Closing Services for Transactional Funding, Extended Transactional Funding, and Hard Money Loans
At Jurado & Farshchian, P.L., we have experience closing deals involving transactional funding, extended transactional funding, and hard money loans. Both investors and private lenders look to our expertise in this area to successfully close their transactions. We also refer investors who are looking to fund their deals to our network of private lenders.
Know your Options: Transactional Funding v. Extended Transactional Funding v. Hard Money Loans
Transactional Funding: Transactional funding is a short-term loan used to finance a back-to-back closing transaction. A back-to-back closing is essentially two closings – the acquisition and subsequent resale of a property – scheduled to take place one after another. These transactions typically involve the purchase of undervalued or distressed real estate (i.e., short sale, REO, estate properties, etc.) that are already under contract to be resold for a profit within a short time frame (typically less than 48 hours). When using transactional funding, credit checks and income verification is not required. The main stipulation that lenders require is that the investor have an end buyer lined up to purchase the property immediately after closing the first transaction (referred to as the A-B transaction or closing). Transactional funding sources will likely not fund the deal unless the end buyer is in place and ready to close the second transaction (referred to as the B-C transaction or closing).
Most transactional lenders will cover all costs associated with the A-B closing, and their fees will be deducted from the investor’s profit so that the investor will not have to show up to closing with any of his or her own cash.
Extended transactional funding (ETF): ETF is another type of loan whereby an investor can obtain transactional funding to buy Seller A’s property and sell it to C end buyer within a specified time period. The main difference between regular transactional funding and ETF is the fact that the B-C closing does not occur immediately after the A-B closing. Rather, the B-C closing can occur up to 180 days after the A-B closing. This funding is appropriate for transactions that require a holding period before title can be transferred to an end buyer.
Hard Money Loan: If an investor needs a loan for a longer timeframe, such as to rehab a property, or does not have an end buyer lined up, then a hard money loan might be the way to go. Hard money loans are very high interest rate, asset-based loans where the investor can typically receive up to 60% or 70% LTV (Loan-to-Value). These types of loans are also appealing to investors who cannot qualify for conventional loans.
Here at Jurado & Farshchian, P.L. we have insight, experience, and in-depth knowledge of closing transactions that involve transactional funding, ETF, and hard money loans. For more please call us at (305) 901-5628 or email us at Jennie@jflawfirm.com