What Is Transactional Funding and How Does It Work?

Frank Chen

What is Transactional Funding and Why Do People Use it:

Also referred to as: flip funding, double close funding, bridge funding, back-to-back funding, simultaneous funding, gap funding

Short term loan commonly used to finance the A-B side of a short sale or REO wholesale transaction. Seller (A) → Investor Buyer (B) → Cash Buyer or Qualified Buyer (C)
There is no credit check or income verification required.
Funding usually covers ALL cost including closing, and fees are taken from the sale price. So nothing out of pocket.

The major stipulation is that you have to have an end buyer lined up to purchase the property from you immediately after you close the A-B sale

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Paperwork:
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Contract to Purchase the property
Estimated HUD-1 Statement for A to B transaction
Short Sale Approval(s) (if applicable)
Title Commitment
Contract to Sell the property
Verification of Buyer C Funds or Conditional Loan Commitment
Estimated HUD-1 for B to C transaction
Clear copy of government issued ID for the Borrower
Corporate Documents for entity taking title (if applicable)

How does the process work:

Identify the property of interest – Short Sale or REO
Request Proof of Funds (letter) – http://fastinvestormoney.com/proof-of…
Execute buy and sell contract
Request funding
Submit transaction documents
Lender Review
Loan approval
Funding
**Extended Funding – 30-day holding period
90-day Seasoning Rule – expired in Feb.

What it WON'T Fund:

Rehab Projects (Fix and Flip)
Earnest Money
Escrow Deposit
Non-Real Estate Transactions
Transactions outside of the United States

Transactional funding allows you to close on properties quickly and same day without a single cent of your own money. It also bypasses the tedious loan process, and your credit doesn't play a roll in the qualification process. If you have questions about how many points, percent, fee is charged per transaction, I would simply contact a transactional funding company because they do vary from lender to lender. I have seen anything from 2-3 points.

Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.