Proof of Funds POF Flip

13 Replies

I am very close to starting to submit offers on REOs that I intend on rehabbing. I have an investor willing to put up cash for for the purchase and rehab of said properties.

My question is how do I go about submitting POF with my offers. Is it as simple as getting copies of my investors bank/brokerage statements with a signed letter of intent to lend. If so does anybody have an example letter/form that they use.

Its really not that hard. Before I got a certain software that many people on BP dont like, I used this site

They'll give you a POF letter. Now if your looking to just submit a letter to the bank saying that your "investor" is going to put up the cash, it just a simple letter that says, "investors name/company" is putting up "xxx" amount of dollars to fund the property at "address".

I suggest getting one from that site emailed to you, then copying it in your own words or put his info on it as the provider.

Good luck and hope it helps.

AND no im not an affiliate of that site. I just use to use them when I first started; I wont make one single cent for you clicking that link.

I know how the admins on here dont like affiliates

Dennis thanks for the reply, but my investor is a private citizen. Is any bank really going to consider a letter that says "John Doe is putting up $xxx to fund the purchase of this property" without actual proof John Doe has any money, or am I over complicating this.


Most sellers will want to see actual proof of funds such as a bank statement.

No Letters. No forms. Simply print a bank statement showing there are sufficient funds to make the transaction. You can white or black out the account number. A lot of investors purchase property in an LLC, or their wife's name or whatever and it isn't the name on the bank account. They will also accept a letter from a bank stating so-and-so has this much money in an account.

Should I have my investor provide me with a bank/brokerage statement (account numbers blacked out) and a letter stating the he is going to put up the cash for the transaction. and submit those two documents with my offer. BTW this is for a fix/flip purchase so I plan on closing and rehabbing the property. this is not a wholesale flip.


What you have in your last post should work. The "lender" you use will need to show that the lender has sufficient funds to cover the amount of the transaction; this is his bank statement(s) with account numbers unreadable to protect privacy. Then, the letter from this "lender" that states that there are funds available for use by "investor" (but you should name the person or company that will be getting these funds to use).

Basically, you need to show where the money comes from, and how it moves around to get to the closing table.

As an REO broker, one of my biggest concerns is having a buyer make an offer that they really don't have the cash to close. Most of my sellers will happily take a bank statement from your investor along with a letter indicating that those funds are available for your use. Usually these docs need to be dated within the previous 30 days.

One thing to note here... If the letter from your investor has a bunch of conditions, such as the property appraising for a certain amount after repairs or the estimate for repairs being under a certain amount, then the seller will likely consider this to be a "finance contingency". Then your offer will be considered the same as offers contingent upon mortgage financing and you lose the power of being a cash buyer capable of a quick closing.

Hope this helps...

Andy, that makes perfect sense to me. My investor is not experienced in real estate investing (not to say I'm a seasoned pro either), and there wont be any conditions in the POF letter. The only conditions on the contract I could think to have would be a due diligence inspection condition, and a condition of free and clear title.

Those two conditions are not likely to weaken my offer any right?

Those are standard conditions that I would not enter into a contract without.

If you have a seller that won't let you do your own inspections and due diligence or have a clear title RUN don't walk from the deal.

Do brokers take POF from POF generators online? And if so, are the asset managers wise to the transactional lender POF letters now?

We have heard scattered reports that some asset managers are pushing back on POF letters from transactional lenders. But, since we verbally verify POF letters, we haven't had any sellers not accept a contract or turn down a deal because of it. Just be sure if you are going to use funding and your seller is touchy, disclose you are using hard money financing.

Of course there can always be exceptions, however, for the most part, you will need a real POF (bank statement, IRA statement, etc) showing cash in an account sufficient to close the subject transaction.
Letters from transactional funders usually do not fly for banks.

Also, the least amount of contingencies possible will better strengthen your deal. I often offer 10 day close times, no inspection contingency (I did that before I made my offer) and all cash.

For the OG posters scenario, your lenders bank statement with a letter from the lender stating that the funds in the account are to be used for the purpose of acquiring the subject property will do just fine. NOTE: Make sure you still check off the all cash offer and that the offer is not contingent upon your lender approval.

POF can be constitued by almost anything that shows verifiable funds allocated for the intent of purchasing specific properties in question. With that said I always suggest you get a trusted inspector with your interest at hand not the realtor/agent/seller if you do not have someone who you trust, find someone develop a relationship and designate his area of work (all inspections he would get) besides that you place the offer expiring within x amount of days you feel comfortable with and move forward if you feel comfortable, however you should make sure your investor is ready willing and able, I almost burned a few bridges when first starting out because of a few investors who got cold feet last minute.

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