It seems that banks would be hesitant to lend out money with a letter from a transactional funding company because it is not based on the income,credit,etc. Has anybody had problems getting these letters accepted as “proof of funds”?
Wouldn’t the bank be worried that you can’t find an end buyer and they will lose time?
As a real estate investor it is important for some transactions and methods to keep and use your good credit and income.
This transaction is easy, I go to my conventional mortgage lender and get a mortgage pre-approval Letter (Form) and I submit to the selling lender (Bank) my pre-approval and a copy of this months savings account statement with the purchase balance if necessary.
I set up my contract with an inspection and a loan contingency. I write my offer for an exceptable interest rate approval from lender within 14 or 21 days, that gives me 14 or 21 days to discretely find an end buyer and in the event I can not, I ask my mortgage broker to write a letter explaining that an exceptable interest rate could not be obtained and you back out of the deal.
All sales from lenders (Banks) are handled by an escrow or attorney title company and you can double close provided your in a state where double closings are legal.
If not you use a flash funding company for temporary closing funds and sell and close to your end buyer. (Provided you found an end buyer)
The bank knows nothing about what you might be doing, and don’t tell them! Just go about what you need to do to get it done.
So this wouldn’t really work if you can’t get the preapproval letter on your own you are saying?
It probable depends on the odds you are talking to a property disposition officer who understands investing, but I would say it is 50/50 at best!
So the whole transactional funding thing is pretty iffy in general it seems.
Transacitonal financing is going to hinge on have a end buyer in place. These types of “loans” are only out there for 24-72 hrs. As far as I know double closing are legal everywhere as long as its full disclosure, this will of course kill most of your deals. This is one of ways tranactional funding can help save your deals.
Can you clarify what Transactional Financing is and what a Flash Funding co. and what they do. Does CA allow this and if so where would I find these co’s and how does the financing work.
Transactional Financing is financing for just a day basically. The companies will put up the money for you to close and then hours later you close with your end buyer. These companies seem to charge about 2% or so for their services. Most seem to claim they can fund in all 50 states.
They will only fund the deal if the end buyers financing is in place and guaranteed.
So this is only to be used for wholesaling a property quickly,rather than a buy and hold.
You can Google ‘transactional funding’ the link for a company called Coastal Funding should come up, you can see their site for more info. I am trying to find out more about this as well, if there is anyone who has actually used these services before.
Thank you for the info. I’ll keep u posted.
Transactional funding is very simple to use. Its the best way to make money in real estate if you have no money and no credit. The transactional funder will give you a pot letter for free so you can put the house under contract or even to get a showing. If you have more questions, just let me know.
Sorry for the typo. It’s a POF letter - Proof of Funds letter.