The use of transactional funding

 

In most cases the term “flip a property” means that you have access to a property and a person who wants to buy it from you.  The problem is that before the property can be flipped, it has to be purchased and paid for.  If you are a new player in real estate investing you may not have access to funds to complete the purchase, this is where transactional funding comes into the picture.  The money that you need is made available by a company that specializes in transactional funding and hard money loans. This company provides the cash and after the end buyer has closed, the company takes its cut and the investor keeps the rest as profit.

These types of double closing transactions used to be done by title companies.  As a result of the mortgage mess that started to become unglued in 2007, many changes took place in lending businesses and real estate businesses, one result of the meltdown was that double closing, where one deal funded the other went by the wayside, at least from the point of view of title companies.  Just because the title companies are no longer involved does not mean that double closings are no longer possible, there is still a way to wholesale a property or flip a property without using your own money.

For a company to be interested in offering transactional funding for real estate the first order of the day is that you have to come to them with a deal already established which is profitable for them and for you.  You have to have the property in question purchased at an attractive price and a ready purchaser sitting in the wings ready to buy it at a substantial profit.  The profit needs to be substantial as the lender will charge a cover fee that can be significant and must be factored into the deal.

Basically, transactional funding is very short term money, in many cases both transactions take place on the same day.  The lender places the funds with the title company and the first deal is closed. Immediately after closing, you move on to the second deal and close it.  The closing statement reflects the payment that has to be made to the transactional lender; you get what is left over as your profit.

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Author: Kendrick Wilkes

Kendrick Wilkes, a luminary in the realm of storytelling, embodies a kaleidoscope of experiences woven into the fabric of his illustrious career. With a profound dedication to unraveling the intricacies of diverse industries, Wilkes navigates through realms with the finesse of a seasoned navigator. His pen, a tool of insight and illumination, has traversed the corridors of finance, technology, healthcare, and beyond, delving into the heart of each domain with a thirst for understanding. Through the medium of storytelling, Wilkes unearths the essence of these industries, capturing their essence in vivid narratives that resonate deeply with audiences worldwide. Whether unraveling the complexities of Wall Street or demystifying the enigmatic landscapes of Silicon Valley, his words serve as a beacon, illuminating the path to comprehension and enlightenment. Yet, beyond the surface of his literary achievements lies a profound commitment to the art of interpretation. Wilkes does not merely recount tales; he breathes life into them, infusing each narrative with a richness born of his relentless pursuit of understanding. His stories transcend mere entertainment, serving as windows into the soul of industries, revealing their hopes, fears, and aspirations with unparalleled clarity. In Wilkes' hands, storytelling becomes a vessel for empathy, a conduit through which the nuances of diverse industries are brought to light, fostering understanding and connection in an ever-evolving world. As a writer, he stands at the nexus of insight and imagination, wielding his pen with grace and precision to illuminate the darkest corners of human endeavor.

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