The critical requirement to complete reo funding of a property or portfolio is that there is a committed and funded End Buyer in place. He keeps his money ready to fund at the end of it all. Whether funding is via cash or financing, a committed buyer with funding is necessary. Additionally, the C Buyer or End Buyer must be committed to purchasing the commercial or residential property or portfolio within a defined window of no greater than 1-4 days. This short term loan serves the purpose of bridging the gap and is also called transactional funding, thereby imp-lying that it helps in completing a transaction.
A Transactional Funding or Short Sale Funding scenario consists of the Commercial Real Estate Investor or Residential Real Estate Investor contractually securing the option to purchase a property whether it is a REO, Trophy Home, or Distressed Commercial Real Estate property. In the same way this Investor indulges in quick buying and selling of the property hoping to make more money. In our example, which is the norm or typical of Double Close Funding or double escrow closings, the B Party or Real Estate Investor is either not in a financial position to purchase the property with their own funds for resell with margin and/or would prefer to leverage the capital of another party- the hard money lender. Essentially, by opting to use our Transactional Funding solution the Real Estate Investor will secure the property with No Money Down.
This end buyer who is known as the C Party is now an Investor for ,500,000 for the same property. So actually the C End buyer will create liquidity for the bridge loan client. Obtaining assignment of the property or portfolio can often be addressed by presenting the A Seller with a Proof of Funds Letter. We are very prompt in making proof of funding letter available. This is the prerequisite for making transactions under Title and Seasoning. It meets the requirement of the recent changes in Title and seasoning.
This is the basis of our funding. All expenses incurred on this transaction will be a part of our funding. This is also known as Double Closing. You or your company as a client incur a nominal profit share of 3% or less for the use of our standard Transactional Funding or Flash Cash bridge loan programs.
As a Transactional Funding Lender, we are well capitalized and able to address and legally naviagate recent changes in Title and Seasoning law. Both these transactions should be independent of each other. This funding should be done before the C end buyer buys it from A seller. Transactional Funding strategically serves the B Investor who may no longer use the C End Buyer’s funds (or is simply not in a position financially) to complete the profitable acquisition of property from A Sellers.
The Transactional Funding Lending source provides the necessary capital for the A to B transaction to successfully close the initial transaction of the Double Closing. A creditable company can be asked to close both transactions. The A Seller/Party will exit with a cash purchase from either institutional funding sources or private real estate investors- finalizing the A to B transaction. Now comes the turn of the B to C transaction to be finalized. Funding is based on the credibility of the C End buyer . Funding cannot be otherwise. As soon as the funds are credited into the Escrow account the C End buyer exemplifies his intentions. Once the amount is escrowed, we are quite sure of a successful transaction. Approval for a prospective opportunity is qualified by the validity of the parties involved A On an average the review process does not take more than a day .
EXTENDED TRANSACTIONAL FUNDING
Time limit can be enhanced. It is called Extended Transactional Funding. This is the period of closing interval for Hard Money lending. Time duration is the basic variation between the two fundings. 120 days are taken after the A to B closing is achieved. Transactional funding is the ideal alternate proposition.
Extended Transactional Funding example:
Our client has assignment of a property for ,000,000. This project is worth ,000,000. Here Flash Funding requirement is varied. This time period is not possible. The investor has a C Buyer ready with his commitment. This is the amount agreed upon, for the property. The duration in this example will require greater than 1-4 days. As the lender, we provide an extended/delayed form of short sale financing. We will fund the A to B transaction including closing costs, we will then allow upwards of 120 days for our client the real estate investor to close his B to C transaction with the C End Buyer. Extended Transactional Funding or Flash Funding for Short Sales will continue to evolve; providing creative solutions for Real Estate Investors. It is indeed an established resolution for short sale investors.
Know more about Transactional Funding. For more information visit http://escrowedproofoffunds.com/solutions/transactional-funding/
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June ~8 2007