Flipping properties can be a lucrative way for real estate investors to make money, but it can also be risky if not done properly. One tool that can help investors successfully flip properties is transactional funding, also known as flip funding or double closing funding. This type of financing allows investors to quickly purchase a property and then resell it, often within a matter of days or weeks.
The process of flipping properties with transactional funding involves two separate real estate transactions: the purchase of the property by the investor and the sale of the property to the end buyer. In the first transaction, the investor uses transactional funding to purchase the property from the seller. The investor then finds an end buyer for the property and sells it to them, typically at a higher price than the investor paid. The difference between the purchase price and the sale price is the investor's profit.
There are a few different types of transactional funding available, including bridge loans, hard money loans, and private money loans. Each type of funding has its own unique set of terms and requirements, so it's important for investors to carefully consider their options before choosing a transactional funding solution.
One of the main benefits of transactional funding is that it allows investors to flip properties without having to use their own funds or take on additional debt. It also allows investors to take advantage of short-term market opportunities and can be especially useful for investors who are looking to fix and flip properties.
However, it's important for investors to carefully evaluate the costs and risks involved in transactional funding before committing to a deal. Transactional funding can be expensive, with high interest rates and fees, and it requires a high level of expertise and organization to manage the two separate transactions involved.
Overall, transactional funding can be a useful tool for real estate investors who are looking to flip properties, but it's important to thoroughly understand the process and the potential risks and rewards before diving in.