6 Best Transactional Lenders for Real Estate Investors

How prompt you are at seizing investment opportunities in the competitive real estate industry impacts your bottom line and overall success. But what if you’re short on funds when opportunity knocks? Consider a transactional loan.

This form of financing offers swift capital without imposing high-interest rates. In this article, we’ll give you the lowdown on what transactional funding is and how it works and highlight the best transactional lenders in the market.

• What Is Transactional Funding?
• 6 Best Transactional Lenders 
• How To Qualify For Transactional Funding
• Costs Associated With Transactional Lenders
• Transactional Lender Alternatives
• Final Thoughts on Transactional Lenders

What Is Transactional Funding?

Real estate transactional funding, also known as same-day funding, flash-cash, ABC, and 1-day flip funding, is precisely what its labels suggest—a form of financing in which borrowers are swiftly approved for short-term loans to cover the cost of transactions/purchases. These loans are repaid quicker than normal, usually within the same day or week. However, some lenders may allow up to two weeks.

So, how does transactional funding work? It involves double closing with three parties (hence the ABC nickname); a motivated seller(A) willing to sell their property to the investor (B) at a cost lower than the market value, and a buyer(C) willing to purchase it at a cost higher than the market value.

6 Best Transactional Lenders For Wholesaling, House Flipping & Real Estate Investments

Transactional funding lenders aren’t one-size-fits-all. They have different years of experience and reputations and offer different transaction loan terms. Here are six of the best:

Coastal Capital Funding

Coastal Capital Funding is a Virginia-based direct private money lender with over thirty years of financing the real estate industry.

The lender, established by renowned entrepreneur Bobby Feinman, offers transactional bridge loans with terms of 1-3 days. Although their repayment term is pretty short (some lenders offer up to two weeks), this lender will offer 100% of the purchase price and close on the transaction loan in as little as 48 hours as long as the borrower has a clear title.

Furthermore, they charge no upfront fees, and although they require a $495 processing fee, it’s part of closing costs, making their transaction loans incredibly accessible. Moreover, they issue a proof of funds letter allowing investors like real estate wholesalers to prove to the original seller they have the funds needed to close transactions. Coastal Capital Funding charges a 2-3% fee on the loan amount.

Paces Funding

Paces Funding is one of the largest hard money lenders in Atlanta. They primarily work with real estate investors and will approve a transaction loan for a wide array of short-sale real estate projects, including commercial investments, retail spaces, developer lots, industrial properties, and even new construction.

This lender further stands out for not heavily emphasizing a borrower’s credit. Instead, they focus more on the ARV of the property and the borrower’s investment in it.

Furthermore, Paces Funding streamlines access to funds with an online-based underwriting process. Applicants can apply online by submitting the purchase contract and renovation list. If approved, the lender promptly arranges an appraisal process within the same or the next day, and if all goes well, the loan is approved and closed on the next business day.

Paces Funding can quickly process loans because, unlike most lenders, they don’t rely on private investors; instead, they utilize their funds. Paces Funding offers transactional loans with a highly competitive 1.75% processing fee based on the initial transaction (A-B).

Read Also: Hard Money Loan Calculator: Profits, ROI, Interest, & Repayment

Washington Capital Partners

If you need a substantial transactional funding loan, you may want to check out Washington Capital Partners. Not only do they offer 100% financing, but they can offer transactional loans of up to $10 million! While they’ll require an origination fee and a separate $1,000 processing fee, the good news is they don’t require a down payment. Even better, the processing fee is paid at closing, ensuring it doesn’t reduce your initial capital funding.

But that’s not all! Washington Capital is incredibly committed to its borrowers. They assign every transactional funding borrower a dedicated specialist. This specialist will walk you through the loan processing and assist in marketing your investment property by promoting it to the lender’s partner company and sharing it via email with over 8,000 investors in the company’s network. This added support is particularly beneficial if you’ve identified a promising rehab or wholesale deal but lack an end buyer.

Simply put, Washington Capital Partners is one of the best transactional funding real estate lenders around.

Equity Max

Do you have a low FICO score but want to capitalize on a wholesaling deal you just came across? Check out Equity Max, a Florida-based transactional funder that began operations in 1990. They don’t call for a credit report or income statement.

Furthermore, this lender sets no minimum or maximum transactional loan amounts, making them a particularly suitable option for small-scale investors with no experience who often need relatively low capital for their initial deals.

Equity Max offers 100% financing through transactional loans and uses a flash funding model to process and underwrite transactional loans in just a day! This allows investors to leverage fast-moving real estate deals in a hot market.

Given their quick process, one may think they charge high fees, but their transactional loan fees start at only $1,000 for loans under $500,000, whereas most lenders using a similar model often require a $2,000 fee. But to be approved, borrowers must prove double closing. Furthermore, the funds are only released once the end buyer proves they have the funds to close on the deal.

Jet Lending

Jet Lending is a nationwide private lender based out in Texas. Their transactional loans offer 100% financing and close within three days of clearing with the title company, allowing investors quick access to capital. The lender also offers a dedicated loan officer who guides borrowers through the process.

Tidal Loans

If you have a low credit score, Tidal Loans is another excellent transactional funding wholesaling lender for you. This Texas-based lender doesn’t perform credit checks and neither do they ask transactional loan borrowers for bank statements or income documentation. So, how do they ensure they don’t incur losses? Once they approve a borrower, the funds are often held in escrow until the deal is successfully closed. Furthermore, approval is contingent on back-to-back closing.

What’s noteworthy is that Tidal Loans typically charges a 2% transaction fee on its transactional loans, but if the end buyer uses them for financing, the investor enjoys a discounted 1% rate. Moreover, Tidal Loans require no upfront fees for transactional loans. Suppose the lender sounds too good to be true. In that case, you can rest assured they’re a reputable company as they not only have a proven track record but are also backed by a network of private investors with over half a century of real estate investing experience.

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

How To Qualify For Transactional Funding

Whether you’re applying with Coastal Capital Funding, Washington Capital Partners, or Tidal Loans, you’ll need the following to qualify for transactional funding for real estate:

• An end buyer contract: Transactional lenders often require a buyer contract to prove not only you have a buyer for your investment property but also that they have the funds needed to secure it immediately after you purchase it.
• Background checks: Although most transactional lenders accept a low FICO, they will conduct a background check before they qualify you for funding.
• Property review: Just because you claim to have an investment property doesn’t mean you’ll automatically qualify for a transaction loan. Lenders conduct a property valuation online while others will send in a physical appraiser to ensure it exists.
• Credit reference letter: Most transactional lenders also require borrowers to submit a letter of credit as a self-declaration of their creditworthiness.

Costs Associated With Transactional Lenders

Most transactional lenders don’t charge an interest rate, but they charge a transaction fee, typically 1%-3% of the loan amount. This fee is usually part of closing costs. However, this percentage may be higher depending on the loan amount and repayment term; a longer term equals higher fees and investment deal risk. Additionally, some lenders charge an origination fee and a processing fee.

Transactional Lender Alternatives

If you’d like to explore your options, here are excellent alternatives to transactional funding for wholesalers.

• A hard money loan
• A private money loan from private investors 
• A home equity line of credit
• Joint venture capital

Final Thoughts on Transactional Lenders

The real estate industry is ever-evolving yet highly competitive. Consequently, investors, whether wholesalers or house flippers, need to maximize every deal they land as soon as they can. Transactional lenders allow them to leverage these deals as soon as they pop up by providing quick access to transactional funding for real estate. 

While their form of financing has short repayment terms, it’s typically quite affordable, with fees ranging between 1-3% only. We shortlisted the best transactional lenders to ensure you secure funding from only the best. 

Sign up for our free webinar training to unlock even more impactful wholesaling and house-flipping insights and strategies.