Financing with Wholesalers??

Question

Most wholesalers I’ve seen have offered properties under hard money/cash only contingencies. Does acquiring wholesale properties through regular financing, either QM or Non-QM loans for example, even exist?

Lydia R. · Answer

Not really because regular lenders are not comfortable paying the wholesalers fee. They dont view the wholesaler as a recognizable party to the transaction. And also, many wholesale properties wont qualify for a conventional loan due to condition. Your best bet would be to use hard money and then refinance with a traditional loan.

Mark Munson · Answer

I work with a lot of wholesalers here in FL and have financed hundreds of wholesale deals with hard money for years. Like others have said, it just depends on the timeline to close and whether or not the property will pass an inspection to qualify for certain types of more conventional financing. Additionally, you will want to make sure your lender will fund the assignment fee if there is one or if they are okay underwriting the deal if there is a double closing. If there is a double closing, you may need the unexecuted warranty deed from the A to B contract for your underwriter. Reach out if you need advice.

Doug Smith · Answer

Hey fellow Tampanian Connor, We sometimes do Transactional Funding on an A-B, B-C closing where the wholesaler is B, the original property owner is A, and the end buyer is C. We'll consider funding the A-B transaction provided the takeout to C is in place. There are a lot of protections we want to see and we want to ensure that we're working with a closing agent that we approve of that's handling both transactions, but that's one way to do it.

Stephanie P. · Answer

Not really because of the prepayment penalties.  Most wholesalers I know don't even really take title so there's no need for financing.

Eliott Elias · Answer

The smaller wholesalers may allow this. Most want cash due to the timeline, and condition of the transaction/condition.

Erik Estrada · Answer

Hey Connor,

It depends on if the wholesaler is okay with a QM, Non Qm loan.

Jesse LeBlanc · Answer

I of course offer Transactional Funding, but only on double closings.  I do usually refer wholesalers that are looking to buy, control then relist the properties to a friend of my who does "Wholetail" loans.  It's just a fancy word that means nothing more than the regular private/hard money loan for let's say max 3 months.  This allows the wholesaler (if they bought right) to make more money selling on the MLS than to an off market investor USUALLY.   @Connor Benn

Financing with Wholesalers??

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