Little to zero $ out of pocket using Transactional Funding for your next rental

[Jesse LeBlanc]

In the past on almost nearly every rental I have purchased, I used to use PML to purchase/rehab then by the time the my rehab was done it was time to close on my long term refinance.  Since then, I've been trying to share with so many others how to obtain rentals using Transactional Funding for deals you have equity in and the property is ready for your refinance allowing you to bring little to nothing to the closing and adding another door to your portfolio.

Right now I lend on an average of 2 of these deals per month and it's quite simple.  The hard part would be to make sure you have a deal with equity and it's in the condition you'd like for your refinance.  Of course if you plan on leaving a little capital in the deal for a cosmetic update for example but want to control the deal right away, this strategy works as well for you.

In short, you find your deal with equity and have your long term lender ready.  Example might be that your lender will lend on 80% of the as-is value VS if you go to your lender for a loan to buy directly and NOT a refinance, they might only give you 80% of the purchase price.  If the house is currently worth 100k, in the 2nd scenario you'd have to bring 20k to closing.  I know there are closing cost, insurance etc, but for simple math we're keeping it like this.  

Instead of buying direct from the seller and using your lender then bringing 20k to closing, simply do a double closing using Transactional Funding.  Purchase the property and already have your lender ready for the refinance same day which then changes the dynamic of the loan.  You're now doing a refinance, and they'll loan say up to 80% of the current value!    So if you bought the property for 75k, paid for the first closing cost and lending fee's you'd still be in less than 80k.  Your refinance lender will loan up to 80k allowing you to control this property for ZERO out of pocket.

If you still have a lot of rehab to be done on a house and you don't want to leave a bunch of capital in the deal, use PML or HML first to purchase and rehab. Once done, refi out but DO NOT FORGET the option if the house is already in rent ready condition or minor repairs you don't mind coming out of pocket for and want your long term loan setup quicker...use Transactional Lending for a double close and you're off to the races adding another property to your portfolio. :)