Convert Your Cash Buyers to Private Lenders

Hi Dallin,

I'm just starting out, I'm a realtor in NY and now live in Charlotte, NC. Pls advise me on how to get a POF letter to present with my offers. I looked into transactional funding companies. It seems as though they want you to have your end buyer in place. Which I don't yet. Due to I have to have a good deal under contract before presenting to buyers.

Any help would be greatly appreciated.

As it has always been, Real Estate Investing is a moving target, with laws, regulations, expectations, etc. always changing.
Proof of Funds letters are a generalized statement of funds availability. In most cases those are acceptable. People who have enrolled at various levels in Dean's training program obtain POF letters from Americancashfunding.com. There are also other sites that offer these as a free service, such as besttransactionfunding.com.
Sometimes you will discover that either your real estate agent, the seller's real estate agent, or the seller (which could be a lending institution or government agency in the case of an REO/foreclosure property)is requesting more than a POF letter. It may be the insecurity of an agent showing through, or a policy from their brokerage to try and get more offers accepted, or it may be a requirement of certain REO programs to try to weed out offers that are not well qualified. In markets where there are competing offers on properties, the terms and the "strength" of the offer are often used in determining which offers to accept.
Please note that obtaining a Proof of Funds letter is NOT the same as applying for funds. Transactional funding lenders offer POF letters as an automated feature that simply requires you to input the required line items, including the address of the property you are making an offer on, and then clicking submit. These letters are free, they will do them for each property you want to make an offer on, and they do not care if you request 10 or 10,000 of them. If you are obtaining an example POF letter to present to a real estate agent, you will need to supply an address of a property, but it can be your own property, or that of a friend or relative.
In some instances, a Verification of Deposit (VOD) is preferred over a POF letter. This is an actual bank account record showing available funds within 30 days. It is possible to obtain a VOD even if you do not have a cash buyer for a property lined up, but there is usually a cost involved with obtaining this particular document. Also, if you begin working very closely with one of your cash buyers, over time it would be appropriate to request from them a VOD that you can use in making offers, and which they will update on a monthly basis. If you are making lots of money for them by providing pre-negotiated deals, they will probably be happy to help you out a little in acquiring those properties for them.

Of having your buyers also become your lenders, but you've taken it to new heights! Thank you for sharing. I also did not know about VOD! Great info!

the breakdown again on the 20% for four buyers, right, but doesn't that mean for me to be a 20% partner I also need to put up the same amount of cash, ....confused?

I will look into those TF companies for a POF letter. I know as a realtor we call to verify funds from lender. I understand with most TF companies they don't answer phone to verify funds. Also, I'll look into VOD's. In the future when I established a working relationship with one of my investor's, I'll see if they're willing to provide POF letter.

Thank you for all the help!

If you are not licensed to sell securities, or your source of private money is not licensed to lend, private money is a little more complicated. Don't get me wrong. I am not saying it can't be done. To do it legally, federal and state securities laws and their exemptions need to be addressed. Typical legal fees for a syndication can run between $12,000 and $20,000 to comply with federal and state securities laws and filing requirements for the offering. People do illegal private money transactions every day for one of two reasons...they don't know, or they don't care. You can do yours legally or illegally, your choice. But now you may have an idea why hard money lenders charge 4-6 points and 15% interest. You can pay them to comply with the laws, or you can take it upon yourself to comply with the laws. Just remember, nobody complains about an illegal transaction until it blows up.

Femailceo, thanks for your comments. To participate in a transaction as a partner, one must supply something of value that is accepted by the other partners as good and valuable consideration. If the deal is good enough, and you found it and will manage the arrangements, I think you will find no resistance from your partners.

TRSD, thanks for adding your valuable comments on doing things legally. Our objective in training is to always direct people to do things legally, ethically, and morally. And don't even walk close to the edge, it is too easy to fall over.
In using money from a cash buyer to finance a transaction, we absolutely want to comply with laws, which would either require that the transaction is done in conjunction with all applicable securities laws, or that the cash buyer become a money partner in the venture you are undertaking.
While my comments are designed to open your minds to other ways of seeing the potential of relationships and leverage, I am grateful for the addition of comments that contribute to the mechanics of legal, moral, and ethical transactions.

Hi All,

I looked into the 2 TF companies and you either have to be a Corp,LLC or for Americancashfunding a member of one do Dean's programs. Since I don't qualify under those terms, is there another source I can get a POF.

I really need help, I informed my realtor I wanted to make an offer on a property. I have to submit POF with offer.

Pls advise.

Ms. Monique, try going into besttransactionfunding.com, into the Proof of Funds section, and opening the Proof of Funds fill-in page. Admittedly you do have to fill in an LLC or other entity name, but the bottom question asks you if you want to have the letter published with Your Name, Your Company Name, or Both. SO, your solution is to till in a fictitious company name to fulfill the requirement of the fill-in box, and then check to have your letter published in your name, and NOT your company name, and no one will ever see the name that you filled into the box.
This may seem a little convoluted, but it will get you your POF letter, in your name, with no reference to a business entity included.