Transactional Funding: Same-Day Closings for Wholesale Deals

Transactional funding is very short-term financing, typically 1–3 days, used to fund a double close in a wholesale or assignment transaction. When an investor (B) buys from a seller (A) and immediately resells to an end buyer (C), transactional funding provides the capital to briefly own the property between the A-B and B-C closings.

The mechanics are straightforward. B contracts with A at a wholesale price. B also contracts with C at a higher price. At closing, the transactional lender funds the A-B purchase. Hours later, the B-C sale closes and the proceeds repay the transactional lender plus their fee. B pockets the difference minus the funding cost.

Fees for transactional funding are typically 1–3% of the loan amount (not annualized, that's the total fee for 1–3 days of use), plus minimal closing costs. A $200,000 transactional loan might cost $3,000–$6,000. Because the fee is flat and short-term, it's cost-effective only when the profit spread is significantly larger than the funding cost.

Not every deal qualifies. Transactional lenders require a signed contract between B and C for the end sale, earnest money from C, and proof that C's funds are ready. If C's financing falls through after the A-B closing, B owns a property they didn't plan to own, with a ticking clock to resell before incurring carrying costs. Most lenders verify C's proof of funds or loan commitment before funding.

Title companies have to be experienced with double closings, as not all are. In some states, simultaneous closings are legally or procedurally difficult, requiring workarounds. Before committing to transactional funding, confirm with your title company that they can execute.

Transactional funding is ideal when the B-C buyer requires a warranty deed from B (disqualifying assignment of contract) or when assignment fees would be disclosed and would risk the deal. For straightforward wholesale assignments where assignment is acceptable, simple assignment is cheaper and simpler.