since 2018 · 11 posts · 4 votes
8y
Originally posted by @Warren Currier:

Carlina Burford wrote about a house she saw listed somewhere and then the conversation became all about funding. Perhaps I'm really out of it but I don't understand how one NEEDS to prove that they can fund a deal in all cases. Are we simply assuming that she'll need to prove that she's got the money to buy the place? Somewhere I read (ie here) that this house is leaning or something and it has not passed inspections. My words may be off but I do not remember having to prove I had the money to buy a house I bought for $945K. I wrote and offer and the offer was accepted. The "I can't get any deals with out proof of funds" seems like a statement that is NOT based on experience, and the, "...and I can't get proof of funds without having a deal under contract" sounds ridiculous! If I have money in a bank and I go to that bank and ask for a statement stating that I have this money in my account such a declaration is easy to get AND it actually is less strong than my own bank statements on that same account that shows the money is aged. Sounds like this is a case of trying to pretend when pretending is not the answer. "Completely stuck on this one" ??
There's more, "I found a deal through a listing and am planning on wholesaling it but of course I can't submit an offer without having proof of funds". It seems like the potential with a house that is leaning may be be found in consulting with a foundation company or a house moving company. Talk to these people and get a price for fixing it all and then do whatever else a real buyer would need to do. Armed with this make your way to the owner and present a well-written offer without any contingencies.
Packaged correctly the owner of the property may want to proceed with you. Get the right paperwork signed and give them something to seal that the offer is accepted and you may have something to sell.
You need to do some legwork and apply some real creativity and followthrough.
In closing:
She writes: "I like the ideas of having the funds to back me in any case so I am glad I am learning this now, but how do I go about this?"
You can pull this off without 'having the funds to back me' and in doing so you will show people (esp., those with money) that you have a certain set of talents, and that itself will attract funds.
Warren, once again you have given me a lot of insight. And I thank you for that. I AM a newbie with very little experience which is why I come to Biggerpockets to get advice, and figuring out which way to go at times can be tough. I had looked through other forum posts to see if anything related to the question I had and didn't really find anything, so I posted my own question. I am not afraid of the legwork, so giving me that direction to go is amazing. That will be my next step. Thank you again.
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