Help! POF letters

It sounds like you are not quite ready to do business. You have no money so therefore you need to wholesale. To do this effectively you must have real, active buyers to flip to.
If you are getting these properties at a really great price you can use the POF letter for a GOOD Transactional Fund provider to get the property under contract. Then try and wholesale the property to a cash buyer and double close or get the property under contract in a LLC and sell the ownership of the LLC or quit claim the property over to the buyer that funds your deal after closing. If your contract is assignable than of course you would simply assign the contract. During this process you will build your buyers list.

Can you do this? Do you have the team members in place? Investor friendly title company, attorney, TF lender, etc. ABOVE ALL, can you accurately evaluate a property and present the deal to a cash buyer? Real ARV and rehab/remodel costs? Then base your offer on the real numbers, get it under contract and flip it to a buyer for your fee?

Me, I tell my agent that I fix/flip and fix/hold and I have a group of investors I work with. I will close using cash or funding from a third party non institutional lender. I don't tell them I have no money and will only close if I can find a buyer.

Along with the POFs, you will need to supply a copy of an earnest money check. If the offer is accepted you will need to come up with the earnest in 48 hours. How are you going to do that?

You have work to do and some thinking about how this process works in the real world.

Good luck and take action!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Michael is right!

Is the transactional funder Coastal Funding? They don't have a good reputation, from what I've heard. You shouldn't have to send in a POF with each & every offer, unless it's required, and they should prove it in writing, or show you in the "remarks" section. If they ask for one, it's usually for bank reo's, or the occasional home owner

I'd have the agent HOLD the em check or a copy of it (not deposited in trust) until after your successful inspection period. Keep in mind, that won't work for Fannies, Freddy's, Huds or most gov't properties, as they want liquified or certified funds (Cashier's checks), even though you get an inspection period (unless others know a work-a-round). Just about everything else is pretty much fair game.

I will get on with building my buyers list and my power team immediately.
I'll tell my agent what you said and see if that will buy me some time.

see link below

This is wonderful thanks again for this post

Hi Rick,

Just curious if you have any update on this? Did your agent accept the POF letter?

Good luck!

- Tom

Michael pretty much summed it all up in the post above; I would print it and place it where you can see it all the time until you get a deal or two, and know the steps by heart...

Also, once you have solid buyers on your list, you can easily provide a copy of a check for your EM, and not have to worry about it because your buyers will put up the cash when it's needed...

Good luck!

Hello Rick,

Thanks for all the good information you share here in this site.

These links that you shared below, I checked on them and is a good source of POF, however you have to put in a $1000 which is refundable upon your 1st deal.

The other sites talked about the help to have a list of buyers and sellers as well as bird dogs, are these websites affiliated to each other as they all starts with MD.

Thanks for the info.

Shirley

Important points have been made in this thread about POF letters, and they do have to be accepted by whomever is accepting your offer and their title company.

There are a lot of people that say that real estate can be purchased with no money down, but the point came up here that one still often has to have earnest money, there are costs to building a buyers list, and often hard money lenders and others charge fees for their products and services, including Dean, so purchasing houses and flipping them with "no money," really isn't reality except for in rare circumstances when people will really pay you to take properties off their hands.

The POF letter I got from BestTransactionFunding.com seemed to work for my agent and I was able to use my $100.00 check for the earnest money. Unfortunately, after the seller sent me their disclosures, I noticed they had cut my inspection period down from 10 days to 5 and crossed out the section of the contract that says that the home's systems (heat/air, plumbing, electrical) was in working order and wrote "as-is" beside the clause. Of course, we all look for properties that need work but something just didn't feel right. So I kept reading over the contract, and I saw on the back page they had indicated the property needed foundation work and that the roof had not been changed in the 12 years they had the property and that there had been roof leaks and some water damage. I know that means that there is more than likely mold issues too. The ARV is around 120k and I had offered 57,600 for it. I could have gone back and dropped my offer significantly, but I decided that with that much work on my first deal, it would be best to just withdraw my offer entirely and just keep looking.
Thank you guys for all the help you have given me and I wish all my DG family good luck.

Hey Rick,

Unless you have Rehabber Buyers on your buyer's list, ready to move, your gut was right to walk away. With the cost of those hidden heavy repairs, it changes the numbers and the spread significantly. Ethically speaking, the sellers had to reveal the condition of the house and it would've shown at inspection. Major foundation and roof repairs are expensive. The discount on the property would have had to been pretty deep.

Ideally, you want to have your team set in place prior to making offers on major rehabs. Join an REI Club. There you will find rehab investors, contractors, and vendors who look for deals like that one!--Your job is to negotiate a deep discount. Go to their meetings. Take a notepad w/you and capture their contact info. Build the list. Network/mingle with other investors! Tell them what you can do for them. Find deals for all of them. Make some moolah.

PS. Build your team there, too, so you can have your contractor walk the properties WITH you when you view them. He will tell you what you're looking at on the spot--(BEFORE you make an offer!) Nothing formal, just off the top of his head. (If he's good). He's your "associate." Then, you can run your numbers and decide whether an offer is in order. This will save a lot of time.

Thank you for the advice. Right now the only REI club where I live meets at a time that I can't attend. The other group no longer meets at all.
But I'm still marketing to investors using the "yellow letters", Linkedin and Craigslist.
Right now, I'm working Matt Larson's 25:1 strategy and running the numbers on properties that meet the right criteria. I don't inspect them unless the offer is accepted. Then if the inspection shows more repairs than I had allotted for, I will lower my offer price. This way I'm not out running around all over town trying to inspect every property I make an offer on.
Right now I'm waiting for my agent to send me the comps on about 8 more properties so I can run the numbers and make some more offers.
Good luck to all and happy hunting.

Rick

Sounds good Rick. Keep up your great efforts!

I like your Og Mandino quote...

PS. Many of the REI clubs have interactive websites besides their physical location from which to network. Search online.