Transactional Funding 101: Everything Real Estate Investors Need to Know
What is Transactional Funding?
Transactional funding is highly specialized, ultra-short-term financing used by real estate investors—primarily wholesalers—to facilitate a "double closing." The loan is typically for 100% of the purchase price and is borrowed for just 24 to 48 hours.
The Mechanics of a Double Close
In a double close, there are three parties: the original Seller (A), the Wholesaler/Investor (B), and the End Buyer (C). There are two distinct transactions occurring back-to-back:
- The A-B Transaction: You (B) buy the property from the Seller (A).
- The B-C Transaction: You (B) immediately sell the property to the End Buyer (C).
Historically, title companies allowed "pass-through" funding, where the C-buyer's money was used to fund the A-B transaction. Today, regulations and title company policies largely prohibit this. You must bring your own funds to close the A-B transaction. This is where transactional funding steps in.
Why Use Transactional Funding?
1. Protecting Your Fee
If you assign a contract, the end buyer sees exactly how much you are making. If your fee is $50,000, the buyer might try to renegotiate or back out. A double close keeps your profit entirely private.
2. Non-Assignable Contracts
Many bank-owned properties (REOs), HUD homes, and short sales have deed restrictions prohibiting the assignment of the contract. A double close is the only legal way to wholesale these properties.
Requirements for Approval
Because the loan duration is so short, transactional lenders do not care about your credit score, income, or bank statements. They care about one thing: Is the B-C transaction guaranteed to close?
To get approved, you must have a signed contract with the end buyer, and the end buyer's funds must already be verified and sitting in escrow at the title company.
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Stefanie Blackburn
Borrower's Deal Strategist at CPI Transactions, LLC
Stefanie helps active real estate investors get their deals funded through smarter deal structures, broader capital relationships, and systems that make the process repeatable. She serves investors nationally across bridge, DSCR, fix & flip, transactional, commercial, and 2nd lien DSCR financing. Based in Denver, Colorado.
