I love this question because it should be an obvious answer but it’s not!
Ironically, most hard money lenders don’t loan funds for same-day double closings.
This may sound silly but it’s a fact because they consider same-day transactional funding very risky.
What may be surprising is they are correct.
Despite what the public thinks about the “safety” of transactional funding, it is fraught with potential issues that only result in one end – the complete loss of the transactional funder’s money!
Without disclosing the specifics of what all can go wrong, suffice it to say that I have personally been confronted by five different types of “situations” where I have lost funds at or after the day of closing.
Can a hard money lender do transactional funding, of course, he should be able to, but he also faces the potential issue of the deal not closing because he didn’t fund the A-B leg and he gets sued by the parties to the transactions.
Remember, he is representing the end-buyer as a fiduciary, and this can put him in conflict with what’s in the best interests of the “B” investor.
Also remember you are doing a double closing so the end-buyer and the seller aren’t aware of how large your profit is.
If the hard money lender for the end-buyer is also loaning you transactional funds for your purchase, then there are no secrets.
The hard money lender then reevaluates his risk in the transaction, and he may get “fuzzy” with his confidence in the end buyer’s ability to pay him back because he suddenly thinks you “overpaid” for the property.
From my experience, the hard money lender suddenly requests a higher percentage from his client just before the closing, for example from 10% to 25% required to close.
This increase of capital required by the end-buyer at the last minute usually kills the deal.
Be sure to check out BestTransactionalFunding.com for all your same-day double closing needs, including a list of Investor-Friendly Closing Agents in various states.
We have more five-star Google ratings than all the other transactional funders combined.
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