Transactional Funding Misconceptions

[Will Barnard]

I would like to post about the title above. What brought this thread about was a recent inquiry from another BP member through PM and I thought it was worthy of posting here. We can then add to it by posting other misconceptions.
Here is the first one:
"Looking for transactional funds for a comm'l deal around $950K for a 60 day period."
I answered - "I no longer offer such services."

"Do you know of any T.F.'s who allow the "B & C" parties to be the same in order to do a refi of the property."
I answered - "I do not, that could be construed as fraud. In essence, you are simply marking up the property value to sell back to yourself which is not allowed."

"Not sure I see the fraud element. If a distressed commercial property is acquired at a discount because it's only 55% occupied and you stablize the rent roll at 85% in say 5 months. The property is worth apprecaiably more because of cash flow.

No fraud element there. Am I missing something in my little senario?"
I answered - "the scenario you mention is not fraud, however, such a scenario is not the same transactional funding scenario you originally mentioned so you are talking about two different things here. The first scenario is not allowed. The second would be if you can find a lender who is willing to loan to you for the 5 months (and it will be more than that) to get the occupancy increased by 30%. Often, that will take a minimum of 6 months. In such a scenario, you are not selling back to yourself, you are buying, using a lender for funds, stabalizing the property and then either re-selling or re-financing. Two totally different situations. - Will Barnard"

"Ok Will. I see the clarification. Thanks for your time and input. I really appreciate it."
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If anyone would like to add on to this conversation or post about any other misconceptions regarding transactional funding, please do post here.