Do I need to secure funds before making an offer? (BRRR)

[Nicholas Morgan]

Hello!

My goal for 2019 is to purchase a property utilizing the BRRR strategy....or at least take all of the steps to ensure a high probability of that happening (analyzing 10 properties/week, sending out direct mail, driving for dollars, etc..)

Anyway, I toured a house today I'd like to put an offer in on once I do a more thorough numbers analysis. However, do I need to have a hard money or private money lender lined up before I make an offer? What if I make an offer and they accept and I don't have someone in place yet to pay the ~$40k cash for the house? My thoughts are if I get the acceptance, I can find a lender while inspections and such are happening....but is that backwards? Am I putting the cart before the horse?

This will be my first "real" deal and want to make sure I'm going about this in the right order.

Thanks,

Nicholas

[Brian Ploszay]

The prudent advice is to line up financing before you make the offer.  You are going to get into a legal contract.  That contract could say, "contingent upon getting financing."  Most home buyers enter into contracts like this.

If you face an astute seller, they will want to see proof of funds.  This is either proof you have cash, a loan pre-qualification letter, a letter of qualification from the hard money lender, etc...

Don't worry about losing this deal.  Work for a month on talking to hard money lenders and get prepared.  Some hard money lenders will also do the end loan.