Are you struggling to find OPM – Other People’s Money to fund your deals? And even a good Proof of Funds (POF) letter?
Well – hold it right there. Because regardless of whether you do (i) an assignment or (ii) a double close on your wholesaling deals – either way, you don’t need OPM or POF.
No, really, you don’t need any funds…
Hey Moguls, Patrick Riddle here, and that’s just one of the many reasons why I love wholesaling so much. It’s a low-risk strategy – for anybody – and especially for newbies who don’t have a lot of money to begin their investing career.
Impt. Note: If you want to make an offer on a property listed with an agent, you will need a POF letter. Realtors expect it, it’s pretty standard. And, you’ll be required to put down earnest money on listed properties of 1% of the purchase price.
But, when you’re working directly with sellers, you should be good to go – look, I’ve been in the business for quite a while now, and I’ve never had a seller ask to see proof of funds.
Okay…
Let me touch on another money point – that of earnest money…
I usually put down $10 bucks. Nope, that’s not at typo. Just $10 is all you need… and you can assign the contract when you have one directly with a seller – minus the aggravations and trouble typically associated with properties listed with Realtors who want you to play by their rules.
Now, as far as I’m concerned, working 1-on-1 with sellers is the best route, but…
If you still want to wholesale and make offers on listed properties with a proof of funds letter, you should build a relationship with a private lender and/or a hard money lender.
Ask for a proof of funds letter in exchange for a 50/50 profit. In the end, it all comes down to nurturing relationships with those lenders.
1 Step, 2 Step
So, securing private funds (cash buyers) isn’t rocket science, but it is formulaic.
And I’ve got 2 strategic yet simple steps you can follow – don’t reinvent the wheel.
Start here…
Step #1:
Connect with people who are buying properties you can wholesale – those would be cash buyers, which is why you need build a solid a cash buyer’s list.
Here are a few ways to find cash buyers…
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Bandit Signs
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Direct Mail
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Traditional Ads
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Basic Research
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Database “plucking” through public records
Step #2:
Building relationships with those buyers and make sure you really understand the types of deals they want – especially location and price ranges.
Once you’ve got those details, you’ll know how to craft your offer, and (bonus!) you’ll be armed to go toe to toe with sellers, instead of weeding through the MLS.
You Got This
So… right now, today, begin marketing for motivated sellers, so that the POF from OPM doesn’t slow you down or screw up the deal.
Then – and only then – can you negotiate, get a contract, move to closing, and ultimately make your profit.
But remember – be consistent – always do your marketing and simply rinse and repeat. Consistent marketing means a constant flow of deals.
I’m listening
Have you used OPM or POF? Tell me about it in the comments section below.
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.