Wholesalers Are you Using Transaction Funding?

Question

How many of you are using Transaction Funding when Wholesaling?

Lydia R. · Answer

@Michael Glist Ive used transactional funding before, typically for deals that I needed to double close. Ive shifted my strategy and now use private money to close on deals and list them on the MLS.

Eric Gamble · Answer

@Lydia T., the use of private money is smart. However, what seems EVEN SMARTER is the listing of those potential wholesale deals on the MLS (casting a wider net for buyer - smart).  And, the use of private money makes this strategy work.

Kudos!-E

Daniel Paloscio · Answer

@Michael Glist I started out using transactional funding on deals I couldn’t assign and am now funding a lot of deals myself. Most of the deals I fund now are bank owned properties where assignments aren’t permitted. In a lot of cases we’re closing @ 2 different title companies because the banks title co won’t do a double close.

Shari Peterson · Answer

Transactional Funding can be a great tool - IF you need it. Many times you can just assign the deal. As @Daniel Paloscio mentioned, you cannot assign bank-owned properties. That is one time to use Transactional Funding.

The other time is when your profit spread is, as a general rule, more than $10,000 or 10% of the purchase price. The reason is that many times your exit buyer will not pay you more than that, and you could lose your buyer. That is when people usually choose to double close and not assign -- because they don't want to reveal the amount of profit to their exit buyer. You simply offer the deal to the exit buyer for the price you specify, and if the deal is good, he'll close on it. He doesn't have to know you're making a huge profit.

One caveat -- if the exit buyer is getting a loan, the fact that you are not the owner of record may turn up in the due diligence on the part of his lender. Be prepared to respond to this if it comes up. If he is a cash buyer, you are less likely to encounter this scenario.

Lydia R. · Answer

@Eric Gamble Thanks Eric! Its definitely a win-win. Our private money people get a great return on their cash and we make a lot more money on our wholesale deals. Its a bigger risk but the reward has been worth it so far!

Michael Jones · Answer

following

Wholesalers Are you Using Transaction Funding?

Most Popular Reply