Ears, go talk with a hard money lender, or several, and find out what their financing criteria limits are, and the cost of their financing.
You use this information to make your offers. As Bluemoon said, HML’s will provide all the proof of funds letters you need or want. They’re not open-ended, and must be renewed, but these will work.
Not only that, but you know precisely where your money is coming from, and what gaps may need to be filled, if you’re not able to negotiate equity purchases that are low enough to qualify for 100% financing.
BTW, not all HML’s are created equal. Terms very widely and can change based on the HML’s experience with you. The money gets cheaper as you do more and more successful business with them. Don’t be afraid to shop around.
There’s gonna be a dominant HML in your area. Find out who that is, and work from there.
If you’re going to pursue foreclosures, you’re going to HAVE to find out who the bank’s foreclosure gatekeepers are, and make friends with them. I’m talking about friends that buy a case of their daughter’s Girl Scout Cookies every season, kinds of friends.
After that, you’ve got to find the brokers who act as the bank’s foreclosure gatekeepers, and buy their kid’s fundraising crap by the caseload. If you want to get to the front of the line, and a heads up on inventory that’s gonna go cheap, because of ‘whatever’ reason, you must be the person the bank/broker loves FIRST.
Go through the bank’s list of REO’s and find out who controls most of the inventory you’re interested in. Make friends with that person.
Smaller banks, credit unions, and the like often get rid of their REOs piecemeal with/without a broker. Make friends with the REO gatekeepers at these small institutions.
As an aside, ask the bank/brokers what, if any, properties they’ve been unable to unload, and try to solve ‘that’ problem for them. Be the problem solver. That doesn’t mean you buy wrong. It just may mean you have to deal with evictions, lawsuits, or some other hiccup that is making it difficult for the bank to sell a property.
This is a relationship business. It’s the same way with any business. It’s not necessarily who you know, but it’s ‘who knows you …and likes you.’
Speaking of that, I almost bought a 50-unit REO apartment deal where the tenants all had been given ridiculous, long term leases, with low rents by the previous owners, making the property unmarketable, if not driving the price into the basement.
Stupid, stupid me. I passed up on the deal, and the agent representing me, put it under contract herself, with the stipulation from the bank that she be given permission to renegotiate all the leases. Who knew you could do that?
Well, she sent all the tenants new monthly rental agreements, at the same rents, along with a 3-day notice to either approve the new lease, or quit.
These new agreements gave the agent/buyer the ability to raise all the rents to market rates nearly immediately after closing.
Of course, she had my low, low price locked in with the bank, borrowed money from the same, private source I was planning to borrow from; closed a month later, all with new rental agreements, and a couple of angry relatives of the previous owners, who knew what they had going.
This rents were over $150 below market per unit, and the upside was huge. My shinns are still sore from kicking myself for not knowing better how to navigate that situation. Since then, I’m not that naive about existing lease agreements. I have a new, multi-million dollar motto that goes, “Leases Mean Nothing.”
Who knew the tenants were too ignorant to understand they had legal leases that couldn’t legally be broken at will by the ‘new owner?’
Anyway, that’s enough ‘fish got away’ stories for today.