Use Private Money for Transactional Funding?



Can You Use Private Money for Transactional Funding?


Most investors think of borrowing money as having to do it through a hard money lender to fund real estate investors. Hard money lenders are a major source of money for closing the purchase of properties, rehab money and even carrying the properties until they are sold to an end-buyer. This is the “normal” function of hard money lenders.


However, hard money lenders also loan transactional funding on a limited basis. Hard money lenders are often referred to as predatory lenders because they loan on the basis that they will have to take the property back and resell it themselves. Nowadays it is more difficult to get these hard money loans because so many of these loans went terribly bad when the market collapsed.


The other option to hard money loans is private real estate funding. So-called “Private Money” is what might be termed “safe money” that non-professional lenders loan to investors. This money from private real estate lenders usually comes from savings accounts, retirement plans and even mattress money.


Private transactional funding is simply transactional financing that is provided by private lenders. If these lenders are loaning truly transactional funding, the closing agent will provide the closing documentation and instructions for wiring the funds when needed.


If the private lender borrows money from another individual or company to lend the money for transactional funding, he may be violating Federal Mortgage Statutes if he pays his lender money from the interest or fees he is making on the private money loans.


If he uses him own money, this issue should not be a problem. Always seek the advice of an attorney in the state where you live and loan any money to make sure you don’t unintentionally violate the law.


In summary, using private transactional funding can be a huge help in an investor’s expansion of his business because it allows the investor to close wholesale deals that he otherwise could not have completed.

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