Hello Real estate Bigger pockets Forum Community, I am hear asking does anyone know about Transactional Funding, and how it works? I have been reading on it, what are the pit falls, or the things that could catch you up in something negative? If I have my B-C end buyer solid, and can close is that all that I should be concerned about?
Hi @Keith Lanier, so transactional funding is a short-term, typically same day loan that would cover 100% of your costs to close on a property, assuming that you have your end buyer lined up to buy the property from you on the same day.
You are correct, having your end buyer lined up is one of the most important pieces. The 2nd most important piece is working with a title company or closing attorney that understands double closings and is able to process them. I have funded several deals in Texas and worked with a few great title companies out there. If you want to shoot me a PM I'd be happy to share their contact info or make an intro.
Good Evening @Keith Lanier I ran a wholesale company for years, then later added Transactional Lending to my business model.
If you already have your buyer and you decide or are required to use Transactional Funding, then there shouldn't be any negatives except for the extra costs you would have for the lending. If you can assign it vs double close, you could get around double closing.
But there are states and or some closing companies that won't allow pass through funding or assignments and Transactional Funding (unless you had your own cash for the 1st transaction).
But again, if you have your solid BC buyer, then work with your closing company and make sure they know you are closing BOTH transactions on the same day at the same closing company. As long as your closing company is familiar with double closings, then it should be really smooth!