When it comes to making offers on properties, one crucial item you will need is a proof of funds letter. In some cases private sellers ask for a proof of funds letter, but it will always be required when making offers on bank owned properties. The purpose of a proof of funds letter is to ensure that you, the investor, have the funds available to follow through with the offer you are making.
Not only does the offer have to be solid, but the proof of funds letter needs to be from a credible source in order for the seller to consider the offer. While a powerful tool, in many cases the proof of funds letter won’t be enough. At that point, you will have to provide a verification of deposit or VOD. A VOD is an actual bank statement showing that you have access to the money to back your proof of funds letter.
Proof of funds letters can be used on all kinds of transactions as well: Commercial deals, residential deals, REO’s, bulk REO’s, short sales, probate deals, wholesale deals, etc.
While some investors use their own money on a deal, it’s actually much smarter to fund deals with someone else’s money, for obvious reasons. You should be able to get proof of funds letters and bank statements from whoever is funding this deal for you.
Although having a proof of funds letter will help show the seller you have the funds needed to purchase the property, you must also have a good offer that makes sense to both yourself and the seller.
How do you go about ensuring you have a good offer?
First you have to determine the property value. Then you will need to estimate repairs. Then you will need crunch the numbers to see if the deal is worth investing in. It can be a time consuming process, and when you’re making an offer, you need to be positive that you calculated correctly so you have confidence in your offer.
To save yourself time and money, check out this free Offer Generator tool by clicking here.
Having a viable proof of funds letter backed by a verification of deposit and a way to confidently make offers will give you the confidence you need to start doing more deals. And remember, the more offers you make, the more deals you will do and profit you will make.