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.

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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.