Transactional Funding Florida: Unlocking Real Estate Deals

Are you a real estate wholesaler in the Sunshine State feeling stuck? You’ve found the perfect property, negotiated a great deal, and even lined up a buyer, but you’re short on the cash needed for a double closing. This is probably where transactional funding Florida comes in.

It can happen to even the most experienced real estate investors. Fortunately, transactional funding Florida offers a solution, allowing you to close deals without dipping into your own capital.

This guide provides all the essentials on how to make it work for you.

Table of Contents:

• Understanding Transactional Funding in Florida
  • How It Works: A Real-World Scenario
• Double Closings Explained Further
  • Why Double Closings Matter in Florida
• When Is Transactional Funding Needed in Florida
  • The Benefits of Using Transactional Funding
• Specifics on Transactional Funding Costs
  • A Detailed Breakdown of Costs
• Navigating Earnest Money Deposit (EMD) Loans
  • Fee Structures for EMD Loans
• Exploring Seller Carry Transactions in Florida
• Finding the Right Transactional Funding Partner in Florida
  • Testimonials and Real-World Success
• Avoiding Common Pitfalls in Transactional Funding
• FAQs about transactional funding flordia
  • What are the requirements for transactional funding?
  • What is an example of transactional funding?
  • How much does transactional funding cost?
  • What is a transactional financing?
• Conclusion

Understanding Transactional Funding in Florida

Transactional funding is a short-term hard money loan used in real estate wholesaling. This type of funding is specifically for “double closings” or “back-to-back closings,” where a property is bought and immediately sold to another party. Sometimes there can even be issues and alternatives in double closing scenarios.

Think of it as a bridge loan that spans a few hours to a couple of days. Because you already have an end-buyer lined up, this type of temporary financing helps move the deal forward quickly.

How It Works: A Real-World Scenario

Imagine you find a distressed property in Miami. The seller is asking for $200,000, and you have a cash buyer ready to purchase it for $250,000.

Normally, you would just sign the purchase contract between you and the original homeowner. But, because you’re wholesaling a property that’s bank owned and in Florida, it’s a totally different set of circumstances; they don’t allow signable purchase contracts. Instead, you use transactional funding to cover the initial $200,000 purchase, the property is then immediately sold to your buyer for $250,000, the transactional loan is paid off, and you keep the difference (minus fees, of course).

Double Closings Explained Further

In many real estate transactions, the property might go to the wholesaler first. The buyer will then take a mortgage and buy from the wholesaler at a future date.

A double closing moves faster, as the sale from the seller to the wholesaler is almost instant to the deal between the wholesaler and investor. This type of closing requires transactional funding.

Why Double Closings Matter in Florida

Double closings are especially helpful when dealing with bank-owned properties, HUD homes, or short sales. Often, these entities don’t permit the assignment of a contract, a common wholesaling tactic.

For instance, you won’t be able to directly assign a contract on a Bank Owned Property in the Sunshine State; they often will not let you use assignable contracts according to Lex Levinrad. The only option to complete the wholesale deal would be through a double closing.

When Is Transactional Funding Needed in Florida

You secured a deal. You also have an end buyer ready for a quick flip.

If you have a property where a traditional assignment isn’t allowed and you’re pursuing the steps towards a double close, consider this kind of bridge loan. By covering the temporary purchase price of real estate deals, investors and wholesalers do not need to use their own capital.

The Benefits of Using Transactional Funding

There are distinct upsides to consider if you want to find success. First, you can keep your own funds untouched, freeing them up for other investments.

Also, speed helps transactions progress more smoothly. Deals often must get funded on the same day for wholesalers to realize a profit, according to Jim, at Quick Transactional Funding.

Specifics on Transactional Funding Costs

The expenses are often linked to loan specifics. Costs for double closings with loans of up to $1,000,000, for example, run at just 1%. Minimum fees on those types of loans might start at $1,000, although this varies greatly from case to case.

Rates on properties go up from there. Keep this in mind to make the right decisions, whether pursuing single or multi-family residences.

A Detailed Breakdown of Costs

Here’s a breakdown based on information gathered about cost from this very company’s available funding:

Loan Amount	Interest Rate	Time to Funding	Additional Notes
Up to $1,000,000	1% (min. $1,000 fee)	As fast as same day
$1,000,001 – $2,000,000	2%	Multiple business days	Requires closing with our attorney
$2,000,001 – $5,000,000	3%	Multiple weeks	Requires closing with our attorney
Additional days money is held in Escrow	0.25% Per Day

Keep in mind that for loans above $1,000,000, closing with the lender’s attorney is usually necessary. This is for increased safety.

There are no upfront fees with transactional funding, making it an attractive option for many investors.

Navigating Earnest Money Deposit (EMD) Loans

Beyond primary loan pricing, an earnest money deposit helps get funding. The loan shows commitment from real estate wholesalers.

This might be another place where an investor is stuck on the “how” of the deal. However, Investopedia states that these don’t have to stop the momentum if you lack upfront capital.

Fee Structures for EMD Loans

Here’s a clear look at how Earnest Money Deposits work. The breakdown here makes things easy to digest.

• $1,500 for EMDs up to $5,000.
• $2,500 for EMDs between $5,001 and $15,000.
• $5,000 for EMDs between $15,001 and $25,000.
• $12,500 for EMDs between $25,001 and $50,000.
• $20,000 for EMDs between $50,001 and $75,000.
• $27,500 for EMDs between $75,001 and $100,000.

Keep in mind, there’s a 10% deposit to secure (with a minimum of $500) up front. It applies if the deal goes through.

Exploring Seller Carry Transactions in Florida

There is a lesser-known financial opportunity for sellers in addition to buyers. It offers the opportunity to serve as the bank, covering costs. This is yet another place where transactional funding comes in, via Fortunebuilders, who note its appeal for those dealing in wholesaling.

Rates parallel those of double closings. They stay at 1% for deals going up to a million but can get funding as soon as the same day.

Seller carry transactions offer another flexible option. The seller can carry financing, and you use transactional funding as needed to fill any gaps in financing.

Finding the Right Transactional Funding Partner in Florida

Pick a provider known for speed and transparency. Consider one who shares insights and experiences as an active investor like at DoubleClose.com.

Remember, the conditions in Florida make certain funding arrangements far preferable than others. You’ll want a partner who is familar with the Florida real estate industry.

Testimonials and Real-World Success

Seek a lender with many positive reviews. Also, try one with established credibility among Florida real estate investors.

Ideally, your lender will be available and responsive, providing excellent customer service. If you call them and are sent immediately to voicemail or are waiting days for an email reply, it may be best to keep searching.

Avoiding Common Pitfalls in Transactional Funding

Common issues might impact closing and realizing profits in this sector. They arise when people pick providers who struggle to offer competitive pricing or communicate well during sales.

Stay away from unproven operators. Be prepared with other avenues and knowledge sources to increase your chance of funding the purchase. Find those resources, like at DaveDinkel.com

FAQs about transactional funding flordia

What are the requirements for transactional funding?

Requirements include having a property under contract. An end buyer should be lined up.

Both closings must occur at the same title company, often on the same day, depending on the value. You need what is commonly referred to as an “A-B, B-C” transaction. That means you, as the wholesaler, are “B”.

What is an example of transactional funding?

An investor buys a house for $150,000. They have funding, real estate investors are set up, and it is sold immediately for $180,000. Then they use proceeds from the sale to fund the original funding contract and take on profits.

How much does transactional funding cost?

Cost varies, but it’s commonly around 1% to 3% of the loan. Additional daily fees might apply for loans if funds are needed to close deals for a longer period of time.

What is a transactional financing?

This type of financing covers property. The intent for funding and to finalize the transaction between the buyer and seller is often to be resold within hours.

Conclusion

For real estate wholesalers looking at double closings, quick flips, and more, consider alternatives for speed and capital preservation. If pursuing these investment options, transactional funding Florida offers a critical tool.

By working with the right lending partners, one can achieve results while avoiding common problems with double closings and earnest deposits. I highly recommend closing real estate transactions with transactional funding if your goal is to expand in this competitive space. Use the facts laid out here to get a winning edge as you keep building your financial resources in a rapidly growing industry.