REO deal flow with private money - questions

[Cathie Kovacs]

So I’m trying to do my first fix & flip deal with private money and I’m not clear on deal flow.  Hoping someone can take a few minutes to educate me.

So I found an REO that I'd like to make an offer on and have private money interested in investing. Just making an offer at this point, so no LLC for this property yet (they may not accept the offer), no note with investor or anything but bank requires proof of funds to even make an offer. Chicken and egg!

Do I make a blanket note agreement with investor (something along the lines of we’ll pay you X% IF an offer we make is accepted and then they can put a mortgage on the property once we close on it)? What if offer is not accepted? Pay them interest for the # of days their $ was in our account?  Return the funds without interest?

Or do you have to get their investment first, start paying interest on that money and then go shoppping for a property? This can’t be good; feels like buying under duress.

How are you guys handling this deal flow?

[Grant Rothenburger]

@Cathie Kovacs I've done something similar once. All I needed was a simple contract between the individual and myself, then we had to show their POF. It was that easy for me, not sure if it always is. We actually did not go through with the purchase, but everything was lined up and ready to go.

I would think they would be on the offer paperwork as holding a mortgage/note on the property.