BiggerPockets

Can anyone recommend a company (and hopefully you've worked with them) that does transactional funding for Short Sales/REO's who will provide funds for more than one day?

Up to 30 days, maybe a little longer. I'm not looking for a real long period of time or a set amount of time, and on any deal would want to close quickly. But same day double closings don't always work as planned so having someone to work with who can supply funding if the deal went to 5 days, or two weeks, would be great.

Keith,

Send me a colleague request as i happen to be in Chicago too and have been trying to come up with a way to offer 30 day funding. Maybe you can be my "test case". I am creating a "pilot program" to do 30 day transactional funding and will start in Chicagoland only.

I do some Hard Money lending in Chicago and I have also done several short sales myself. I would much rather lend than work deals.
I have noticed alot of demand for 30 day funding for SS flips but very few lenders are offering it. Only Aegis RE from what I can tell, currently. All the others who claim to offer 30 day are really 1-4 days.

I have posted here a couple of times trying to get info from people who have actually done 30 day deals but gotten little response. 30 Day funding seems to be one of those rare animals that everyone hears about but few have actually seen in the wild.

It seems alot of people (borrowers and lenders) quickly expanded from 1 day "transactional funding" to 30 day when BofA first put their restrictions in and alot of lenders got burned with defaults and fraud.

Turns out the 30 day deals are MUCH, MUCH different and riskier than the 1 day deals so most lenders have dropped out. It is very hard to keep the B-C deal alive for the 30 days and then the lender is stuck because they have loaned 100%. Also it is so easy to "fake" a pre-arranged B-C deal to get the funding and then try to scramble to find a new B-C after the fact. This usually turns out badly.

I think the lesson to lenders is that if a short sale investor has absolutely $0 to put into a deal and must borrow everything, then he is A) probably not an experienced, successful investor and therefore might not have properly vetted the B-C transaction so it is likely to be lost
or B) It is a fraud situation where the B-C is being faked... or worse.

Either one is bad for the lender.

However, I believe that there is a sizable number of SS investors who are experienced and successful who still want to make use of 30 day funding and who will close the B-C deals and pay off the 30 day loan. The question is how does a lender sort out the good from the bad?

My guess is that the main way to do it is to require the investor to have some equity in the deal. I am thinking 10%. So my program would involve lending 90% of the A-B purchase costs instead of 100%. I also think there are some ways to "lock" the B-C deal in better.
What do you SS flippers think of 90%? Would you be willing to have some $$ in the deal?

The fee for the 30 day loan would be in the 5 point range. I know everyone looks at the 1-2% cost of the 1 day transfunding and they think 30 day should be similar but it just isn't. 5 points is what Aegis charges and is sort of the average of some of the closed down programs I have seen.

This is a work in progress for me but I think it can be done and I'd like to hear feedback from SS flippers.

THanks
Eric

Originally posted by Rich Weese

Every transactional loan I loaned money for was a terrible deal for lender. Still trying to recapture the funds loaned. If anyone wants more info, PM me. Rich

Im also looking for transactional funding for Trustee Sales in California. Just for 15-30 days. Is that something we can do?

Aegis,

Can you explain from a legal standpoint what the purposes are for structuring your program as an equity contribution rather than a loan?
Is the purpose to streamline the "foreclosure" process if needed or to avoid regulations on "lenders", or something else?

Just curious.

Thanks
Eric

Originally posted by Rich Weese

Every transactional loan I loaned money for was a terrible deal for lender. Still trying to recapture the funds loaned. If anyone wants more info, PM me. Rich

Hey Rich I just sent you a colleague request, because I wanted to get more info on your transaction loans and such.

Thanks, Andrew

Rich, I actually dont need this type of loan I just wanted to ask a few questions about how your experience was with it because I have have someone who is interested in it. I just wanted to get some inside info on how TF operates coming from your point of view.

I have a source who does transactional funding for up to 120 days.

Originally posted by Ken Spurgin

I have transactional funding from 2-90 days. We might consider 120 day. 250k limit on first deal. $395 application fee 100% refundable. Quick turnaround, 5 days to fund. Quick and easy applications.

Please call me and so we can talk. Thanks

A warning to all--- I just received a "HELP" PM from a BP member. He also has had default problems. 2 loans made to the same BP member, both in default.
Also, there ARE usury laws in most states against the rates charged. Whether you are a borrower/lender research it thoroughly or you may have a voidable loan! Rich