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:
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:
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