How to set up for transactional funding lenders.
What you need the most for transactional funding is a profitable real estate deal. You
need a motivated seller and an equally motivated end-buyer who come together with
the real estate investor in the middle to coordinate the two closings.
These two closings are usually referred to as double closings and the parts are referred
to as the A – B “leg” and the B – C “leg.” In these legs the “A” individual is the property’s original seller and the investor is designated as the “B” entity. Finally the
end-buyer is referred to as the “C” buyer.
The real estate investor himself only needs to qualify for the transactional funding by having a closing agent who has done the preliminary HUD-1 Closing Statements and has the
end-buyer’s wired funds in his escrow account. Once these elements are in place, the closing agent can have all the necessary documents signed by the parties to the transaction and
proceed to disburse the proceeds to the original seller (“A”) and the investor (“B”).
Transactional lending is simple in its basic concept and functionality. All of the complicated ingredients of the closing are handled by the closing agent and he gets paid on the HUD-1
Closing Statement for completing the two legs of the transaction.
The beauty of transactional lending is that is allows real estate investors the ability to do any sized transaction with no money in the deal. All the funding for the A – B leg is borrowed from the transactional funding lenders
There is no down payment required, no document stamps for a mortgage, no inspection of the property or survey required. All these and more requirements may be necessary for the end-buyer to close, but they will have been completed long before the transactional lenders allows his funds to be used to buy the property.
The documents required by the transactional funding lenders are very limited and can be completed in minutes. Likewise, the approval or denial of the transactional funding can
be done in minutes once the borrower’s documents have been reviewed.
If you intend to borrow transactional funding , don’t wait until the last minute to apply to the transactional funding lenders because they may not have the amount of funds you need at the time
you need them