Real estate investing tends to be lightning-fast and leaves no room for funding delays. That’s where transactional funding comes into play. It becomes a lifeline to investors who require funds same-day or next-day to close a deal. Whether you are a wholesaler or a seasoned investor, knowing how transactional funding works can help you grab winning opportunities.
What Is Transactional Funding?
Transactional funding is a short-term loan that is designed for real estate investors and wholesalers who want to buy properties without putting forth their funds. Since the lender is offering 100% financing, the investor must have an end buyer ready to close a sale on the property within 24 hours to five days.
Same-day transactional funding, also known as flash funding, is commonly used for fast property flips and back-to-back closings.
Advantages of Transactional Funding
Here are the key benefits of transactional funding:
- Low Risk: Your own funds stay untouched.
- Fast Approval: Minimal paperwork and no credit checks make the process quick. Funds are often available on the same day.
- 100% Financing: Unlike traditional loans, transactional funding covers the entire purchase price.
- Broad Accessibility: Investors with poor credit or limited financial history can still qualify.
- Cost Efficiency: Low fees and fewer requirements (no title reports, appraisals, or insurance) reduce costs, maximizing profit.
Disadvantages of Transactional Funding
Despite its perks, transactional funding has a few drawbacks.
- Buyer Dependency: A verified end buyer and a signed purchase contract are mandatory for loan approval.
- Fees: Closing costs range from 2% to 12%, impacting profits if not carefully planned.
- Potential Delays: Issues with title companies or contract defaults can slow the process and lead to extra costs.
- Fast-Paced Process: Inexperienced investors might struggle to keep up with the quick turnaround required.
Qualifying for a Transactional Loan
Transactional funding has simpler requirements than traditional loans. You’ll need:
- A signed B-C contract that proves an end buyer is ready
- A lender title insurance policy to secure the deal
There are no credit checks, appraisals, or employment verification, so it is more investor-friendly.
Is Transactional Funding Worth It?
Transactional funding is an intelligent move for real estate investors with deal lined up. They can accomplish back-to-back closings with the protection of the deal. Transactional funding ensures both sides are committed without cutting out the investor, ensuring privacy between the seller and the end buyer.
However, it is not recommended for beginners. With the extremely fast-paced nature of transactional funding, any mistake is costly.
Do You Need Reliable Transactional Funding?
DoubleClose.com is ready to close quickly without up-front fees and 100% wholesaler transactional funding. Whether you are a wholesaler or a smart investor, they have an easy-implementation, low-cost program that will not let you miss any attractive opportunities.
Visit DoubleClose.com today for more information and to get started on your next profitable deal!