What Is Transactional Funding?

 

 

 

Transactional funding is the process where funds are borrowed and used to purchase various types of commodities that usually will be resold the same day.  In our use as real estate investors, the best transactional funding is when we borrow money for a few hours to purchase a property that we have already resold to an end-buyer.

 

Transactional funding is money that is wired into a closing agent or attorney who will be closing a double transaction – the purchase and then the sale of the same property preferably the same day.  It is critical that any monies supplied by the transactional funder and the end-buyer be deposited into the closing agent’s escrow account from wired monies only.

 

The importance of wired monies can’t be stressed enough because counterfeit money orders and cashier’s checks are easy to make with high quality copies available to the public.  No actual cash money is allowed for buying properties as closing agents do not want to be responsible for holding cash and having to make the bank deposit. 

 

The reason is the person making the cash deposit must give their social security number if they don’t have an account.  If they have an account, their social security number is on file and the deposit is reported to the Internal Revenue Service (IRS) as a counter-measure for money laundering.

 

Transactional funding allows real estate investors to do purchases and sales without the use of their own money.   This is a giant benefit to beginning investors who have no money of their own to invest.  The transactional funding lender only needs to review the closing statements for both the purchase and the sale of the property and know that the end-buyer’s funds are “cleared” and are in the closing agent’s escrow account.

 

Once the transactional funding lender is satisfied that the buyer and seller are ready to close (money in the escrow account) and there is a profit for the investor, he authorizes the closing to go forward.  This closing can take from 30 minutes to many hours if there are problems that have to be resolved at the closing table.

 

 

Once the original seller has signed all his closing documents, the investor has signed his seller’s documents and his end-buyer’s documents, the transactional funder’s money will be used to fund the first closing and the second closing with be funded with the end-buyer’s money all within a few minutes.  Lastly, the transactional funder’s money will be wired back to his bank account usually the same day

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About Dave Dinkel 27 Articles
Dave Dinkel graduated from the University of Florida in 1968 with a BS in Chemical Engineering. He initially worked for a petrochemical research and development company in Illinois. Later he entered the financial arena as a stock and commodity broker with Merrill Lynch.While a stock broker he became a Certified Financial Planner and later started his own brokerage firms and stayed in the financial services industry for 22 years before retiring to pursue his love of real estate investing. After retirement, and because of his interest in business start-ups, he worked with a small company for a few years while driving their sales from under $12,000,000 to over $150,000,000 annually before going back to full-time real estate investing.Dave Dinkel has been a national platform speaker, contributor to local real estate clubs, mentor and consultant to numerous real estate investors and all the while running his own real estate business. Mr. Dinkel received the following degrees or designations: BSChE, FINOP, CFP, MSRP, RSP, RR, ROP, SROP, MGA, GA, Certified Estate Planner, Licensed Mortgage Broker, and Licensed Insurance Agent. He is often referred to as the “Teacher of Teachers” and his Mentoring continues to produce Students who go on to be national real estate "Gurus". .He has been a real estate investor since 1975 and recently received the first-ever Lifetime Achievement Award for Contribution to the Real Estate Investing Community. While being active in real estate investing for over 40 years, he and his wife Nancy have been married for over 52 years. He is most well known for the development of his Mentoring Program that has been called, "The Best Mentoring Program in the Country" which he continues today.In addition to his Mentoring Program, he started a full-service transactional funding Program so that new investors had the ability to do deals with no money of their own. He challenged the funding industry by making borrowing money very simple with his "One Point Funding Program" which has revolutionized the transactional funding industry and made millions of dollars available to investors who otherwise could not have afforded it. Currently his transactional funding is only available in Florida.Get more information about his real estate investing mentor program at http://www.DaveDinkel.com