Mastering Transactional Funding for Wholesalers in Illinois

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Many real estate wholesalers, even successful ones, sometimes find themselves in a tough spot. Perhaps they’re just starting out, are low on funds, or a promising deal pops up, but it hinges on getting cash quickly. This is where transactional funding for wholesalers in Illinois becomes an invaluable asset for investors.

You might think you can just work harder, connect with more cash buyers. But it’s a fast-paced environment.

These financial bottlenecks could stifle their potential, and that’s where transactional funding for wholesalers in Illinois comes in.

Table of Contents:

What is Transactional Funding?

Transactional funding is a short-term loan designed to let real estate wholesalers purchase a property and quickly resell it. Think of it like getting help with the needed purchase price. This is all without using their own capital.

It’s commonly used in “double closings”. The wholesaler buys the property from the seller (the A-B transaction) and then immediately sells it to an end buyer (the B-C transaction).

The end buyer is in place *before* the wholesaler uses transactional funding.

How Transactional Funding Works in Illinois

The process begins when a wholesaler, “B,” finds a property and makes an agreement to purchase it from the seller, “A.” “B” has already lined up a new buyer “C,” who’s agreed to buy the place, for a higher price. “B” is going to make a profit from the price difference.

The wholesaler then applies for transactional funding. They have to give the funder details about both the A-B and B-C deals.

Once approved, the funds are wired to the closing, often a title company, for the A-B deal.

Once the A-B transaction closes, ownership is briefly transferred to the wholesaler, who is going to profit from this purchase. “B” then immediately completes the sale to the end buyer “C.”

Then the wholesaler pays the funding plus interest and fees.

Legal Considerations for Transactional Funding in Illinois

Is wholesaling real estate legal in Illinois? Yes, but staying within legal lines is crucial.

Illinois has put laws into place that protect buyers. The Real Estate License Act of 2020 (RELA) in Illinois dictates rules to maintain professionalism in the industry.

The law also defines what a person *can* and *cannot* do in real estate transactions without holding a professional license.

These kinds of short-term loans differ a little bit from some types of investing, as you’ll want to have an end buyer secured. Make sure, too, that the sale contract on your real estate acquisition doesn’t forbid selling.

Do keep these in mind as you’re scouting places that match up with the type of selling or double-closing loans you need.

Key Aspects of Illinois Real Estate Law

Illinois views those who frequently engage in wholesaling as those *needing* a real estate license. Illinois law specifies certain behavior requiring this, for instance.

The actions involve a “pattern of conduct.” You should also consider looking into one or more trade groups to stay informed of Illinois Real Estate law.

Some of these real estate trade groups that focus on education, licensing, advocacy, or business best practice are as follows:

  • The Illinois Realtors (IR): The IR is one of Illinois’ largest trade groups.
  • The Mainstreet Organization of Realtors (MOR): With history going all the way back to the 1920’s, MOR’s most recent makeup started in 2007. Their service extends into many real estate investment areas within Illinois.
  • The Chicago Association of Realtors (CAR): Since the 1880s, the CAR has become a central, well known place for people interested in buying and selling real estate, right in Chicago’s booming economy.
  • The Greater Gateway Association of Realtors (GGAR): The GGAR started helping buyers in the 1940s. They have expanded their base of operations outward from the home city, Glen Carbon.

Transparency in Illinois Wholesaling

Illinois requires full transparency in real estate deals. This means disclosing to all parties your role as a wholesaler.

This doesn’t stop deals. Instead, it sets clear expectations and fosters trust.

It shows a true, legitimate interest for both sellers, as well as potential customers.

Double Closings and Transactional Funding

Double closings are a core use for transactional funding. In Illinois, having a solid funding partner helps manage these.

The two-step closing process goes fast. It goes better with experienced lenders who know Illinois.

Why Choose Double Closings?

Double closings offer a cleaner separation between the purchase from the original seller and the sale to the end buyer. Some wholesalers might like doing this because of potential conflicts from assignment clauses in the original purchase agreement.

This can come from an inability to openly sharing profit margins.

Costs of Transactional Funding

Fees usually range from 1% to 3% of the loan amount. These are usually just for very short terms, like 24 hours to a few days.

With FundMyDoubleClose.com, rates vary depending on several criteria.

Loans up to $1,000,000 are charged at 1%, with a minimum of $1,000. We have funded same day, when needed.

The price is set at 2% of your property cost for any of our Illinois contracts going between $1,000,000 and $2,000,000. Funding here usually happens across several workdays.

For loans falling within the $2,000,000 to $5,000,000 range, a 3% charge on these bigger-ticket acquisition applies, across multiple weeks. Keep in mind also, that escrow could increase fees, specifically, if we need funds beyond standard closing timing.

Comparing Costs: Transactional Funding vs. Hard Money

Transactional funding is preferable to other types of short-term real estate financing, like hard money. Why is this you might ask?

Fees tend to be lower, there is no credit or income verification, and paperwork is simpler. Hard money lenders also look at your credit history, and transactional funders do not.

Hard money loans may carry higher interest rates. There can also be extra fees that will ultimately affect your returns.

Finding Motivated Sellers and Cash Buyers in Illinois

The key to a thriving wholesale business starts with having a solid supply of great deals coming in. And you have to be fast, knowing that your offer might not be the first (or highest.).

Building connections and growing networks within real estate groups can give access to new deals that aren’t on main market. But how and where does the typical buyer find these deals?

Some useful ways can involve using digital platforms. Many buyers do tend to lean into a specific part of internet tools these days. As the National Association of Realtors wrote in their most recent Home Buyers and Sellers Generational Trends Report, nearly all, specifically, 96% of property buyers used the net as a part of buying and deal scouting work.

Earnest Money Deposit (EMD) Loans in Illinois

Sometimes, a wholesaler needs funds for a deposit. That helps the seller agree to their terms and lock in an interest in the property for a certain length of time.

Fund My Double Close’s tiered approach breaks down as such.

$1,500 fee – If the deal is worth $5,000
$2,500 fee – for “earnest deposits” ranging from $5,001 – $15,000
$5,000 fee- when EMD falls within $15,001 – $25,000
$12,500 – For EMDs needing between $25,001 and $50,000.
$20,000 fee – where you deal’s deposit needs between $50,001 and $75,000
$27,500 fee- If the investment lands between $75,001 – $100,000

The Role of EMD Loans

These deposits can demonstrate to your property sellers that you’re on the up-and-up. EMD funding in your double-closing process is yet one more, often very key element.

EMD helps the deal to progress in general. So, having accessible funds here adds yet one more aspect of trust and interest for your real estate contracts.

The deposit you offer needs to have clear terms stated, and you want to lock it down to meet the timelines in Illinois you and sellers discuss.

Seller Carry Transactions in Illinois

Seller carry transactions, where the seller acts as the lender for the buyer. Transactional funders support these, as well.

The funding rates generally mirror those used for double closings, typically between 1%-3%. These kinds of deals provide different choices, when classic funding isn’t available.

It’s where trust built with buyers or sellers is key. Seller carry is yet one other flexible tool, that smart investors will consider and act upon.

Structuring Seller Carry Deals

Seller carry loans above $1,000,000 do need an attorney for closings, but your rates are still based on these amounts:

  • 1% fee: loans to $1,000,000.
  • 2%: if the seller-backed price falls between $1,000,000 – $2,000,000.
  • 3%: on funding spanning $2,000,000 – $5,000,000.

This set pricing shows exactly what you get.

Choosing the Right Transactional Funding Partner

Partner with someone offering clear deals, low rates, and solid Illinois double-closing expertise. Consider companies like Best Transactional Funding, which claim some level of national, professional standing, offering pricing rates of 0.5% – 1%.

Make sure to select firms with expertise, especially in Illinois, to increase your closing’s success rate, on properties around Illinois. Partnering with those known well across the state does make things smoother for both of you.

Do focus also, that those well known have proven reliability in all Illinois locations, Chicago, all the way down to Glen Carbon.

Due Diligence on Funding Partners

Read reviews. Do more checking online, and if at all, meet a lender face to face for the bigger and more complex lending that will grow your sales across the Prairie State.

Look out for what the lenders have for client experiences. For instance, EMD Transactional Funding have success testimonials directly on their site.

So what’s the core goal here, on deals you get with a funder, if it goes the right way? Ideally, everyone is looking for low lending fees, fast closing to make deals go smoother, and keep the investor building good sales.

FAQs about transactional funding for wholesalers in illinois

What are the requirements for transactional funding?

The main needs are a signed purchase agreement with the seller and a signed agreement with a new, different, end buyer. Traditional income verification, is not needed.

What services offered by wholesalers transactional funding?

Services include short-term loans for double closings and earnest money deposit loans. It can include help for seller carry transactions.

This means that it handles all deal types wholesalers could think up. Funding help is accessible and can adjust to each sale method or nuance of the deal as they come up in different Illinois counties, even those deals falling into less-used strategies.

How much does transactional funding cost?

Costs may change between different loan offers. At Fund My Double Close, funding usually falls around the rates discussed earlier, i.e., between 1% to 3% of funding, and rates and fees will rise with higher-cost acquisition plans, too.

Remember, the price depends a great deal on the contract price of each deal.

Conclusion

Transactional funding for wholesalers in Illinois lets investors make the most of time-sensitive real estate options. By dealing with quick purchases, then closing a deal quickly with waiting customers, wholesalers have ways to earn revenue.

They may be blocked in a double closing by less-liquid funds. Or have other chances that hinge on deposits.

With a solid partner in place, the details of transactional funding helps boost confidence in deals and this is without a fear of loans hanging over time. Think of these approaches, such as “seller carries,” that don’t require one’s own liquid assets.

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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