The Cost of Transactional funding

[Isaac Blocher]

Calling all wholesalers out there on BiggerPockets. I am just curious about how much you'll are paying for the transactional funding your getting when you do a deal. I have talked to some wholesalers who pay 12% for the money they use when closing a deal in one day. And I have talked to some wholesalers who are paying just 2% for the money they use when doing a one day deal. 

I would love to learn from everyone how much they pay for transactional funding and from what state they are located in. This information will help me understand this business better. Thank you

[Tim G.]

The largest wholesale fee I've assigned was $48,000. I've got one in escrow currently for $30,000, buyers won't mind if they are making their desired profit and if they do care they are replaceable. If they weren't okay with this, couldn't you just perform a double close? That runs a couple grand, well unless this costs less than that.

Due to deed restrictions on most shortsales can someone even transfer title for 90 days on most after the initial close? I've not been able to in years, we just line up buyers and go the full length with them on the contract rather than play games. 

Another option is to be paid outside of escrow, this requires a second agreement and if you really don't trust the buyer a second escrow. This runs around $600 in California but we've done that twice. Once for a retail end buyer (worst idea ever trying to wholesale to them) and an MLS deal. In both cases this option worked well to guarantee us our payday without having to jump through hoops on transactional funding.

If anyone wants more info on how I've avoided the need to use funding just PM me, its insanely straightforward and keeps a much larger amount of the wholesale fee in your pockets.

Anyhow, thanks for clearing it up. I'm a full time wholesaler, mastermind with many other FT guys and gals and none of us have ever ran into these issues but we're mostly working with off market stuff. I've done two shortsales, never an REO but in my four years in the business I'd not ran into these issues.