Using Transactional Funding in Dade, Broward and Palm Beach
Local real estate investors using Transactional Funding in Dade, Broward and Palm Beach in Florida are at the epicenter of the nationwide foreclosure and short sale market. Doing real estate transactions in short sales and purchasing bank-owned or REO properties can be challenging if an investor doesn’t have money to do the actual buy and close on these properties.
Typically wholesale profits are made when the investor puts a property under contract with the property owner (designated as the “A” seller) and then sells the same property to an end-buyer (“C”) to complete the double closing. The transaction is designated as an A – B and B – C closing where the investor is designated as “B”.
Many closing agents recognize that if the A – B transaction uses the end-buyer’s money to close the A – B “leg” the transaction can be an illegal flip unless both the Seller (A) and the end-buyer (C) are disclosed this in writing and both parties agree. This can be a deal killer in most cases as the A party immediately thinks the investor resold the property for a HUGE profit, no matter how large it is, and the end-buyer (C) feels he was charged too much.
Especially where the wholesale profit is over $15,000 +/-, the investor has two options to fund the A – B closing even if it is at another closing agent than the B – C leg’s closing. This is a hard money loan which can be very expensive or he may be able to use transactional funding which is very inexpensive.
Transactional funding is where the funder of the A – B leg wires funds needed to close to the A – B closing agent. This amount is the full amount (100%) of the net due from the buyer (B) that is due on the HUD-1 Closing Statement (Line 303). As an example I am sending in almost $300,000 to a closing agent in Orlando for the A – B closing on a property while the investor (B) and the end-buyer (C) are closing with a local closing agent in Miami.
If the contract from the seller (A) cannot be assigned per the terms of the original contract with the Seller (A), the best alternative is to use transactional funding to complete the deal with no money out-of-pocket for the investor and to keep both A – B and B – C transactions legal.
If an investor asks the closing agent if he does “double closings” often the agent or attorney will say they are illegal. Unfortunately, these likely well-meaning but uninformed people are trying so hard to protect themselves from a non-existent liability that they kill many deals. Transactional funding overcomes this issue as the investor can now close the A – B leg anywhere in the country and close the B – C leg in Florida.
Miami, Ft, Lauderdale, Coral Gables, Plantation, Davie, Sunrise, Coral Springs, Pembroke Pines and every other city in the tri-county area using Transactional Funding in Dade, Broward and Palm Beach have short sales, REOs, probates, and other types of motivated sellers who can be great candidates for investors who want to get wholesale properties. Using transactional funding insures that these deals can be completed with no monetary requirement from the investor for the A – B leg.
To your limitless success,