Transactional Funding

What is Transactional funding? Transactional funding is a form of short term, hard money lending, which allows a wholesaler the opportunity to purchase a property with none of his/her funds, provided that there is already an end buyer in place to purchase the property from the wholesaler within a short time frame, usually 2-5 days.


Typical examples of properties that are flipped using transactional funding are:

  • single family;
  • multi-family buildings;
  • commercial properties (apartment buildings, strip malls, mobile home parks;)
  • land.

These properties can be purchased as short sales, REOs, or any other means of purchasing real estate. Transactional funding is preferable to other types of short term funding, like hard money, because the fees are usually lower, there is no credit or income verification, and the paperwork is much simpler.


This is how the process works when using transactional funding:

1.The Buyer/Investor/Flipper, called party “B,”writes a contract to purchase a property from the Seller “A.”

2.The Buyer “B” signs a contract with end Buyer “C” to purchase the property on the same day that “B” purchases it from “A.”

3.”B” seeks transactional funding to fund the deal in order to buy the property from “A” and sell it to “C”.


Now as far as advantages of Transactional Funding:

  • Credit score and income of the borrower are not an issue;
  • Funding is usually 100% of the purchase price;
  • Proof of funds letter provided by the transactional funding lender;
  • Limited to no risk – you are not putting up any collateral besides the property being flipped;
  • Easy and straightforward paperwork;
  • Lower fees than hard money and fees are taken out of the proceeds at closing.