To those of you utilizing HML, how do you go about providing POF with your offer?

Question

So to all of you out there that use hard money to buy your flips, are you making a cash offer or an offer to purchase with a mortgage? Someone asked me about this today, and I have no experience with this. The group I work for buys all cash and we just print a bank statement as POF to accompany the offer.

So someone putting an offer on a listed property (mls), do you call it a 'cash' offer or add a mortgage contingency? If you mark it cash - what do you do about POF?

J Scott · Answer

If you're buying from an institution (bank, for example), expect that a POF will need to be in the name of the buyer.  If you can't provide a POF in your name, it's a financed sale, and you should be providing a pre-qualification letter.  You can get this from your HML.

Chase Maher · Answer

Travis,

In my experience as a HML, and investing in real estate using HML's, they are represented as cash with no loan contingencies. The 'POF' would be a letter from the HML that states you are approved on X/Specific address, for up to X amount.

Simple, but hope that helps !

Jay Hinrichs · Answer

Account Closed

Here's what I like about small community bank.. and my relationship is different.

1. I know the president of the bank

2. my banker is the Senior VP and he has banked me 22 years so knows my financials better than I do

3. No customer service phone I call my gals they handle anything I need on the phone or when I stop in.. Branch is 3 minutes from my house I am there virtually everyday either wiring money or notarizing Deeds on properties I am selling .. .I buy and sell 10 to 20 properties each month..

4 I can use their copy machine to make copies of my huds.. I walk back to the machine and do it myself.

5. Customize Cashiers checks in any manner I need them.. they won't take the funds out of my account until I call them and tell them I negotiated it.  Although funds have to be there.

6. Unsecured LOC  a True one not a CC scam thingee.. in the mid 6 figures range.

7. mid 7 figures construction loans currently  ( try getting a construction loan from Chase)

8. A and D loan to build said subdivision  try getting one of these from a major bank

9. portfolio loans if I wanted them basically unlimited with 25 % down in the PDX market and 1.25 DCR... but I am not a buy and holder per se I am a buy and sell guy and actually selling the last of my rentals I only have 9 or so left

10.  Hypothecate notes if I need to pull cash  ( try explaining that to Chase)

on and on I like the personal service. and I like dealing with a business bank that totally understands the real estate investment world.

Now if I had 5 million in cash in Chase I would probably get the same treatment from their business center.. but never in a branch.

Jay Hinrichs · Answer

Account Closed

I make it out to the seller.. transmit a copy so they know I am for real.. then I take it back to my bank and put it back in.. when they accept I put the EM in and off we go

you NEED to bank like I do at my friendly community bank..

Travis Lloyd · Answer

@Jay Hinrichs I use a copy of bank statements for POF as well, and I agree, it is the stronger way to go.

My question actually came from someone I had lunch with today, and while I did not know the answer, I told her I knew where to find out... hence the post here on BP! So thank you everyone for the answers, I will pass it along!

Jay Hinrichs · Answer

@Travis Lloyd

we always present copies of bank statements much stronger than so and so is approved for a loan subject to final review of financials blah blah blah..   And if I really want the deal I go get a cashiers check make copy of same and present that as my POF.. that's strong dude

Jay Hinrichs · Answer

Account Closed

I can wire from home as well.. and I am one of the few that does not have or use a ATM card I am old school I go the bank and get cash ...

Also what is really important to me.. Is when I move money I do it on the phone and my banker then puts a memo on the transaction line.. so my bank statement when it comes out there will be a memo next to each movement of money.. helps me remember what the heck I did  LOL

Account Closed · Answer

@Jay Hinrichs

I hear you.  I'm not quite where you are financially but I'm sure there are advantages to community banks for everybody.

In defense of bigger banks, I think they tend to be slightly more technologically advanced.  I was talking to the Chase rep the other day, she was telling me there is talk about having those inside ATM machines print cashier's checks without a real teller being present.  Bigger banks are omnipresent, you can find one no matter what town you are in.  I can wire from your desktop computer, no need to go into the bank, although I think all banks have this now, big and small.

If you hit FDIC insurance limits it's nice to have more than one bank so you can spread the money out and be covered...although it is a pain to have money so fragmented.  Having more than one bank allows you to move money easily ... when one bank makes you mad it's easy to move to the other and when that one makes you mad you can easily move back:)  I guess they aren't as accommodating to me as they are to you.

Account Closed · Answer

@Jay Hinrichs

Good idea, thanks.

I know banks can really be a pain.  I'm with Chase right now, so far they have been fine.  I can get as many cashier's checks as I want for free and they haven't pissed me off, yet.  And they are all over the place, which is very convenient.  I'll try this cashier's check thing next time and see how it goes.  I've been with many banks through the years, they all eventually do something to make me move.  What can a small community bank do that Chase can't.  The only thing I can think of is maybe portfolio loans to an entity and maybe a little more flexibility with loan terms.  BofA is the absolute worst, it's in a class of its own.

Account Closed · Answer

@Jay Hinrichs

If you are the buyer I can see that working, cool idea.  My situation is a little different, I'm the lender and my borrower is a rehabber, and he needs a way to show POF.  I have a couple snappy ways of accomplishing this and maybe I can add your cashier's check to the seller routine to my repertoire.  The only problem I can see is that whenever I get a cashier's check the bank seems to want my name as remitter thus possibly giving away the true owner of the money.  Do you see a way around this?  Or is it even an issue?

To those of you utilizing HML, how do you go about providing POF with your offer?

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