Transactional Funding 101: Everything You Need To Know About It
Transactional funding, also known as transactional lending, is a short-term financing solution designed specifically for real estate wholesalers. This type of funding plays a crucial role in acquiring off-market properties and direct-to-seller/owner leads, empowering wholesalers to close deals quickly and efficiently while protecting their profits.
In this blog post, we’ll dive into the fundamentals of transactional funding, exploring its benefits and how it can help you succeed in the real estate investment world. Read on to comprehensively understand this powerful financing tool and discover how it can transform your approach!
Understanding What Is Transactional Funding
Transactional funding, also known as transactional lending, is a type of short-term financing used by real estate wholesalers for their transactions. This type of funding is designed to facilitate the quick purchase and resale of properties. At the same time, it allows wholesalers to close deals without the need for traditional financing options or using personal funds.
The primary purpose of transactional funding is to provide the necessary capital for investors to acquire a property and sell it to an end buyer, all within a short timeframe. With this, wholesalers can capitalize on time-sensitive opportunities and streamline their double closing process.
Pros Of Transactional Funding
Transactional funding offers numerous advantages, making it an attractive financing option for real estate investors. Some key benefits of transactional lending include the following:
- The Deal Is Completely Funded: With transactional funding, the entire amount needed to purchase and resell a property is covered, eliminating the need for additional financing sources or personal funds.
- No Proof Of Income: Unlike traditional loans, transactional funding does not require investors to provide proof of income, allowing for a smoother and more efficient approval process.
- Double Close Using Other People’s Money (OPM): Transactional lending helps investors to execute a double close using other people’s money. This method reduces their financial risk and maximizes profitability.
- Protect Your Profit: Keeping your buyer and seller separate incase of a large spread you’re uncomfortable assigning
How Transactional Funding Works
Transactional funding is a powerful financing tool for real estate investors. Here’s a step-by-step overview of how it works:
- Identify An Off-Market Opportunity: The first step is to find a lucrative off-market property that can be acquired at a favorable price and resold quickly for a profit.
- Secure The Contract: Once the investor identifies a suitable opportunity, they must secure a contract with the seller. Also, they should outline the purchase terms and establish their intent to buy the property.
- Get Funded: After securing the contract, the investor applies for transactional funding from a reputable lender specializing in this financing type. The lender reviews the deal and, if approved, provides the necessary funds to complete the purchase.
- Close The Deal: With the funding in place, the wholesaler can close the deal, acquiring the property and reselling it to an end buyer within a short timeframe. This process allows investors to capitalize on time-sensitive opportunities without traditional financing or personal funds.
Transactional Lending Allows You To Close Deals Without Complications
As a real estate wholesaler, you want to be efficient, reliable, and successful in your investment endeavors. However, you can face issues when securing the necessary funding to close deals swiftly. This can make you feel uncertain about your ability to capitalize on profitable opportunities. You shouldn’t go through that.
Wholesalers deserve a seamless and hassle-free experience when it comes to transactional lending. We at Wholesalers Transactional Funding understand real estate investors’ needs and have helped our clients close hundreds of deals over the years.
By offering funding for real estate investors, we empower wholesalers to overcome obstacles and unlock their full potential. Contact us to learn more!