Real Estate Investors - How to Draft a Proof of Funds Letter

If you are buying short sales from banks one of the requirements from most banks is a proof of funds ("POF") letter. If you are using a traditional lender it is generally easy to get a standard pre-approval letter. But what if you are going to use private lenders or hard money lenders how you get proof of funds letter.

I have drafted several example for you use in different circumstance depending if you are using private lenders for hard money lenders.

A typical POF letter from a private lender might be as follows:

To Whom It May Concern:

My name is Sammy Lender ("Lender") and I am private investor. Mr. Joe Real Estate Investor ("Borrower") has the availability of private funds from for the purposes of purchasing a single family home at 123 Main Street, Anywhere, USA. The Borrower has an approved availability of funds in the amount of $ ____________________.

The Borrower(s) has immediate access to these funds subject to normal terms and conditions prior to closing. These funds are available immediately for wire transfer as instructed or directed for disbursement by the Borrower.

In the event you would like to verify these funds please address your calls to the contact information provided below and we will do all we can to assist you for the benefit our Borrower.

Sincerely

Sammy Lender

A POF letter from hard money lender may read something like this

To Whom It May Concern:

This letter is to confirm a positive working relationship between xxxxxx Funding, LLC ("Lender") and Joe Real Estate Investor ("Borrower"). Within Lenders Guidelines, Lender will provide Borrower with the amount of funds up to $xxx,000, to purchase real estate located at 123 Main Street, Anywhere, USA. Borrower has been pre-qualified for a quick cash closing.

Cordially,

These are both example for you to use or modify to fit your needs. They should be acceptable by most banks to meet your POF letter requirement.

I invite you to learn more about Private Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html.

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lending Kit.

The 7 Things You Should NEVER Do as Part of Your Private Lending Program

As part of our private lending coaching program we spend a lot of time showing students what to do. But we also show them many things NOT to do to stay out of trouble. Please find below the top 7 things you should never do as part of your private lending program.

1. NEVER Assume You Know Your State Regulations - I would say the number one thing any real estate investor should do before getting involved with private lending is to READ your state securities regulations. I know this is not easy reading, or fun, but simply reading the regulations and understanding your requirements can prevent a major and costly mistake. If you are not going to read the regulations you should, at least, consult an attorney about what is allowed and not allowed in your state.If you are not sure how to get your regulations simple go to Google and put in "securities regulation" and your state and they should be at the top of the list.
2. NEVER Fail to Submit any Required Paper Work - Once you have read your state regulations you may be required to do nothing (great), you may be required to file a notice with the state or register with the state securities department. Either way, be sure to understand your requirements and make sure you follow them and file the correct paper work.
3. NEVER Advertise on the Internet - You should never advertise on any internet site directly for investors or make an offer to invest in a specific property. There is nothing wrong with offering free information or educational material as a "door opener". But do not advertise directly for investors on site like Craig list or other bulletin boards.
4. NEVER Have a Web Site for Private lenders - Again this relates to 3 above in that you should never advertise directly for money or investors on your own web site. You can offer advice or education but nothing more.
5. NEVER Use Out of State Investors - Never use out of state investors unless you have filed the proper registrations with the federal SEC.
6. NEVER Advertise in Newspapers - Never advertise in newspapers because you cannot be certain who is reading the paper. The person could be from another state and federal regulators could deemed that as a cross state solicitation and require you to register with the federal SEC. You can also never be certain if the person reading the ad is qualified for the investment.
7. NEVER Use These 5 Words in Your Advertising - Never use these 5 words in your advertising including Guarantee(d), Low Risk, Secured, Safe and Risk-free. All of these terms will attract the attention of the federal or state SEC organizations as potentially false or misleading advertising of securities for sale.

For more information on Private Lending please go to http://www.private-lending-secrets.com/

Private Lending Secrets for Real Estate Investors

My brand new eBook titled "Private Lending Secrets for Real Estate Investors" is a 76-page eBook that I wrote for developing your private lending program to find prospective private lenders in connection with buying, selling, and wholesaling real estate properties. Did you know, that investors like yourself tell us that “Finding the money” to buy property is the #1 problem that holds them back from making big profits in real estate?

go to http://private-lending-secrets.com/

Private Lending Secrets - The Top 3 Reasons Why Private Lending is the Key to Real Estate Investing

When I first starting investing in real estate I made the same mistake everyone else makes and was using my own money. It did not take long before I was out of money and forced to sell a property each and every time I want to buy another property. I needed to find a better way or I was out of the real estate investing business.

I started to utilize private lenders. A private lender is an individual that you can negotiate directly with on a personal one-on-one basis to borrow money for real estate investments. These lenders would help me fund my down payments, some or even all of the rehab costs and even some of the loan closing costs. I finally had a way to buy real estate without using much, or even any, of my personal funds.

What is the importance of private lending? The answer is using private lenders to fund your real estate deals. Private lending is a consistent source of funds to purchase real estate deals that you can go back to again and again and again. In fact, the more you use, the more will become available as you develop relationships with more private lenders.

Having the ability to fund all of your projects with private lending is critical to a real estate investors success in this business.

There are three great reasons for using private investors to fund your real estate deals and allow you to grow your investment business.

First, utilizing private lenders will free up your cash to be used for new deals and for making offers versus such things as down payments, rehab costs, and all the costs associated with acquiring a piece of investment real estate. Now you can focus on new deals with your money and use your private lenders to fund the deals you have under contract.

Secondly, private lending is really the only game in town at this time. It very hard, if not impossible for the average real estate investor to get traditional loans from bank or saving and loans with great credit and at least 40% down payment. Hard money lenders are a thing of past as the credit crisis has wipe most of them out. So you are left with private lenders as the only real dependable source of loans to buy investment real estate.

Third, the benefits of private lenders is that the money is relatively cheap at 9% to 15% versus hard money at 25% or more. The documentation and forms are very simple and only require 4 documents to close a private lending deals versus a bank loan with over 4 inches of paper. Lastly, and most important there are no personal guarantees with private lenders like bank money or hard money lenders.

I invite you to learn more about Private Mortgage Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by going to http://realestatewealthtoday.com/FREE-eBook.html .

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lenders.

The Top 4 Reasons to Believe in Real Estate Again - 2009

Sure, the real estate market is less than ideal right now, but we are a tough brood and that means we will perservere no matter what the market is doing. The key is to focus on the best trends in real estate right now and those trends are primed to give hope where there was once none. The top 4 reasons to believe in real estate again are: 1) Cheaper Mortgages - The cost of a mortgage is cheaper now than ever before. That means more people will be able to afford a mortgage. There are some people out there who have great credit scores but lower incomes. That means, these safe buyers will be buying houses 2) Low Home Prices - We have all seen the home prices falling and that means more people can afford more home. Look for a boost in sales when these low home prices are bolstered by the cheaper mortgages. 3) Less Building - Home builders are not building, but they are stuck with the homes they were trying to sell before the recession hit. This means a drop in prices for these custom built and newly built homes. 4) Stimulating Isn't It - The stimulus package is a change that has created a lot of controversy. But, the fact remains that tax implications for new home purchases will get people out of their rentals and into the real estate office.