Transactional Funding West Palm Beach

West Palm Beach, Florida is a great place for real estate investors to find profitable deals. It is important to understand the unique nature of Transactional Funding West Palm Beach and Palm Beach County in general. Most real estate investors who do wholesaling in West Palm Beach use transactional funding to avoid any legal issues in the first part of their transactions.

 

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Transactional funding is the process where a “funder” allows the use of his money for a real estate closing for the initial “leg” of an A – B and B – C transaction. The letter designations are used for the parties to the transaction, the seller (“A”), the investor (“B”) and the end-buyer (“C”).

 

This process is often referred to as a double closing and is totally legal in the State of Florida when done properly. The misconception of this funding process being illegal has been perpetrated by national lenders and a few misinformed Realtors, closing agents and attorneys.

 

These well-meaning but misinformed individuals perceive double closings as taking advantage of the sellers’ lenders. After all, in the lenders’ minds, if an investor can close on a property and hours later resell it for a profit; something must be wrong because the seller’s lender should have received this profit spread.

 

The situation where an investor and closing agent can get into an illegal situation is when the end-buyer’s (“C”) money is used to fund the investor’s original purchase, or the A – B leg. What is illegal about this part of the double closing is that the end-buyer is intentionally not told his money is being used to fund the A – B leg.

 

While most closing agents shy away from using the end-buyer’s money at all, some have correctly requested that the investor get the original seller and the end-buyer to sign a Disclosure Statement that allows the investor to use the end-buyer’s money to close the A – B leg. However, this “joint cooperation” often results in either the original seller or the end-buyer walking away from the transaction.

 

The more viable option for an investor who doesn’t have the money to purchase the property with his own money is to use transactional funding for the A – B leg. Some investors will try to “assign their contracts” to the end-buyer and in rare cases this will work and no funding from the investor will be needed. However, this cannot be done with short sales, REOs (bank-owned properties) and where the net profit to the investor is so large that the seller or buyer may not close.

 

West Palm Beach is a unique area in many ways for South Florida real estate investors. The city and county of Palm Beach rank relatively high in short sales and REO properties at seemingly great prices compared to its neighboring cities and counties to the south – Broward and Miami-Dade Counties. However, this can be misleading since the city of West Palm Beach and Palm Beach County are less populated than their “sister counties”.

 

Because of the less transient nature of the population in West Palm Beach, properties sell slower if they are listed or offered at Full Market Value (FMV) and rental properties only bring about 60% of the corresponding rents as in the neighboring cities in Broward and Miami-Dade Counties. Once investors grasp these important features of West Palm Beach properties, they can adjust their offering prices accordingly. Also using transactional funding West Palm Beach makes the deals easier to fund.

 

In summary, real estate investors should use transactional funding whenever necessary to legally do double closings in any of the following cities – West Palm Beach, Palm Beach, Wellington, Lake Worth, Boca Raton, Boynton Beach and Delray Beach to mention a few cities in Palm Beach County.

 

To your limitless success,

Dave Dinkel

 

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