You’re a real estate wholesaler, and you’ve just found an amazing deal. The only problem? You need cash, and fast, and the best transactional funding companies help make it happen by providing transactional funding loans. This can mean the difference between a smooth deal and a complete disaster.
Finding the best transactional funding companies involves knowing a company can actually deliver. Speed, reliability, and cost are the primary elements in real estate investing. Transactional funding is essential for quickly securing and closing deals.
Table of Contents:
- What Exactly is Transactional Funding?
- Key Factors for Choosing the Best Transactional Funding Companies
- Finding the Best: Top Transactional Funding Companies
- Comparing Different Lenders Benefits
- How to Apply For Transactional Funding
- Maximizing the Use of Transactional Funding
- FAQs about best transactional funding companies
- Conclusion
What Exactly is Transactional Funding?
Transactional funding is a short-term loan designed for real estate wholesalers. It lets you purchase a property and quickly resell it to an end buyer, often within the same day or a few days. This is commonly known as a “double closing”.
The beauty of transactional funding is that you don’t need to use your own capital. It allows investors quick access to funds. This funding works especially great in active markets.
How Transactional Funding Works
Transactional funding involves three parties: the original seller (A), the wholesaler (B), and the end buyer (C). The wholesaler (B) contracts with the seller (A) to purchase the property. The wholesaler then simultaneously contracts with an end buyer (C) to sell it at a higher price.
The transactional lender gives the funds for the wholesaler (B) to buy from the seller (A). Then, once the sale to the end buyer goes through, those funds cover what’s owed to the transactional money lender.
Key Factors for Choosing the Best Transactional Funding Companies
There are several very important elements that most investors forget about. When evaluating the best transactional funding companies, remember there are multiple options, all of whom can benefit the real estate investor in similar ways. Most transactional funding lenders do not require extensive documentation.
It is easy for the closing agent and the estate investors to not have much visibility, and this may cause some issues. It’s vital you follow a number of steps in order to get what’s required from the best transactional funding companies. Think about things in an active tone instead of in a passive, theoretical approach.
Here’s a checklist you will want to keep close:
- Confirm they provide 100% of the initial capital needed.
- Check on reputation and online reviews.
- Ensure transparency in fees and closing costs.
- Ensure closing agents work efficiently.
- Understand restrictions (length or number of days, dollar amount limit).
- Confirm that they allow the same-day funding that’s needed.
- Be mindful of wire transfer requirements, processes, and paperwork.
- Remember to discuss contingencies (funding commitment is contingent on getting funded.)
- Note they may or may not need financial documents from the closing agent or escrow; have these available.
- Check with their policy about needing your financials.
Speed of Funding
Time is very valuable in real estate deals. The faster a transactional funding process works the more efficient and quick closing can take place, saving money. Fast funding is crucial for successful real estate estate wholesalers.
Some lenders, like Equity Max, use a “flash funding” model, which means they can get everything ready to go in one day. Other companies like, Paces Funding can quickly process funds, offering next-day funding options. This same-day funding supports more investment opportunities.
Interest Rates and Fees
The costs matter, so consider how it fits into your investing model. Some have simple fees; others vary more. Watch out for any origination fee that might impact your profits.
FundMyDoubleClose.com offers a tiered fee structure. It is 1% for loans up to $1,000,000 (with a minimum fee of $1,000), 2% for loans between $1,000,000 and $2,000,000, and 3% for loans between $2,000,000 and $5,000,000. There is a per-day of $.25% per day if money is held for more days, so shorter loan terms can be advantageous.
Reliability and Experience of Lenders
Picking someone with a proven record and solid background is always the safer bet. Consider, if the rates or process seem right, what is really being saved or protected? You must also know how long have they actually been actively assisting clients?
Coastal Capital Funding, for example, brings over thirty years of experience in real estate financing. Having such relevant experience provides great benefits to customers of their service. They offer excellent service in the industry.
Loan Terms
Some transactional funding lenders offer very brief time, generally lasting a single day to a week. Tidal Loans is different, going as far out as two weeks for transactional funding. These short-term loans are great for quick deals.
Finding the Best: Top Transactional Funding Companies
Several companies stand out in the transactional funding market. It requires time to properly assess and choose the best option. Here’s a closer look at a few of those most reliable lenders:
FundMyDoubleClose.com
FundMyDoubleClose.com specializes in transactional lending for real estate investors. We understand how the quick close process works and provide support for it.
With competitive rates and funding options from the same day all the way through multi-week arrangements for higher-value deals, we keep the costs low. We’re very clear on our transactional funding costs so investors know up front how much of their total earnings can go towards securing financing.
Washington Capital Partners
Washington Capital Partners provides up to $10 million in transactional funding. They even have a dedicated specialist team member to help you.
This added support is useful if you’ve identified a wholesale deal but need an end buyer. They are a valuable partner company that shares opportunities within their internal network of investors.
Tidal Loans
For those with less-than-perfect credit, Tidal Loans could be a good option. They don’t check credit scores as their lenders don’t require them.
Funds are held in escrow until the deal closes. This helps keep it more secure by ensuring the initial transaction is safe.
Jet Lending
Jet Lending is a nationwide lender. Their transactional loans offer 100% financing and close quickly.
They also provide a loan officer to guide borrowers. They’ve got resources available to support investors to navigate the transactional funding real estate process, funding real estate deals efficiently.
Comparing Different Lenders Benefits
Looking at some companies who provide best transactional funding companies can let you look at your investing models differently. Comparing lenders will help real estate investors secure a wholesale deal successfully.
Here’s a table comparing the lenders mentioned above, based on key criteria. Remember these points are generalizations for a specific area:
| Lender | Funding Speed | Loan Terms | Credit Check |
|---|---|---|---|
| FundMyDoubleClose.com | Same-day possible | Up to several weeks, amount dependent | Varies |
| Washington Capital Partners | Varies | Varies | Not specified |
| Equity Max | One day | One Day | No |
| Tidal Loans | Varies | Up to two weeks | No |
| Jet Lending | Within 3 Days | Short Term | Not specified |
| Paces Funding | Next Day Possible | Varies | Not a main factor |
| Coastal Capital Funding | As Little As 48 Hours | 1 – 3 Days | Not specified |
How to Apply For Transactional Funding
Getting transactional funding usually involves similar steps across companies. You usually must confirm you are using their funding properly and that all documents are ready for review by a title company.
Prepare Your Documents
Have your purchase agreement with the original seller (A) and your sales contract with the end buyer (C). Get it ready ahead of time for the closing agent.
Submit Your Application
Fill out the lender’s application form. This will include details about the property and the deal. You may need to show a funds letter to prove your eligibility.
Work with the Lender
Once approved, work closely with the lender and the title company. This ensures funds are transferred and that you can close transactions quickly. Proper communication facilitates the entire process.
Maximizing the Use of Transactional Funding
Transactional funding opens doors to more deals, especially if you’re short on cash. Always be open to all the solutions and possibilities when selecting from the best transactional funding companies to maximize the use of real estate transactional funding.
If something seems not quite right, talk with others. Learn other approaches on using transaction funds wisely and always find the most helpful approach possible that suits your investing needs best, allowing investors more control.
FAQs about best transactional funding companies
How much does transactional funding cost?
Transactional funding costs vary. Most charge between 1% to 3% depending on time and loan specifics, which include potential processing fees or upfront fees. The exact cost varies by provider and the details of the real estate deals.
What is an example of transactional funding?
An example of transactional funding is where a wholesaler finds a good deal. Then, they use a short-term loan to buy and sell it quickly.
The wholesaler pays off the transactional loan once the final buyer’s funding is set. This is how transactional funding works in practice, enabling quick real estate transactions.
What is a proof of funds letter for investors?
A proof of funds letter is a note often written by companies who give these options. It lets the investor know you have enough funds and can purchase without stress.
What is a transactional financing?
Transactional financing helps you act without large upfront requirements. Many transactional funding real estate companies allow this when following proper procedures, making it easier to access capital. It simplifies the process for the estate investors involved.
Conclusion
Choosing among the best transactional funding companies can make or break your success as a real estate investor. As a tool, transactional funding is very helpful when used correctly, particularly for house flipping. Remember, you want someone with experience, funding power, reasonable costs, and who is a partner with you every step of the way.
At FundMyDoubleClose.com, we specialize in transactional lending solutions tailored for real estate investors and wholesalers. Whether you’re interested in double closings, earnest money deposit (EMD) loans, or seller carry transactions, our team is here to assist you.
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