All Forum Posts by: Charles Kamen

What the heck did I just read??

Depends on the condition.  It's held up for over 100 years, what makes you think it won't last another 30?  Is it bulging, deteriorating, separating?  If it's in good shape it'll last another 100 years.  When in doubt, bring in an inspector - you should do a full inspection of the property before closing anyway.

Sorry, TRANSACTIONAL lender!  I guess I got autocorrected, just realized it.

Pretty much as the title states - what are the legal requirements to become a transitional lender?  Do you need to become an approved lending institution, or can it be done personally, like private lending?  I tried to do some research online, and while there's a good amount of info on how to borrow, there's not much out there on how to lend.  I'm very interested in getting involved with transitional lending, I'm just not finding much to read about it!

Yup, I'll agree!  Unless there's a stipulation that states that the money could be used if financing falls through, with XX% interest as @Rob Green wrote above.   The transactional lending that @Darrell Shepherd mentioned seriously peaked my interest though, I'm going to try to learn more about it.

Thanks everyone for the info!  It's not something I'm necessarily doing, but I did want to educate myself on it.  I agree with the sentiment that while it may not be illegal, it's not exactly ethical.  I had not heard of transactional funding before - I just did some reading on it, and that's actually more along the lines of where I was going with this - making it easier for buyers to close their deals when financing is in limbo.  The way I understand transactional lending is that you're providing a short-term (or same-day) loan to a wholesaler or intermediary who is both buying a property and selling it in the same transaction.  Your lending, then, enables them to purchase the property with your loan (A to B) and then immediately pay you back with the sale of the same property (B to C), plus interest and fees.  If that's correct, it's a great concept (and legal, and ethical, too!).  Can individuals become transactional lenders, or do they need to become an approved lending institution?

This is purely hypothetical but I had an idea that I could explore if it's even legal.  My idea is to work with RE investors/buyers, and use my available funds to provide a proof-of-funds letter for their deals, and charge a fee of, say 1% of the value.  This would not be a loan, this would merely be a way for them to provide proof of funds to close the deal. 

Presumably this would be a scenario where they'd have other financing lined up already but not finalized, and they don't want to loose the deal waiting for the final lending approval  to come through.  It sort of fills the gap between closing the deal and getting the final financing approval.

Is this legal, does anyone do this?