What Michigan Real Estate Wholesalers Need to Know About Transactional Funding
After the real estate bubble burst and lenders got stricter, investors—especially wholesalers dealing with motivated sellers of distressed properties—found a lifeline in transactional funding. When it comes to closing deals, many wholesalers turn to transactional lenders, whether it’s for every deal, as a last resort, or on a case-by-case basis.
Are you curious about transactional funding in Michigan? This article answers your questions, explores the benefits, and more.
What Is Transactional Funding?
Transactional funding involves utilizing a short-term loan to finalize a real estate purchase. When executed correctly, real estate wholesalers can generate significant profits without using their own funds for the deal.
This type of funding is intentionally short-term, requiring investors to have an end buyer prepared to acquire the property from the original investor, typically within a few weeks. Some transactions can be as brief as days or even hours.
How Do You Qualify for Transactional Funding?
The fundamental qualifying factors include having a property seller and documentation confirming a qualified end buyer to be eligible for transactional funding in a real estate deal. Given the expedited nature of these transactions and the absence of the extensive paperwork associated with traditional real estate loans, the entire process usually takes only a day or two. Additionally, there are no appraisals, credit checks, proof of income, or job verifications to receive the funding.
What Are the Benefits of Transactional Funding?
1. 100% Funding of Purchase Price
Transactional lenders can fund the entire deal, covering 100% of the purchase price because an end buyer is already in place to finalize the property sale.
2. No Proof of Income or Credit Check Required
Transactional funding relies solely on the deal’s strength and the security of having an end buyer. Consequently, investors aren’t required to prove income levels or navigate the usual paperwork associated with traditional real estate loans. No credit check is involved, making this process ideal for individuals with poor or no credit and limited capital.
3. Double Close Using Other People’s Money (OPM)
Real estate investors can leverage a third-party lender to fund the deal instead of using their funds for closing. This double-closing process involves back-to-back property transactions utilizing the original seller and the end buyer. By using other people’s money (OPM), investors can employ lending capital to close deals and reinvest their funds back into the business.
4. Quick Closings
Companies specializing in transactional funding provide swift financing for fast-closing real estate deals. Investors often require funding within hours or days, and lenders of transactional loans are adept at handling quick closing schedules.
Considerations for Michigan Real Estate Wholesalers Regarding Transactional Funding
1. Sound Investment
Michigan wholesalers must prioritize performing due diligence and thorough financial analysis to ensure the soundness of any investment, including those funded through transactional funding. A successful deal relies heavily on the quality of the investment.
2. Hard or Private Money Lender
Michigan wholesalers should know that transactional funding involves a third-party investor directly wiring funds to the title company. This part of the process enables wholesalers to complete deals and build wealth without utilizing their funds. It’s crucial to note that these funds cannot leave escrow, and borrowing them involves no credit or income checks.
3. Privacy
Michigan wholesalers should be aware that employing a wholesale real estate double closing ensures the confidentiality of details because it is unknown to both the buyer and seller. This secrecy preserves the privacy of profits from the transactions. Although it’s not anyone else’s business, there have been instances where knowledge of these figures caused emotional difficulties for sellers and buyers, potentially jeopardizing excellent deals. Collaborating with highly skilled and reputable funders, such as those at DoubleClose.Com, instills confidence in a smooth transaction process.
Author Bio
The author serves as a swift transactional funding provider for real estate wholesalers nationwide, facilitating the closure of deals above and below one million dollars. Offering 100% transactional funding to conclude your next deal without upfront costs, you can find more information at https://www.doubleclose.com/.
