How much should I charge to provide very short term funding

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How much should I charge to provide very short term funding

Doug Carroll
Member since 2019 · 7 posts · 5 votes

I have an investor friend wanting me to provide very short term funding for deals they are wholesaling. I need to get more details on how exactly this will work, but as he tells it the funds may only be needed for minutes, or hours, just long enough for them to sell/transfer to me and then sell/assign to their buyer. 

He said 1 pt is normal but I've heard 2-3 pts elsewhere. Thanks

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y

depends on the size of the deal.. most transactional lenders have a minimum fee expressed in dollars not in points.

you do a 40k deal for 400 bucks ??  lot of work for little money.

when i do these I have a minimum fee of 2k and if its a big one then might go to 5 to 10k size matters. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y

    depends on the size of the deal.. most transactional lenders have a minimum fee expressed in dollars not in points.

    you do a 40k deal for 400 bucks ??  lot of work for little money.

    when i do these I have a minimum fee of 2k and if its a big one then might go to 5 to 10k size matters. 

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  • Doug Carroll
    OP
    Member since 2019 · 7 posts · 5 votes
    3y

    Makes a lot of sense. Thanks Jay!

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    3y

    @Jay Hinrichs

    is there any sort of "security" when doing transactional lending?  Or, is it pure "trust?"

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @David M.:

    @Jay Hinrichs

    is there any sort of "security" when doing transactional lending?  Or, is it pure "trust?"

    U take title and transfer it same day or next day.. Risk is something goes haywire and you have a property U were not intending to own. I have done it on a very limited basis  ( maybe 5 or 6 times in last 10 years)..  Its a real specialty niche. 

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  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    3y
    Quote from @Doug Carroll:

    I have an investor friend wanting me to provide very short term funding for deals they are wholesaling. I need to get more details on how exactly this will work, but as he tells it the funds may only be needed for minutes, or hours, just long enough for them to sell/transfer to me and then sell/assign to their buyer. 

    He said 1 pt is normal but I've heard 2-3 pts elsewhere. Thanks

     I personally charge 1% or $1000 min, in California info 1.5% or $1500 min.

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  • Kuzi Matambo Dumont
    Real Estate Coach · Member since 2023 · 21 posts · 23 votes
    3y

    Was quoted $1.5k-2k fee for a $50k loan 48hours

    1Reply
  • Todd Hoffman
    Real Estate Lender · Littleton, CO · Member since 2012 · 32 posts · 15 votes
    3y

    For those who provide transactional/same-day loans (including @Jesse LeBlanc and @Jay Hinrichs), do you require a loan title insurance policy, and typically what LTC (percentage of the purchase price) do you lend?




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  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    3y
    Quote from @Todd Hoffman:

    For those who provide transactional/same-day loans (including @Jesse LeBlanc and @Jay Hinrichs), do you require a loan title insurance policy, and typically what LTC (percentage of the purchase price) do you lend?




    For Transactional, I fund 100% because it’s a same day loan. I do have loan docs signed as a backup, but I only fund once both sides have signed and end buyers funds are in escrow. We don’t require lenders title policy because our borrower is same day transaction on a double closing, not a rehab or fix and flipper.  For those (one offs for me) yes, 100% of the time it’s best to be safe and require lenders title policy! You never know and I have friends who have had to use it before. Saved his ***! But he also makes his clients pay for his lenders title insurance in order to do business with his private funds. 

    For me, one of the biggest risks is wire fraud. We’ve had a close call before, super scary when a couple of million can be gone in a split second.  The closing team had a phishing scam, got our payoff letter, changed the bank info and contact info. The closing team was about to send the wire after calling the number the scammer put in the payoff but last second realized the return wire info didn’t match where they received our funds from.  Called us and found the scam.  Super quick way to lose a few million in one second.
    2Reply
  • Todd Hoffman
    Real Estate Lender · Littleton, CO · Member since 2012 · 32 posts · 15 votes
    3y

    Thanks!  I appreciate the detailed response and the color the story adds.

    0Reply
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