About the author : Dave Dinkel

I have heard some crazy transactional funding requirements for wholesaling, but if someone asks for certain items or information it is a warning sign to run the other way and find another transactional funder.


Hi I’m Dave Dinkel and this is my warnings to real estate investors. Today’s issue is why would you need a passport for wholesaling?

I got a phone call from a wholesaler asking what documents I needed to approve him for transactional funding – pretty much a standard question.  When I explain what I needed, he sounded shocked and frankly angry. It seems that he had been calling every transactional funder to find out what he needed to be approved to fund the deal he had coming – once again standard operating procedure.

Every website he had gone to had required he fill out an extensive application.  In general with the other websites, he had to supply the following: a very extensive and completely filled out application, including personal information and the property address, the seller’s information, complete info about the closing agent, the end buyer’s information and a copy of his driver’s license.

He mentioned that on another website he was required to submit not only his driver’s license but also his passport! The investor then asked me why he had to provide this other transactional funder with his passport. Frankly, this transactional funder must be new in the business and doesn’t understand his liability or how to protect his money.

However, there may have been a more devious reason for this request. If a scammer has access to your Social Security number, driver’s license and passport, he or she can get a credit card or mortgage in your name or even file a bogus income tax return.

For example, two days ago the IRS through the media announced they had captured two sisters who had filed bogus tax returns. They had opened two offices where they processed people’s income tax returns. Ultimately, they had filed 16,000 bogus income tax returns and taken in more than $25 million before the IRS actually closed them down.

All they needed was the personal information, including home address, tax ID number or Social Security number of the individual and away they went.

Here’s what I need to approve you. First of all the A to B to and B to C closing must be on the same day with the same closing agent.  That’s standard in the industry.  Anything that’s not on the same day is called extended transactional funding and very few (or none frankly) transactional funders that I know still do it.  For me, number one thing is you’re A to B signed contract along with your B to C signed contract, and one more thing, the email address of the person you’re working with at the closing agent. That’s all we require.

We will take it from there and do everything you need. So no longer do you have to fill out a giant lengthy form with all the information on it that you have to find and put together and give up personal information that’s frankly nobody’s business but your own. So we make it very simple.

Now much should you be paying for transactional funding? This is pretty important because it’s a cost of doing business and you may have to do it despite the fact you may not want to.

  1.  The maximum you should pay is 1% of the amount the transactional funder sends in for you – this is known as the amount “Due from Borrower” or “Due from Buyer” on the A to B closing statement and it should include all closing costs. There are some transactional funders who require that you pay the closing cost.  Now the closing costs are 1 or 1.5% of the actual purchase price and there is no reason they can’t send in the additional 1 or 1.5% as they send in the other 98.5or 99%.
  1.  Over $1 million, the fee is negotiable.
  1.  A wire fee between $35 and $50 and you should never have to pay any additional fees, even if the transactions don’t close!

So, in summary, if the transactional lender will only loan to an LLC, find another one who will loan to individuals, land trust, or partnerships as we do.  Make sure the transactional funder has been in the business for at least five years and has satisfactory Google ratings.  We’ve been in the business 47 years.

Never ever provide your tax ID number, driver’s license or passport to anyone except the closing agent, as this is required by law.

Stay in touch with the transactional funder as you get closer to the closing so you know he will be there for you when you need him.  Too often times I get emergency calls two or three days before the closing and the investor B, A to B, and B to C, the investor B tells me his transactional funder suddenly called him and said he ran out of money or he’s not going to close.  So stay in touch because you have everything at risk and the transactional funder if he pulls out, doesn’t risk anything.

Now let’s talk about one of the serious things that comes up, I mentioned that the property has to close on the same day with the same closing agent, but what you do when a seller and buyer says they only use their attorney to close? Here’s the response, “Mr./Mrs. Seller, I spoke to my funding partner and he says he won’t close with the attorney you want because of a past experience.”

Now, if the seller says, “What past experience?” You say, “He didn’t tell me, he just told me he will not close with that closing agent.  However, he said all you have to do is have your attorney ‘shadow the transaction’ and I am positive your attorney will be good for that.”  Say nothing, the first to speak loses, but try sticking to this choice as your funding partner’s requirement (I am your funding partner!). I’m the bad guy in the situation.

Same exact language with your end buyer.  The point is to make sure your seller and end-buyer doesn’t know what your spread is and ALWAYS choose your closing agent on your original contracts. Don’t believe any Realtor® that says it’s the “LAW” that his seller or buyer gets to choose the closing agent. It’s not the “LAW”.  It is whatever is “usual and customary” in that county or state.  You may have to pay for title insurance to get your choice, but it is well worth this minimal cost to control both closings.

In closing, I want you to assign any contract you can – that’s extraordinarily unusual for a transactional funder to tell you take that option because it will save you money. I want to see you pay the least you have to so you can make the largest profit you can.

If you can’t because the seller won’t allow it (profit is too large and buyer won’t allow it, the state or closing agent or attorney won’t allow it, etc.), I can help.  Virtually every month another state is disallowing assignments of contracts. Check with your closing agent before you get shocked at the closing table.

After thousands and thousands of closings, I am your Go To guy to help you get deals done! I am BestTransactionalFunding.com Dave Dinkel 954-274-1003 and I wish you limitless success in all that you do.


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About the author : Dave Dinkel