How Does Transactional Funding Work in Cities Around Tampa?
Transactional Funding Clearwater | Pinellas | Pasco | Manatee |Brandon is being used in an estimated 78% of all wholesale transactions in the Tampa Bay area of Florida including Tampa, Clearwater, Pinellas Park, Saint Petersburg, Brandon, Citrus Park, Seminole, Largo, Oldsmar and Gulfport, where the real estate investors have no money to close the first transaction of a double closing or the A – B leg.
The general real estate market is typical of mid-sized cities where properties tend to stay on the Multiple Listing Service® (MLS) for over 5 – 6 months. In these areas, it is more challenging for real estate wholesalers to operate where they are flipping wholesale deals. However, there are many wholesale deals done where the real estate investors do double closings with other investors who rehab these properties and sell them to retail buyers.
For these wholesalers, the key to doing double closings is to first get the property under contract with as long an inspection period as possible then market like crazy to their buyers list and other local ad methods including Craigslist and bandit signs. Once an end-buyer is found and he signs a purchase contract, the investor will head to the closing with the original property owner.
The parties to these closings that are flipped from one seller to an end-buyer with the investor in the middle are called “Double Closings”. The parties to the transaction are designated by letter (A, B, C) with the original property seller as “A”, the investor as “B” and the end-buyer as “C”. The double closing is referred to as A – B and B – C closing. These two closings are most often done on the same day but they can be done at two different closing agents even if different states.
A double closing is often incorrectly referred to as a simultaneous closing but in “legal” jargon it is not the same. A double closing is as I described above where three parties are involved and the transactions are all paid by cash only. This means wired funds from each party to the transactions, not cashier’s checks or money orders.
A simultaneous closing is where there is a seller and a buyer at the closing table and the buyer is getting a mortgage to purchase the property. The simultaneous part of the closing actually refers to the closing of the mortgage loan with the lender when the deed is transferred to the new owner. This difference may seem like a technicality but it does imply that the person saying double and simultaneous are the same doesn’t understand the terms.
Transactional Funding Clearwater | Pinellas | Pasco | Manatee |Brandon varies greatly from hard money in that transactional funding is only loaned for one or two days while the end-buyer’s wired funds are used to close the second leg (B – C) of the transaction. Hard money is usually loaned for a maximum of one year and it carries points to close, various junk fees and an annual interest cost. These rates and fees can vary dramatically depending on the lender and how much his local market will bear.
The cost of Transactional Funding Clearwater | Pinellas | Pasco | Manatee |Brandon is very modest and usually varies from 1/2 % to 2% of the amount borrowed. For example on a $100,000 funding, the investor might pay anywhere from $500 to $2,000 for the one-day use of the money. Typically the more money funded, the higher the points (%) but it is suggested that you check out a number of local funders for the best “net” cost. Net here means how much the real cost is because some funders charge junk fees or have minimum funding costs.
If there is a deed restriction in a short sale or an REO you are purchasing, the closing agent will have to know how to legally do the closing so as not to get into legal entanglements. Not all closing agents or attorneys know how to do this so be careful and check before you get to the closing table.
Most hard money lenders will not finance deed restricted properties unless the buyer (investor) has money of his own in the transaction. This is because of the risk associated with the deed restriction and the property may be conveyed with less than marketable title. Also check with your closing agent early on and make note of which lenders have deed restrictions before you offer on them.
Paying for a purchase by cashier’s check is 99% unacceptable by closing agents in the Tampa Bay area of Florida including Tampa, Clearwater, Pinellas Park, Saint Petersburg, Brandon, Citrus Park, Seminole, Largo, Oldsmar and Gulfport, because Cashier’s checks are easily forged using advanced photo copy machines that literally anyone can access.
Transactional Funding Clearwater | Pinellas | Pasco | Manatee |Brandon is easy, quick and it will facilitate your making large wholesale profits because the seller (A) will not be able to see what you sold the property for and the end-buyer (C) will not be able to see what you paid for the property and therefore, what your profit is in the transaction – until both legs of the transaction are recorded in the public record.
To your limitless success,