Is your dream to become a successful real estate investor? Don’t have enough capital to buy a property on your own? Wishing you could get approved for a loan that allows you to bag your first real estate deal?
Transactional funding is what you need!
At DoubleClose.com, we make it super easy for individual and corporate real estate investors to secure the best transactional funding. Continue reading to know more about transactional funding, specifically what it is, how it works, and who’s eligible for it. Perhaps transactional funding is exactly what you need to take your real estate investment business to the next level, so you can’t afford to miss this information!
What Is Transactional Funding?
Also known as flash funds and AB-BC funding, transactional funding is a same-day loan that real estate investors use to close deals. The biggest reason why transactional funding is sought-after is because it gives real estate investors with low capital the ability to close deals they wouldn’t be able to close otherwise.
How Does Transactional Funding Work?
To understand transactional funding, you need to first understand how double closing works. Usually, there are three parties involved in a double close scenario:
- Party A – The property seller
- Party B – The wholesaler (real estate investor)
- Party C – The end buyer of the property
Party B buys the property from Party A and sells it to Party C. The name “double closing” comes from the fact that two simultaneous transactions take place in this scenario.
So where does transactional funding come into the picture? Well, Party B applies for transactional funding to purchase the property from Party A, and then Party B sells the property to Party C. With the proceeds from this second transaction, Party B repays the loan; what’s leftover is the profit from double closing.
Why Choose Transactional Funding Over Bank Loans?
When you apply for a transactional funding loan, all the lender requires are copies of the relevant buyer-seller contracts. You don’t have to go through any credit check or put up a down payment. Getting transactional funding is quicker and more hassle-free than getting a regular bank loan.
Once your loan application is approved, you receive the funding immediately, usually on the same day. And unlike a regular bank loan, you won’t be charged any interest for transactional funding. Instead, the lender charges a nominal fee plus a small percentage of the amount lent as a lending fee.
Who Is Eligible For Transactional Funding?
Eligibility is another factor that distinguishes transactional funding from regular bank loans. To secure a traditional loan, you’ll have to get a lender to assess your credit score, income profile, and other factors before you’re approved for a loan. On the other hand, there’s a low eligibility threshold to receive transactional funding. As long as you are buying and selling the property on the same day with the same title company or escrow attorney, you are eligible to get flash funds from a lender that provides these.
In most scenarios, the only documents you’ll have to submit are copies of the relevant buyer-seller agreements. You do not have to provide any other details, and there’s no stringent credit check. Appraisals, title reports, etc. will not be necessary.