Proof of Funds/Pre-approval

[Bruce Thomsen]

Hi Team! Thanks in advance for your feedback. My brothers and I own a few SF's and are now looking at MF's. We are activity looking at 3+ family properties. We have been deterred from certain properties because they say that POF or pre-approval is required for showing or to make an offer.

Should we get pre-approved? Also, I found it difficult to go back to our investors and sell them hypothetical opportunities. 

We are now getting close to making some offers and would also like to see a couple of properties that have those requirements upfront.

How do we get around those requirements or show proof of funds that we don't have but will obtain from our investor pool? 

Any type of guidance or feedback from the BP family would be greatly appreciated!! 

[David M.]

@Bruce Thomsen

I don’t understand. How do you plan on funding your purchases? You say you have investors. Will it be a pure cash deal? Or, lots of cash with financing?

If the former, then your Proof of Funds is a bunch of bank/brokerage statements (with A/C removed).

If the latter, you need to have get your financing in order anyway. So, get your ore-approval letter. You will need it anyway so get it. I don’t know how it works in every State, but generally when you make an offer you are representing that you have sufficient funds to close. Well, if your financing isn’t in order then you may not be representing yourself correctly.

You realize the dilemma from the seller’s side, right? Anybody can make an offer, but not everybody can actually afford to close. Hmm... think it about it this way: when it comes time for you to sell one of your properties, will you take the offer who has PoF? Or the guy who tells you to “trust them?”

Quick story about a “trust them” situation. Couple said they have great credit so we didn’t need to know about their finances. They had the money and could get a mortgage no problem. I got a call next day that they filed for an extension on their taxes. A month later they were still working things out with their accountant. Glad I didn’t “trust them.” Remember, many people think they know what it takes to get fianacing, but really they don’t...