How Does Transactional Funding Work?

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Transactional funding works by allowing an investor to purchase a property with no money of his own.  The transactional funder uses his money as a loan to the investor for the original purchase of the property from the property owner.  The property owner can be a homeowner, landlord or even a commercial property owner.

 

The investor does not need to have a stellar credit report to borrow money as he would if he borrowed from a bank.  In fact, his credit report is meaningless since the transactional funding is relevant only to the purchase of a property where it has already been resold to an end-buyer who has cash to close and has wired in his full amount of his purchase price.

 

The end-buyer’s purchase price is obviously higher than the investor’s purchase price or there would be no profit and no transactional funding of the investor’s purchase.  Profits on these deals can be in the thousands or hundreds of thousands of dollars – all happening within a few hours of the investor purchase and the investor’s sale.

 

Extended transactional funding is where the end-buyer didn’t get his money into the closing agent’s escrow account timely.  This is a common occurrence with international wire transactions that take time to be scrutinized by the Federal Reserve and the TSA for money laundering issues. 

 

It is suggested that if you know foreign monies are being wired for the closing that you inform your end-buyer to have his funds transferred to a domestic bank at least 72 hours in advance so they then can be wired into the closing agent’s escrow account.

 

There are transactional funding lenders that have what they call 30, 60 and 90 extended transactional funding.  In actuality, these are hard money loans that have the additional burden of carrying costs in the form of interest payments.  Even if the interest payment is made at the time the loan is paid off, this interest charge is what sets apart real transactional funding and so-called extended transactional funding.

 

Investors can usually get transactional funding from local hard money lenders.  However, they can expect to pay more than shopping around for a private real estate lender who specializes in loaning transactional funds.

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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