Hard money application

[Will Moore]

I have recently received some real estate investment training and they have been telling us in class that to satisfy hard money lenders, all we have to do is to submit an app, get approved and print off the proof of funds letter to show we have available funds for the transaction. 

I just found this statement from one of the investor websites and it has been pretty much what I was thinking since the beginning. When they told us how to get a proof of funds letter in class, it seemed kind of sketchy.  Will someone who has gone through the process read the statement below and let me know if you agree? Because it sounds more realistic than what they told us in training. It seemed they tried to make parts of this whole process easier than it actually is. Trying not to be pessimistic, but don't want to be naïve either.

Thanks

"It used to be that you could get a letter from a transactional funder and use the letterhead as proof of funds and they would accept it. Nowadays, it’s few and far between that a broker will accept a letter like that. They know that they are easy to get and that you can buy them on the internet, so what’s the point?

Nowadays, most REO brokers want to see a copy of a bank statement with an amount of money in it or they want to see something that’s printed off a statement of an account where funds are actually held".

[Andrew Davis]

Hey @Will Moore, welcome to BP!

You've received some great advice from @Karen Margrave, @Jon Holdman and @Matt Mortensen.  

I purchased my first investment with hard money, and it can be a great tool.  It sounds like you may have fallen into the guru trap:  http://www.biggerpockets.com/renewsblog/?s=guru

Don't be discouraged, but know that your instincts are correct. It is unethical to use a POF letter that doesn't represent what you actually have in the bank.

I assume that they're telling you to do that so you can start wholesaling with no money?

Your instincts are correct again, it is not as easy as they tell you.  And again, don't be discouraged by that, just know that it will take hard work to achieve your financial goals.

I would strongly suggest networking with some local BP investors in Dallas.  On the most recent podcast with @Brian Adams, @Brandon Turner gives a great suggestion for people who are just starting out:  Find an experienced and successful investor, and help them build their business by taking on some of their workload.  Definitely worth a listen.

Here are a few more tips to help you get the most out of BP and get a head start on your REI journey:

Start here. You'll get a wealth of REI knowledge and learn how to take full advantage of Bigger Pockets (including how to connect with other investors).

Listen to the podcasts , get active on the forums & set up key word alerts to be notified when people are discussing topics you're interested in. 

I wish you all the best Will!