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The short answer to using transactional funding to buy probates is “if you work it correctly.”   The best prospects for probate wholesale deals are the ones where there is not yet a probate attorney working on the probate filing with the probate court. When the case is filed the probate attorney takes control of who will do the closing when the property is sold, and usually, it is the same probate attorney wearing another hat (closing agent). In some cases, the probate attorney is also a listing agent, so he can receive a commission on the [...]

The short answer to using transactional funding to buy Short Sales is “most of the time.”   The short sale of a property requires the lender to agree to a reduced payoff from an outstanding Promissory Note to stop the property from going into foreclosure. Typically, when a lender has a property owner go without paying on his note for 90 days, the lender does an appraisal to determine if there is equity in the property. If there is no equity, the lender will usually try to get the owner to sign a deed in lieu of [...]

The short answer to using transactional funding to buy lender REOs (Real Estate Owned) properties is “sometimes.”   When a lender forecloses, he must have a local attorney do the legal work to get the final judgment and sale date from the court and then they get these recorded in the public record. Lenders are typically cheap because they don’t want to get properties back and pay maintenance costs, carrying charges, losing interest on their funds, and having repair issues. These lenders usually promise the foreclosing attorney he can do the closing for a buyer when the [...]

Transactional funders typically cover 100% of what is “Due from Borrower” as shown on the settlement statement.   This should mean the investor would not have to bring any money at all to the closing. However, as always there are exceptions to this industry standard for what transactional funding covers. I have heard that certain transactional lenders will not fund any of the closing costs associated with the A-B closing. These costs include all settlement fees and expenses listed on the second page of the settlement statements. It is important that your contract with the seller and [...]

This “extended closing” is the second most common reason for deal failure behind hard money lenders not funding timely or at all on the B-C closing.   I have asked closing attorneys in most states if there is an actual statute (law) that specifically requires the closing agent to do the A-B and B-C closings on different days, The answer has always been, “absolutely not!”, yet this extended closing requirement happens in about 20% of all closings in a certain group of states. These states are the ones where well-meaning but uninformed politicians or the State BAR [...]

There should never be any upfront costs for transactional funding, but…   Some transactional lenders charge an Application Fee for them to decide whether they will or will not fund your deal. It is critical for any investor who needs transactional funding to “interview” an actual representative of the funding company and ask certain questions, such as: What states do you NOT fund in? Do you have any upfront fees? What happens if the deal doesn’t close, am I charged anything? What is your minimum? How much is your funding fee? Is there a wire or transaction [...]

Both terms can be misleading so check carefully what the transactional lender actually means.   The terms “flash” and “instant” obviously infer the very quick funding of a loan by a transactional lender. A “flash” of light takes a millisecond while “instant” implies it’s over and you didn’t even know it! In the real world, in both cases, a transactional lender must take time to make sure he isn’t throwing his money away, so there are no “instant or flash” loans. However, the advertising really draws in unsuspecting investor-borrowers and often to their detriment. In transactional lending, [...]

The cost of transactional funding can vary greatly and you should know ahead of time your total costs before engaging a transactional lender.   The fees a transactional lender can charge include but are not limited to: The Funding Fee for borrowing the funds for the actual double closing which can range from 1% to 2%+ for closings that require $1,000,000 or more which are usually negotiated. A Wire Fee to cover the lender’s cost of wiring his funds, A Minimum Fee that covers “smaller” amounts loaned to investors which can range from $350 to $1,495+, An [...]