I did a search the other day here for Transactional Funders and I did not find "ONE" posting where someone used a "Transactional Funder." With fees at 1% to 2%, and a $395.00, one time processing fee, I thought that they represented a promising avenue for financing a deal, so my question is this.
Why are Investors not using these companies? I have checked other websites, and found that Coastal Funding was used successfully.
Just some are
and there are more, but that is a moot point, so I will not go any farther.
Could you please explain what a transactional funder is and what role exactly they play in a real estate transaction? I've bought and sold many properties and I've never heard of it. Thanks.
Not really sure where or how you are searching but there are hundreds of posts about transactional funding. There are several lenders on here who post regularly like myself as well as many investors who have used us and mentioned using other firms.
Many many threads.
Transactional funding is simply a way to finance a back to back closing in a way that both satisfies title company requirements and allows an investor to flip a property quickly with no money of his own in the deal. Both the bou and sale of the property have to take place on the same day.
Again, there is much information here on this technique. Google is your friend.
Costs vary from lender to lender.
Thanks @Eric Michaels for your explanation. I've not been involved in a transaction of that nature. Good information to know though...
There are tons of Transactional Funder out there but most wholesalers want to pay the Transactional Funder out of escrow but that want fly with some.
Hello, Joe Gore
Which fees or money do the Investor's want to pay at closing? Most, but not all, of the Transactional Funder's that I know of, claim to pay for the closing costs, but require an up-front fee of $395 to $595 or more. This fee, needs to be paid up-front and NOT at escrow. Is this the fee, you are talking about?
Many, if not all will provide the Investor, a Proof of Funds letter, which I am not sure works yet.
Some of these funder's offer a 90 day "extended funding" for homes that can be fixed in that time. Of course, the cost to the Investor rises.
Finding people here on Bigger Pockets, who have actually used any of these funder's to double close on a deal where a Wholesaler sells a rehab to a third party investor has been difficult to find here. Where are the successful flip stories with Investor's using a Transactional Funder????
All I am looking for is the name of the friendly and easy to use Transactional Funders.
My list has six or seven, and searches with those names produce minimal results.
I know some that will not do the deal until their full fee is put in escrow and most are 2% to 3% and the end buyer must have all thier funds in escrow.
That's right, but me as the wholesaler per say, does not pay that. The third party Investor, who had already received the property details, repair costs, holding costs, financing costs, and sales price from me, with all the contingencies removed, in order for the Funder to fund needs to put this in Escrow, and NOT the wholesaler. That is how I understand it.
Thanks, Joe. I guess you kind of answered my question already with your response. The wholesaler will pay the $400 to whatever up-front one time, administration or doc fee, and with most, the wholesaler will be responsible for the Earnest Money/Good Faith deposit in the amount negotiated or standard for the are.
Many, of the funder's, if not all, are requiring the wholesaler to conduct that particular transaction under the umbrella of an LLC. In other words, they require the Wholesaler to have a Limited Liability Corporation setup, prior to using their services and selling the property.
You are correct.
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