Mastering Double Close Transactional Funding: A Guide

You’ve probably heard whispers of “double close transactional funding” in real estate circles, especially if you’re involved in wholesaling. Maybe you’ve wondered how this financial tool might expand your options as a real estate wholesaler. It might seem complex or reserved only for experienced professionals, but it’s not.

This is a common misconception. Double close transactional funding is an accessible tool that can significantly benefit your operations. This guide explains its mechanics and how it empowers real estate wholesalers to facilitate more deals.

Table of Contents:

• Understanding Double Close Transactional Funding
  • Why Use a Double Closing?
  • The Role of Transactional Funding
• How Transactional Funding Works in a Double Close
  • The Double Closing Process: Step-by-Step
• Benefits of Double Close Transactional Funding for Wholesalers
  • Double Closing Transactional Funding Fees and Costs
  • Choosing the Right Transactional Funding Partner
• Double Closing Example
• Double Close Transactional Funding Loan Strategy
• FAQs about double close transactional funding
  • What is double close funding?
  • What is an example of a double closing?
  • What is the double closing strategy?
  • Is DoubleClose.com legit?
• Conclusion

Understanding Double Close Transactional Funding

Double closings involve two separate, but connected, real estate transactions. First, the wholesaler (Party B) purchase property from the original seller (Party A). Then, the wholesaler immediately sells the estate property to the end buyer (Party C), often a real estate investor.

The term “double close” refers to the necessity of two distinct closings. Transactional funding simplifies this process. It allows the wholesaler to complete the purchase from Party A and the subsequent resale to Party C seamlessly, with the two transactions executed one right after the other, streamlining the real estate deal.

Why Use a Double Closing?

Double closings are sometimes necessary when there’s a requirement for the wholesaler to take ownership of the property. For instance, banks might require it in certain short-sale situations or a title company might require it. This approach might also be preferred for legal compliance reasons.

It offers wholesalers greater control. It also eliminates the need to disclose the assignment fee to either the seller or the buyer.

The Role of Transactional Funding

Traditional funding methods are usually too slow for these fast-paced deals. Transactional funding loan provides short-term loan specifically designed for these transactions. These loan fund are intended to cover the initial purchase (A to B), allowing the wholesaler to take title without large amounts of personal capital, especially with the common requirement for a hard money lender.

This enables real estate wholesalers to buy the property without requiring substantial personal funds. Once the sale to the end buyer (B to C) is completed, the proceeds are used to repay the funding loan. It’s a streamlined and efficient process designed for fast transactional needs and without a credit check.

How Transactional Funding Works in a Double Close

Think of transactional funding as the intermediary that facilitates the entire process. It enables the swift purchase and sale of a property from Party A to Party C, minimizing the wholesaler’s financial risk.

Because of this rapid financial turnaround, the wholesaler avoids significant financial exposure. The funds provided by a transactional lender offer the means to purchase the property without any out-of-pocket expenses, perfect for estate wholesalers looking for funding work.

The Double Closing Process: Step-by-Step

Here’s a detailed look at how a real estate double close with transactional funding typically unfolds:

1. Find a Property and a Buyer: A estate wholesaler identifies a property, often below market value, that a property seller wants to get rid of. They then locate a final buyer willing to pay a higher price. This could be considered a great wholesale deal.

2. Contract Time: Two separate contracts are necessary. One is the original purchase agreement between Seller A and Wholesaler B, and the other is an agreement between Wholesaler B and Buyer C. Both of these combined can be considered a closing deal.

3. Get the Funding: The wholesaler secures funding from a transactional funding provider, often needing same-day funding. This close funding will cover the initial purchase of the property from the seller.

4. Closing A-B: The first estate transaction (A to B) is completed. Ownership is officially transferred to the wholesaler.

5. Closing B-C: The second closing (B to C) occurs immediately afterward, potentially on the same day. The end buyer (C) acquires the property, and the proceeds from this sale are used to repay the transactional funding, completing the closing real estate deal.

6. Profit for Everyone: If the numbers work and it’s been done right, everyone involved makes the money they want.

Benefits of Double Close Transactional Funding for Wholesalers

What are the specific advantages of using double close transactional funding? It solves logistical challenges, and offers significant benefits.

First, transactional funding minimizes your financial risk when deal started. Second, you enhance your negotiating position by appearing as a well-funded buyer, gaining you the power to pursue real estate deals. You expand your access to a broader range of deals, improving your credibility.

You establish an ethical and legitimate standing for your estate deals. Finally, you gain invaluable hands-on experience in real estate transactions, furthering your understanding and ability. This experience allows for estate wholesalers transactional processes to be completed without many obstacles.

Double Closing Transactional Funding Fees and Costs

Since these are essentially short-term loans, fees are part of the process. The precise amount and structure of these fees can vary based on several factors.

These closing costs are usually calculated as a small percentage of the total transaction amount. An origination fee, often ranging from 1% to 3%, is common, and the maximum loan amount can be up to $5 million.

Choosing the Right Transactional Funding Partner

Selecting the appropriate funding partner is crucial for real estate professionals. The chosen partner should be capable of providing funds quickly and reliably and without requiring many hurdles.

They must also possess a thorough understanding of the double closing process to prevent any complications. Key qualities to look for include transparency, clear communication, and the ability to deliver funding promptly.

Double Closing Example

Let’s say a real estate investor locates a motivated seller who is willing to sell their house for $400,000. The seller is seeking a quick sale without the hassles of repairs or prolonged negotiations.

The wholesaler then identifies an investor who is looking for a move-in-ready property in the same neighborhood and is willing to pay up to $450,000. This is where a transactional lender comes into play.

The funding provider provides the $400,000, enabling the wholesaler to complete the initial closing with the seller and take ownership of the property. The wholesaler can then legitimately resell the property to the investor for $450,000, resulting in a $50,000 profit, before factoring in loan and origination fees. Estate investors should consider all the legal ramifications and always consider consulting a real estate attorney.

Double Close Transactional Funding Loan Strategy

A common challenge in many wholesale real estate transactions arises from managing interactions with both the buyer and the seller simultaneously. Many individuals may find themselves uncertain about how to facilitate a sale between two distinct parties, highlighting where the estate double close strategy comes in.

A solution to this challenge is the double closing, which allows for separate, independent transactions. With this method, neither party is exposed to the specific markup and fees that would typically go to an agent. This allows real estate wholesalers transactional strategies to bring in a lot more revenue for them.

By utilizing a double closing, investors or real estate wholesalers gain a method for increasing their profits. Always look into your specific State requirements before attempting to get your deal started, such as looking into the state’s privacy policy when it comes to public data disclosure.

FAQs about double close transactional funding

What is double close funding?

Double close funding is a real estate investment strategy that utilizes short-term loan. These loans are provided to estate wholesalers to facilitate the purchase and rapid resale of a property.

What is an example of a double closing?

Imagine an investor looking to sell a property quickly. Then, you find another investor eager to purchase the property in cash, at a price higher than the original asking price. A double closing would help.

What is the double closing strategy?

It involves two separate estate transactions: first, the wholesaler purchases the property. Second, they immediately resell it to a final buyer, so wholesalers transactional funds are used and paid back quickly.

Is DoubleClose.com legit?

DoubleClose.com appears to be a legitimate website. Some user reviews highlight the company’s high level of service, particularly regarding speed and market knowledge, with no credit check needed. Many would say that is where transactional funding works in a great way.

Conclusion

For real estate wholesalers, double close transactional funding offers a streamlined approach to property flipping. This financial tool allows for the purchase and immediate resale of properties without tying up personal assets.

By grasping the mechanics, benefits, and selecting a reliable funding partner, wholesalers can gain a significant advantage. As with any financial decision, thorough market research and knowledge are critical for success when it comes to double close transactional funding and a need to close real estate fast.