Dallas-Fort Worth Real Estate Investor Club

Proof of Funds

  • 28 Aug 2012 11:16 AM
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    Message # 1058682
    Michael Mixon
    I'll start this question by stating that I"m sure this question, or a similar question has been asked before, but I'm not able to find a way to search through previous threads so I appologize for asking a question I'm sure has been answered.

    My issue right now is that I've been in contact with a Buyers Agent that really wants to do some business with me.  He's a nice guy, and I believe he'd work hard to find deals so we can both make some money, but he is insisting that I have some form of Proof of Funds before making offers to the selling agents.  I understand this is common practice for the average Joe buying a house, but I'm not sure my guy has a full understanding of what I'm trying to do as a wholesaler.

    So my question is, how, if at all, do wholesaler have a POF when going into the deal, they don't plan on actually purchasing the property themselves (and yes I understand some consider this to be not to the standards of the letter of the law.)  Is there a way to either obtain a proof of funds saying I'm capable of purchasing the property, even if I don't intend to?  OR, is there a trickety trick for getting around the POF issue altogether?

    My guy has recommended that I could get a POF in the name of the investor that I plan to flip the contract to, but I'm not sure he fully graps that my buyers list has over 20 individual investors, along with several "mass buyers" groups such as the Property Listing Service on this site, along with others.  If I only had 1 buyer that I knew would purchase any good deal I brought to them, this plan may work perfectly, but not knowing who the final buyer will be when I make the offer, makes this plan a little difficult to work.

    Any advice would be appreciated.  I'd work with this gentleman if we could get around this issue, but if there's no way around it, should I just go my separate way from him?  Should I contact selling agents myself and try to work the deals straight with them, with the understanding I'm going to flip the contract and not ever have a POF?
  • 29 Aug 2012 8:59 PM
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    Reply # 1060092 on 1058682
    Deleted user
    Michael,

    I STRONGLY suggest you find an alternative solution. 

    When you state the equivalent of "I am planning on putting a home listed on the MLS under contract, that I cannot and do not intend to buy," you are telling the world "I am planning on committing fraud. Investors, especially wholesalers, tend to quickly gloss over this issue, but the Law is the Law and ignorance of it is no protection.  

    Which is exactly why Buyer's Agents require POF letters. 

    If you cannot prove you at least have the ability to buy a home (which is easily provable by document subpoenas), they (Realtors) can get into BIIIIIG trouble with TREC for facilitating a fraudulent contract. 

    One solution you might consider is partnering with another investor whereby you do the work and they provide the funds (and PoF Letters) and y'all equitably split the proceeds.

    -Greg

    Greg Wilson
    The REI Mentor
  • 30 Aug 2012 10:19 AM
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    Reply # 1060580 on 1058682
    Michael Mixon
    Thank you Greg, I knew you'd say something of the sort. :)  I guess I'm going to have to proceed without a buyers agent until I have the funds to start purchasing my own houses.  Of course if I talked to a Hard Money lender, got approved for a loan, and provided my own POF, would that satisfy the law?  Even if I still plan on wholesaling?
     
    Last modified: 31 Aug 2012 1:13 AM | Robin Carriger (Administrator)
  • 31 Aug 2012 7:29 AM
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    Reply # 1061521 on 1058682
    Deleted user
    I thought I replied to you yesterday. I am interested in talking with you. I would provide transactional funding for deals like this. I think you would find it a better option than hard money.
    email rjsuproperties@gmail.com or 817 798.7444.
    Last modified: 02 Sep 2012 11:08 AM | Robin Carriger (Administrator)
  • 01 Sep 2012 7:19 AM
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    Reply # 1062239 on 1058682
    Deleted user
    Michael,

    It doesn't matter where the funds come from, as long as you have the ability to purchase. Jean, Robin, I (LOOOOTS of others) provide transactional funding. Terry Weakley provides hard money loans. You can do a cash-out refi on your house, partner with someone else (you do the work, they provide the $$$), doesn't matter. 

    If you have questions, just ask.

    -Greg

    Greg Wilson
    The REI Mentor
    Last modified: 01 Sep 2012 7:19 AM | Deleted user
  • 01 Sep 2012 8:20 AM
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    Reply # 1062269 on 1058682
    Michael Mixon
    Thanks Greg, you guys (and gals) are always so supportive.  In a partnership such as you speak, what is the typical split on responsibility?  Would I be expected to basically act as if I was on my own, and my money backer is like a silent partner?  For example, am I going to find the house, lock it up under contract, complete the closing, organize the rehab and then be responsible for selling the house?  I'm expecting it to go something similar to that, with only minimal participation from the money man.  Of course the person with the money would have final say on alot of things that happen, and hopefully be there to answer any questions I have, but if they're putting up the money, I assume they want to be as hands off as possible, while still protecting their investment.  Is this along the right lines?
  • 02 Sep 2012 12:54 AM
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    Reply # 1062627 on 1058682
    Deleted user
    It all depends on who the investor is. When we (my partners and I) partner with new investors first starting out we have one set of terms if the investor only wants our money and us to act as information source / approvals, and another set of terms if we are actively involved. 

    I recommend you hammer out ALL details before moving forward and put them all in writing, paying particular attention to who gets paid what when & how.

    -Greg

    Greg Wilson
    The REI Mentor
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