What is Transactional Funding and How Does it Work?
Transactional funding is a type of short-term funding that real estate investors use to complete real estate transactions. It’s a temporary loan that’s meant to cover the costs of a real estate deal until the investor can secure permanent financing or sell the property. Transactional funding is also known as “flip funding” or “bridge funding” because it allows investors to quickly flip a property for a profit.
Transactional funding lenders provide the financing needed to complete a real estate transaction. These lenders specialize in short-term funding and are a good option for real estate investors who need to complete a deal quickly. The funding is provided for a short period, typically just a few days, and is used to cover the costs associated with closing a real estate deal.
Benefits of Transactional Funding
One of the main benefits of transactional funding is that it allows investors to close a real estate deal quickly. This is because the funding is provided on a short-term basis and the lender does not require a credit check or any other lengthy underwriting process. This means that investors can close a deal within a matter of days, rather than waiting for weeks or months for traditional financing to be approved.
Another benefit of transactional funding is that it can be used for a variety of purposes. For example, it can be used to cover the costs of closing a deal, such as title fees, transfer taxes, and other closing costs. It can also be used to make repairs or upgrades to a property, which can increase its value and help the investor realize a greater profit when the property is sold.
Choosing the Right Transactional Funding Lender
Transactional funding lenders typically charge higher interest rates than traditional lenders. This is because the funding is provided on a short-term basis and the lender is taking on a higher level of risk. However, because the funding is only needed for a short period, the overall cost of the loan can still be quite low.
When choosing transactional lenders, it’s important to consider several factors. For example, you should look at the lender’s reputation and track record. You should also consider the terms of the loan, including the interest rate, the length of the loan, and any fees or charges associated with the loan. It’s also important to find a lender that provides the level of support and customer service you need to complete your real estate deal successfully.
Conclusion
In conclusion, transactional funding is a valuable tool for real estate investors who need to complete a deal quickly. Transactional funding lenders provide the financing needed to close a real estate deal and can help investors realize a profit in a matter of days. When choosing a transactional funding lender, it’s important to consider factors such as reputation, terms of the loan, and customer service.