When do I line up Transactional Funding?

Question

I am getting ready to make an offer on a property that I’m planning to Wholesale to a cash buyer. It will be a double close so I’m wondering at what point do I call a lender to set up transactional funding? Do I do it right after I make the offer? Or should I wait for the seller to sign the purchase and sales agreement first?

Logan Clark · Answer

@Jesse LeBlanc Thanks!

Jesse LeBlanc · Answer

@Logan Clark If you can assign your deal, you'll save money. But I realize there are some attorneys and some states where you MUST use your own funds or use a Transactional Lender.

The sooner the better is best to find the right lender for you and your deals of course. I also HIGHLY suggest that you have an idea of what your buyers will pay or a specific buyer in mind before you lock up a deal so you don't have the stress of trying to find a buyer later and risk pissing off your sell by not performing.

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Daniel Paloscio · Answer

Typically people reach out for transactional funding once they have an executed purchase agreement with the seller then another with the end buyer. There is no harm in reaching out early, but technically there isn't much work to be done on the lenders side until you have a buyer in place.

Will Barnard · Answer

I never said "assign" and you would A. need to get the assignment clause in your contract OK'ed with seller and their agent PLUS B. you would need to check your state laws to see if your process would violate any brokering laws.

I simply meant that if your buyer was already in place with a price agreed upon for a property with the numbers you provide (and assuming those numbers are accurate), you simply contract with your cash buyer partner for a fee or you form a new entity naming you and them as owners and you simply sell your interest/shares in the company to them at closing for your fee. No double closings or borrowed funds needed.

Most wholesalers who use the assignment process are actually violating the law (brokering without a license) in most states. If you bring buyer and seller together for a fee, publicly market a property you do not own, or any number of tasks which states require a RE sales license for, you are breaking the law.

Logan Clark · Answer

@Will Barnard This is an MLS property that we received through an agent so I figured we had to do the double closing method. Are we able to assign the contract if we are going though an agent?

Will Barnard · Answer

Why would you go through the added costs of transactional funding and two closing costs to wholesale? Do you have your buyer in place for this deal? If it really is a good deal for a flipper/cash buyer, run the numbers by your buyer and see what he/she would pay for it. Then simply lock it up in their name or a new entity name and give to them for your fee.

If you do go the double close/transactional funding method, get your funds lined up earlier rather than later.

When do I line up Transactional Funding?

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