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One Day
Transactional Funding
Transactional Funding is a
short term loan provided to real estate investors who are
buying and selling houses. The loan is used to close on the
purchase of the home and it is paid back when the house is
sold to a third party. The key element that defines a loan as
"Transactional Funding" versus "Hard Money" is that the end
buyer is under contract at the time the loan is made for the
close on the purchase.
Example of a One Day Transactional Funding
Deal
Let's say you get an approval for a
Short Sale on Mr. Smith's house at 123 Main Street for
$100,000. You find a buyer, Ms. Jones, who will pay $120,000
for that house. In order for you to get the profit between the
$100,000 that you are buying it for and the $120,000 that you
are selling it for, you must first close on the house and pay
the Short Sale Lender in full for the purchase.
In
this transaction, Mr. Smith is party "A". You are party "B".
Ms. Jones is party "C". REI Funding loans to you the $100,000
so that you can buy the house from Mr. Smith. This is the
A to B part of the transaction. You then sell the house
to Ms. Jones in a second closing tht same day. This is the B
to C part of the transaction. At the B to C Transaction
closing, you pay back the $100,000 loan plus interest/fees,
and get the difference from that amount and the $120,000 that
Ms. Jones is paying for the house.
Voila: you walk
away with about $20,000 cash in pocket and you never had to
put up a dime of your own money.
A > B Transaction: Investor Buys House
from Seller
B > C Transaction: Investor Sells House to New Buyer
Requirements
We must have everything below 3-5 business days prior to closing.
Please scan and attach these documents to and email sent
to info@reifunding.com.
- The form completed at
http://www.REIFunding.com/request-funding.htm
- The contract between the Seller and
the Buyer (the A-B transaction)
- The contract between the Buyer and
the End Buyer (the B-C transaction)
- If you are buying in a Trust: the
Agreement and Declaration of the Trust, the Appointment of
Trustee, Assignment of Beneficial Interest, the Affidavit of
Trust, and the Deed to Trustee
- Short Sale Approval letters from
all lenders, or HUD/REO Acceptance letter (if applicable)
- State paperwork verifying your LLC,
corporation, or registered business of B Buyer
- Scanned copy of a photo ID with
signature of all signers on both the B and C transactions
- The contact name, phone, &
email address for the C Buyer’s lender to verify knowledge
of the flip or proof of funds if it is a cash purchase
- The contract for the Assignment of Beneficial Interest
(if
applicable)
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