What is transactional funding in real estate? – Transactional Funding is typically a one-day loan used in real estate wholesale transactions requiring a double closing or a double closing contract.
Using Transactional Funding – When Is It Needed?
When the wholesaler does not have enough cash to close the transaction or the property owner will not allow a pass-through real estate closing, transactional funding is needed. The transactions close simultaneously, which ensures all parties to the transaction are able to fund the same day, and the wholesaler’s profit is not known to the buyer.
A Real Estate Example of This Funding
A wholesaler contracts a property from the seller (Contract A to B).
Then the wholesaler contracts the property with the end buyer (Contract B to C).
In most cases, the wholesaler is required to fund their transaction from the seller “A-B” before selling to the buyer “B-C”.
Use Transactional Funding In This Way To Help…
Transactional funding satisfies this requirement. Once the simultaneous transactions are completed, the loan is paid back to the lender, and the wholesaler realizes their profit. Please note that this type of funding is only utilized for simultaneous closings.
DFW Hard Money & Transactional Funding
DFW Hardmoney can fund 100% of the transaction to the title company. Real estate investors & real estate wholesalers alike can get transactional funding work (& wholesale double close).
Once all funds from all parties are received, the company holding the title disperses funds, and the transactions are closed. Fees can range from half a point to one and a half points.
How Much Does Transactional Funding Cost?
All funds are provided by the funder/hard money lender, and the borrower is not required to put any money down at closing. The points due for the loan will be taken out of the proceeds at closing. The only funds the wholesaler will receive is their profit.
How to Qualify
DFW Hard Money does not require a credit report or backup information to approve transactional funding on hard money loans.
Just have the end buyer in place and “A-C” contracts all closing at the same time to purchase the property.
For more information, please check out DFW Hard Money – Transactional Funding.
References – What is a double close? – Rocket Mortgage