Flipping Deals With Transactional Funding

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There are ways for people to earn without having the enormous funds that are usually associated with purchasing shortsales, foreclosures and REO’s. You may have heard of simultaneous closings in the real estate industry, and how it has helped generated income for people in the past. If you want to get into the activity, here are what you need to know about transactional funding and how it works.

Simultaneous closings

Buying and selling in the real estate industry is one of the general and most common ways of making a profit. Imagine that you have found an excellent piece of real estate property that you know would fetch an excellent price in the market, or which another investor or buyer is looking for. If you can own the property, the implications for you are good – you get the upper hand and will be able to sell the property to the other investors who need the lot. In the past, one of the easiest ways to make money out of these ideal situations is to undertake simultaneous closings, which are essentially back to back deals where you purchase property from seller X, which you will immediately sell again to buyer Y.

Quick flips and dry closings

Simultaneous closings allow you to earn without having to shell out your own money, since the lot you purchase from seller X is immediately paid for by the funds from buyer Y. This is otherwise called a quick flip, and is one of the most profitable in the industry in the past, since you are essentially making money the quick way. These transactions, which are called ‘dry closings,’ are one of the ways that the common man and woman has entered in the real estate playing field, without having to bear the brunt of the capital usually needed for real estate dealings – which could amount to as high as several million dollars, depending on the type of property that you are looking into.

New requirements

New requirements from the state and the federal officials have made simultaneous closings, quick flips, and dry closings more difficult. Today, these transactions are not illegal per se, but are undergoing much more scrutiny than it has faced in the past. What this means is that many title companies today no longer want to undertake the hassle of state and federal assessments and investigations, which can take quite some time and which may require more work out of the deal than is necessary. For more and more people, the question then is what to do when faced with the opportunity and the problem of simultaneous closings.

Transactional funding

This is exactly where transactional funding comes into play. Essentially, this is a type of service where investors like you are given the opportunity to use a type of loan called the bridge loan, that allows you to undertake the simultaneous closings safely and with the backing of money provided by the loan. The barrier of scrutinizing federal and state agents are removed since you are no longer conducting dry transactions or deals where money is transferred from the buyer to you, and from you to the seller. With transactional funding and the bridge loan under it, you are already conducting valid closings that give you the opportunity to make money out of opportunities in the form of simultaneous closings.

Funding source

With transactional funding programs, the investor such as you is essentially making use of the funds of the transactional funding company. You may use the transactional funding company’s name or your own company title, depending on the deals that you have chosen. There are fees, of course, for these types of services and using the loans, but since you do not actually put any money out on the table, the pros balance out the fees in the end.

The next time you are faced with an end buyer who is willing to purchase a specific type of property which you happen to know and have control of, go on and make the deal through the use of transactional funding programs.

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