1. There are no loan applications, credit or income requirements for you to obtain transactional funding.
2. Not one penny out of your pocket is required for the AB Transaction: Transactional funding covers the purchase price (minus your "earnest money deposit") and the full closing costs for the AB Transaction.
3. Easy Transactional Funding will provide you with a Proof of Funds Letter to assist you with getting your offer accepted by the Seller.
4. You have limited risk since you are not putting up any collateral besides the property you are purchasing to resell to your end buyer.
5. A minimal amount of paperwork is required on your part.
6. Transactional funding costs a lot less than hard money does. Plus, your fee is taken out of the proceeds of the BC Transaction.
7. Transactional funding gives you privacy on the AB Transaction. Your end buyer will not know who your source is for acquiring properties, how much you purchased the property for, or what your profit markup is.
Sequence of Events
1. Investor (wholesaler) identifies the property of interest.
2. Investor lines up an end buyer to purchase the property.
3. Investor contacts Easy Transactional Funding and requests a Proof of Funds Letter for the purchase of the property.
4. Investor sends in his purchase offer, along with his Proof of Funds Letter, to the seller and negotiates a purchase price.
5. Investor executes his Purchase & Sale Agreements with both the seller and his end buyer. (The investor must have his end buyer under contract).
6. Investor submits a Request for Transactional Funding, along with the required documents, to Easy Transactional Funding for review and approval.
7. Investor fills out and signs any other paperwork required by Easy Transactional Funding.
8. If approved, the investor is notified by Easy Transactional Funding that they will furnish the funding.
9. Investor has closing agent open up a file for the AB Transaction and a file for the BC Transaction.
10. Easy Transactional Funding submits its Lender Closing Instructions to the closing agent.
11. Easy Transactional Funding waits until the BC Transaction is funded, and all the documents are signed and ready to execute.
12. Easy Transactional Funding then releases the funds to close the AB Transaction.
13. Investor now closes the BC Transaction with his end buyer.
14. The closing agent deducts Easy Transactional Funding's loan amount and fee out of the net proceeds from the BC Transaction and distributes those monies to Easy Transactional Funding, and the remaining proceeds from the sale (the Investor's profit) goes to the Investor.
15. The Investor comes to the closing with no cash and leaves with a check from the proceeds of the two transactions (minus the loan amount and transactional funding fee).
The Transactional Funding Process
The process begins when an investor finds and gets a property under contract with a seller. The investor doesn’t have the money necessary to close the purchase with his seller (or the investor, for whatever reason, doesn’t wish to use his own capital to close the purchase). The investor also has an end buyer that he can sell the property to in order to make a profit (if he can close the purchase with the seller). By obtaining transactional funding for the initial purchase of the property, the investor can then turn around and sell the property to his end buyer, completing the back-to-back transactions, and make his profit.
Transactional Funding: What It Is And How It Works
Transactional funding is a form of private, short-term lending used to do a “back-to-back” closing (also known as a “consecutive closing" or "double closing"). A back-to-back closing consists of two closings: 1) the acquisition, and 2) the subsequent resale of the property———both scheduled to take place one after another, on the same day. Transactional funding is utilized for the first transaction of a back-to-back closing. A back-to-back closing involves two separate transactions, on the same day, with the same closing agent.
Other names for transactional funding are: “wet funds”, “good funds”, “bridge loans” and “gap loans”.
Transactional funding allows an investor (wholesaler) to purchase a property without any funds of their own, providing that there is an end buyer already in place to immediately purchase the property from the investor on the same day, or in some cases within 1-3 days. The investor pays back the loan, and pays the transactional funding fee, out of the proceeds he or she receives from profitably reselling the property to his or her end buyer. This takes the transactional funding company out of the process by returning its money and fee, leaving the remaining proceeds from the sale for the investor———which is his or her profit.
Most transactional funding lenders will cover the full purchase amount, and ALL closing costs associated with the first transaction, so that the investor does not have to show up to the closing with any of his or her own cash.
Do not confuse a “back-to-back” or “consecutive” closing with a “simultaneous” closing, an earlier practice in which investors would use their end buyer’s purchase money to fund the first transaction between them and their seller. Or, they would assign the purchase contract to their end buyer. Lending and title regulations do not allow “simultaneous closings” any longer. Now, a property being purchased needs to be funded, and full legal title taken, before it can be resold.
Transactional Funding Explained
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Easy Transactional Funding
Easy Transactional Funding
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1. Most conventional transactional funding only allows between 1-3 days to close (although, extended transactional funding can be obtained for a higher fee).
2. Preparation, timing and coordination on the part of the Investor is of the essence.
3. Transactional funding may not be able to be obtained if the subject property has seasoning requirements connected to it.