When it comes to success as a Real Estate Investor, all the training of how to find and recognize potential good deals, negotiate with the seller, organize the repairs and final lease or sale of the property is for naught if one of these pieces of the financing puzzle are missing.
As every Real Estate Investor is aware, financing is more complicated than obtaining loans for real estate investment by owner occupants, and one even one missing piece of the puzzle can mean losing out on a potentially profitable deal.
Such missing pieces as a free proof of funds letter, short-term real estate financing and transactional funding for the close are often required for a deal to be successful.
Nothing is more frustrating for the real estate investor than finding a suitable property to invest in, only to be cut short of the deal by missing one of these key financial ‘puzzle pieces’.
PROOF OF FUNDS LETTERS
Without a valid Proof of Funds Letter, many institutions aren’t even allowed to accept a bid on a property.
SECURED FUNDING FROM A SHORT-TERM LENDER
Funding from a short-term lender, the investor may not have enough cash on hand to purchase and renovate a property to the point of leasing it out or selling for a profit.
In some instances, the investor has already located a buyer but, as the purchase contract is made out and can’t be assigned, Transactional Funds are needed for 24 to 72 hours to actually purchase the property to then re-sell to the Buyer.
KNOWLEDGE OF HOW TO CONSTRUCT DEALS WITHOUT CASH
A fourth, and possibly most crucial piece of the financial puzzle, is that it may be possible to acquire control of the property with no personal funds out of pocket whatsoever.
We can suggest three resources that the Investor might find useful for different specialized purposes:
The first resource is for both “Transactional Funding” and “Proof of Funds” letters while the other source is for use in short term “fix and sell” or longer term “fix and hold” situations.
PLEASE BE AWARE THAT WHILE WE OCCASIONALLY USE THESE SOURCES OURSELVES, WE ARE ALSO AFFILIATES OF THESE SERVICES AND COULD POTENTIALLY BE PAID A FEE, IF YOU ALSO HAPPEN TO USE THEIR SERVICES.
TRANSACTIONAL FUNDING AND PROOF OF FUNDS LETTERS
Transactional funding can be useful in situations where an Investor has gotten a property under contract to buy and, rather than to buy the property for the long term and do the renovation himself/herself, locates a fellow Investor who he passes that property on to, normally at a higher price than his purchase price.
In situations like this, involving third-party funds for 24 to 72 hours may be more desirable than pulling in personal funds to buy and immediately re-sell that property to the fellow Investor.
The source of these Transactional Funds currently requires an upfront deposit of around $1,000 which is refundable as a credit from future transaction fees on deals they assist you in as a participate in the Transactional Funds program. He earns a very good return on Transaction Funds fees, but that amount can be relatively small considering the potential return for the Investor.
An additional benefit of working with this Transactional Funds source is that they will also provide a “Proof of Funds” letter for up to $600,000 per transaction that can be available to the Investor when needed, such as required when making certain offers for purchases.
There is no additional cost for this and the Investor can potentially save time and money by not having to liquidate assets just to have cash sitting in a bank account as a condition of making an offer that may not even be accepted.
Requesting funds is a very simple process and a letter is generated on your behalf almost immediately.
A link to the Transactional Funds and Proof of Funds Letters source is:
ALTERNATE SOURCE FOR PROOF OF FUNDS LETTERS
If you don’t think you’d ever need Transactional Funds but might find Proof of Funds letters helpful, and alternative source is at the following link offering Proof of Funds for up to $300K.
This program is from one of the top real estate investors and educators in the nation, Ron LeGrand. It requires a $1 fee for the first month (to include an excellent training course) and then an ongoing a monthly fee that also include extremely valuable training in doing deals without cash and even live Q&A calls to review your potential deals, if you wish to stay with the program:
BEST REAL ESTATE TRAINING DEAL ON THE PLANET
If you are new to real estate investing, the above $1 fee will include a comprehensive course in real estate investing that will get you off to a good start with strategies that are proven to work whether you have plenty of funds to invest, or very little.
Moreover, you’ll get access to practically every legal document you might need. Many of the well known “real estate gurus” teaching around the country have actually gotten their start through this man’s training, and he’s still an active investor and “millionaire maker” to this day. The ling again…
SHORT-TERM FUNDING FOR 2 TO 48 MONTHS
Finally, short-term loans of 2 to 48 months, with 3 to 6 months the most common, and can be useful for short term “fix & sell” or longer term “fix & hold” situations, assuming you’d obtain long term, lower cost financing once the property had been renovated and populated with tenants.
Please note that these loans do not cover your fix-up costs unless you are tying in other fully owned properties as collateral, or having your Seller hold a second on the property you are buying.
The whole focus of this program is on Independent Real Estate Investors with the main consideration given to the equity in the property and not to your credit score or how many other properties you might already have that are also financed.
Here are the basics of the program:
1. Loans are for only non-owner occupied properties, either residential (up to a four unit building) or commercial.
2. Normally, there is a $600K borrowing limit per transaction for residential properties.
3. Property must be under contract to you BEFORE the loan can be processed.
4. There is NO application fee.
5. All properties will need to be appraised at your expense once the application has been accepted. (An appraisal by a licensed appraiser within the last 90 days is sometimes sufficient.)
6. Maximum loan amounts are up to 65% of the purchase price or appraised value for residential property purchase price (55% for commercial). Please note that you will need to come up with any fix-up or closing costs either from your own funds or as provided by the seller.
7. Funds can often be available within 2 weeks or less, once all paperwork has been
submitted (to include “fresh” appraisals of the properties).
8. Loan duration is for up to 24 months, at your discretion.
9. At the time the loan is applied for, you would need to state your exit strategy such as flip, fix-rent-refinance, fix and sell, etc.
9. The Lender will need to be in a FIRST position once the loan is made. If you need to have the Seller or other party carry a loan to allow you to buy the property and make repairs or take cash out at closing, they would need to be in a SECOND position.
10. If you have other properties you’d like to use as collateral to increase the loan amount that is also an option.
11. Loan rates are set by the loan analyst and can only be determined after the application has been made and all factors are known, however rates should be assumed to be higher than bank rates or funds from family and friends to offset the risk to the lender and cover the administrative costs.
12. For more information or application, visit:
and click on “Borrow on Real Estate”.
Again, while we are affiliates of each of these programs, we are also their clients. We’ve personally spent time with the principles of each and consider both to be highly ethical, as well as being seasoned Real Estate Investors and real estate investment educators themselves who we fully endorse.
We hope you have found something in the above information that may be of value to you in you own real estate investment business.
Wishing you the best of success.