Lombard, IL · Member since 2013 · 25 posts · 0 votes
I've found a wholesaler that has a house at a good price in the neighborhood I am interested in. But before he will do anything I have to provide pof. I was going to use a hard-money lender, but they need all the numbers on a house.
It's like a chicken and egg thing, I can't get the pof until I look at the house, I can't look at the house until I have pof.
I think you might be confusing proof of funds with a pre-approval letter.
Proof of funds is used when you are making a cash offer to show that you already have the cash in your account required to complete the purchase.
If you're using a hard money lender, that usually means you do not have the cash and are making a financed offer. In which case, you would generally get a pre-approval letter (or letter of credit or whatever term your hard money lender uses) from the lender to show their intent to finance the purchase.
Tell the seller what you intend to do. Put a time limit to getting the POF. Honesty should do it. If not, move on. :)
Tried that, explained that I have flipped before (true) and that I intend to use hard-money (true). He said that his owners want a cash offer and don't want to be bothered by anyone that does not have cash.
I think you might be confusing proof of funds with a pre-approval letter.
Proof of funds is used when you are making a cash offer to show that you already have the cash in your account required to complete the purchase.
If you're using a hard money lender, that usually means you do not have the cash and are making a financed offer. In which case, you would generally get a pre-approval letter (or letter of credit or whatever term your hard money lender uses) from the lender to show their intent to finance the purchase.
Thanks for the reply Kyle.
They definitely want a cash offer. We do have the funds in an investment account that we can pull out if we have to. I could see if I can get the POF letter from the fund manager, look at the house then get the hard money involved.
If the sellers are demanding a cash offer and you're not able to offer cash, I'd just move on. Like you said, it sounds like they're not (yet) motivated enough...
If the sellers are demanding a cash offer and you're not able to offer cash, I'd just move on. Like you said, it sounds like they're not (yet) motivated enough...
Wow! A response fro J Scott! I'm honored, I've spent a lot of time on your site and I've been impressed by your work.
I agree, they are just not motivated enough. But this is not the first time I've heard this and I'd really like to get working on another house. I've only done 2, but I enjoy the work.
Originally posted by @Matthew ReedThanks for the reply Kyle. They definitely want a cash offer. We do have the funds in an investment account that we can pull out if we have to. I could see if I can get the POF letter from the fund manager, look at the house then get the hard money involved.
How about show POF by offering a statement from the investment account, but use your HML to close? I did this a few years back on my primary... Used 401k statement to show POF but ended up using reserves from my savings as my source of downpayment.
Originally posted by @Matthew ReedThanks for the reply Kyle. They definitely want a cash offer. We do have the funds in an investment account that we can pull out if we have to. I could see if I can get the POF letter from the fund manager, look at the house then get the hard money involved.
How about show POF by offering a statement from the investment account, but use your HML to close? I did this a few years back on my primary... Used 401k statement to show POF but ended up using reserves from my savings as my source of downpayment.
Thanks for the reply Scott. I think I'll contact my investment manager and see if I can get that done. Some is a 401K, some is not (profits from other flips). Surely that will work.
I don't know if you need to contact your investment manager to get the POF. In the past I've just taken a screenshot on my computer screen of my bank account balance and that has been sufficient for even one of the big 5 banks on a short sale.
If the sellers are demanding a cash offer and you're not able to offer cash, I'd just move on. Like you said, it sounds like they're not (yet) motivated enough...
I agree, they are just not motivated enough. But this is not the first time I've heard this and I'd really like to get working on another house. I've only done 2, but I enjoy the work.
Note that I said "yet"...
Call back next week (and the week after and the week after and...) and see if they've come to their senses.
Perhaps even write up an offer for full price with a 3-day inspection contingency -- this gets something in writing in front of the sellers, and stuff in writing tends to get much more serious consideration than something verbal.
Or, as others have suggested, try finding the cash to make the purchase and then do a refinance to recoup the cash and pay back the lender.
If you have funds, just don't want to use them, make you cash offer and show your statement. You can still borrow the money and close, allow time for inspections to give yourself time. There is the risk you don't get the loan, better ask first, if not, use your funds and refi later. Better to get funds as purchase money than as a refi as your qualifications/loan terms can be different. :)
I don't know if you need to contact your investment manager to get the POF. In the past I've just taken a screenshot on my computer screen of my bank account balance and that has been sufficient for even one of the big 5 banks on a short sale.
If the sellers are demanding a cash offer and you're not able to offer cash, I'd just move on. Like you said, it sounds like they're not (yet) motivated enough...
I agree, they are just not motivated enough. But this is not the first time I've heard this and I'd really like to get working on another house. I've only done 2, but I enjoy the work.
Note that I said "yet"...
Call back next week (and the week after and the week after and...) and see if they've come to their senses.
Perhaps even write up an offer for full price with a 3-day inspection contingency -- this gets something in writing in front of the sellers, and stuff in writing tends to get much more serious consideration than something verbal.
Or, as others have suggested, try finding the cash to make the purchase and then do a refinance to recoup the cash and pay back the lender.
I like the 3-day contingency idea. I actually contacted this wholesaler a week ago and he said they "had to have cash in 3 days". Well, now its 7 days.
MAKE AND OFFER .. and send your asset statment to them as POF with the offer. Sellers ( and investors) respond either way postive or negatively TO OFFERS. Its a call to action. * If you have the money & intend to close or have a buyer/investor lined up to take it from you and the spread is right, send an offer. Then rinse and repeat. After 1 or 2 deals he HM Lender will give you whatever you need to show you are well financed and CAN SHOW THEM THE MONEY.
As a newbie, buying from a wholesaler and using a HML for funding sounds like a cocktail of something I'd be wary of. Both these professionals are very unforgiving if the deal does not go like clockwork, so let's ask you this @Matthew Reed, are you ready to dive in at the deep end like this? Is this deal that good?
As a newbie, buying from a wholesaler and using a HML for funding sounds like a cocktail of something I'd be wary of. Both these professionals are very unforgiving if the deal does not go like clockwork, so let's ask you this @Matthew Reed, are you ready to dive in at the deep end like this? Is this deal that good?
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I don't know, I can't see the property. The wholesaler states that there is a 60K buffer, the comps look that way but I don't know what is inside.
It's in a pretty hot area, which also makes me suspicious. I know there are other investors in this area, why haven't they snatched it up yet?
Maybe I should go to some people in the local REI club and ask for partners.