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What Is Transactional Funding, And How It Works?

More often than not, investors and wholesalers require short-term loans to carry on their business operations smoothly. Transactional funding seems to be the savior in such instances. However, before taking the plunge, one must know about all the risks and advantages involved in the process. To cut down on all the confusion, we have prepared an elaborate guide that includes the much-needed details regarding transactional funding for real estate.

 

Transactional Funding Meaning

Transactional Funding is a short-term funding option that is quite preferred by both real estate investors and wholesalers. These funds enable them to invest in any property without involving their own money. These short-term loans are also known as same-day funding or flash funding or double closing.

A reputable transactional lender like Tru Power Capital offers loans on a short-term basis, given that the investors have willing and qualified buyers for purchasing properties.

 

How Does Transactional Funding Work?

Let us explain with an easy and comprehensive example.

  • Three parties will be involved – seller A, investor B, and buyer C.
  • Suppose real estate investor B wants to buy a specific property from seller A at $500,000. 
  • In the meanwhile, buyer C enters into a contract with investor B at $550,000.
  • Now investor B will have to acquire a proof of funds letter from buyer C and show this to an established transactional funding lender like Tru Power Capital. The proof of funds is necessary for acquiring approval for transactional funding.
  • After approval, real estate investor B utilizes the transactional fund for buying the property from seller A.
  • On the same day, investor B sells out the property to buyer C and uses the funds to pay back the lender. Also, the investor makes some quick money by keeping aside the amount that is left over as profit.

 

Advantages of transactional funding

  • Minimal or no risk for investors/wholesalers: A wholesaler or real estate investor finds transactional funding as a safe option since it involves minimal or zero risks. A renowned transactional lender like Tru Power Capital offers 100% financing of the loan amount. Thus, there is no need to bring in own money at all. 
  • Easy and convenient paperwork: At Tru Power Capital, we have kept the paperwork fuss-free and straightforward. There is no requirement for scrutinization of the income or the credit score of the borrower. Rather, the borrower is simply required to show a proof of funds letter from the buyer’s end.

Tru Power Capital, one of the best transactional funding companies, makes sure that investors or wholesalers can get easy access to short-term funding. We also offers transactional funding double close so that borrowers can show their HUD/LLC statements on tax records. This will allow them to show credibility in the future for raising capital and doing more deals.  As one of the best funding platforms with straightforward and easy-going formalities, Tru Power Capital should be the ultimate destination for every investor and wholesaler.

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