hard money- proof of funds?

Question

Hi,

I've been doing my reading on hard money for fix and flip investing and have 2 questions.

1. How do you show proof of funds when using a hard money loan

2. What name is the contract written in?

thanks

Guy Gimenez · Answer

@Lee Schram

Unless you're splitting the deal with an HML, you won't generally have proof of funds. Some online HML's will allegedly provide POF if you "register" (ie. pay a fee) with their company.

The contract goes in the name of the purchaser, the purchaser's LLC or other purchasing entity.

Jon Holdman · Answer

If you're buying with a hard money loan, write the offer as financed, not cash.  Cash means you have the cash to close.  A hard money loan is still a loan.

Eric Munson · Answer

@Lee Schram - apply with a HML and when approved you will get a pre approval letter to submit as POF. Cash offers go to the front of the line though. You will need some cash for down payment to have skin in the game. I have relationships with lenders that will fund 100% of purchase but that comes with time and trust.

Lee Schram · Answer

thanks Rob.  I purchased and read Jay Scott's books on flipping.  My next read will be Brandon Turners, "The Book on Investing in Real Estate with No and Low Money Down"

Rob Matthews · Answer

I believe you can get 100% financing of the sale price and rehab costs if you have a great deal and the numbers support it.  Collateral is the name of the game

Rob Matthews · Answer

Lee

I have been doing some research on Hard Money Lending and have come across a couple of good books.  Chapter 5 in Brandon Turner's book "The Book on Investing in Real Estate with No and Low Money Down" covers the topic pretty well.  Another book that may be helpful is Lee J Carney's "Four Step Guide to Private Lending Profits".  However, this one is from the perspective of the HML.

Rob Matthews Pittsford NY

Jon Holdman · Answer

Hard money lenders are highly varied in their guidelines.  Most are small companies that match their terms to meet the local market.  Some will go over 80% of the money you need if you have the right deal.  Some require you to have some of your cash in the deal regardless of the numbers.

Lee Schram · Answer

thanks everyone for the responses.

What is the typical skin in the game requirement? 20%?

I've come across a few articles on hard money lending on BP.  Does anyone have one that discusses the process?

Thanks

Ken Sheppard · Answer

Great Thread. We provide the proof of funds in the form of a letter from our lawyer that we have the capacity to enter a transaction. I do not like using a bank statement because it can be altered. We have had this happen. The attorney letter works great. Always purchase the properties in the name of a corporation or similar structure for your asset and liability protection.

Eric Munson · Answer

Don't know why that posted twice.

hard money- proof of funds?

Most Popular Reply