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Transactional Funding: Perform REOs and Short Sales in a Hassle-Free Manner
Real Estate Investment
Real estate is one of the places in which people love to invest. Money invested on the lands will always be worthy and it is a wise move to invest money in real estate as buying the houses can bring in more happiness to any owners. However, in order to invest your valuable money in any of the real estates, beforehand one should possess a thorough knowledge on the real estate business and its functions. A best option would be to contact a real estate agent in the vicinity for better results. The real estate agents will exactly know how to invest your money in an appropriate way which fits your budget as well as the purpose. However, you can directly sign a contract with the seller or through a real estate agent.
Real estate investment is found to be a daunting task unless thorough knowledge is not gained over it. Most of the places in-and-around the United States have a wonderful atmosphere and stunning look which would be quite useful for anyone upon investing. The rates of the places were found to be sky-high once; however, the rates have been slashed in the recent period due the economic turn down. To add more insult to the injuries, most of the houses have been undertaken by the government as well as the banks due to non-payment of the loans which is called as foreclosure. Hence, purchasing the houses from certain parts of the United States is not that easy. There are some set of protocols that have been imposed for buying the property. The protocols are enforced by the government and banks which have undertaken the properties.
What is Transaction Funding?
In the South Florida regions of Broward Country, Fort Lauderdale, Coral Springs, Miami, Miramar, Plantation, Davie, Sunrise, Lauderhill, Hollywood, Pembroke Pines; most of the real estate is owned by big banks or government agencies which is termed as Real Estate Owned or REO. However at times after signing the contract with the end buyer, the real estate investor may feel that he is falling short of the money which is quite a lot for a perfect deal. Also, many REO or government agencies don’t allow assignable contracts for a long time as well. The only thing which can save you on the Earth in the crucial times like this is the transactional funding.
Many may not be aware of this kind of funding. It is quite a useful funding procedure which could help you sign the pre-planned deal in the right time. Especially, investors who are at the beginners’ level and someone who have encountered hard times in the real estate investments would find the transaction funding an important tool for them. Especially, the economic meltdown has produced a great impact on the real estate investment which has highly complicated the property selling and buying. However, introduction of the transactional funds has pulled things back in the order and investors are able to breathe free with the help of this process.
It is a just the perfect funding procedure for anyone who is planning to invest in the short sales and REOs. The flips of REOs and short sales will be much lowered when compared to direct selling with the end buyers. Hence, the transactional funding by all means is found to be quite useful for the investors who look out for a secure investment in the real estate. One of the biggest advantages associated with this kind of loans is that any investor can buy the REO homes at a less costs and can sell them at incredibly high prices.
Benefits of Transaction Funding
So, a high profit is always associated with the transactional funding and most of the investors have started using it as a tool to earn more profits in a short period of time. Another feature that adds feather to the cap of this kind of funding is that the banks or government agency which owns the homes will fund the entire purchase and closing fund for the entire deal which in turn can be sold by the investor with end buyer at high rates. Remember, in order to acquire the complete advantage of the transactional funding, you should have an end buyer readily available to close the deal.
Another fascinating factor which is associated with this typical funding method is that the banks won’t look at the investors’ money or credit in the banks. The only thing which is a must for the banks (i.e., the lenders) is the ready availability of the end buyers. Any amount of money can be availed if an end buyer is present to the close the deal; in general, the deal has to be closed within 2–3 days which is very important. Transaction funds can be quite handy even for the investor who has a very little amount but possesses a high deal of end buyers. They can make huge amount of profit even with a small amount of money in their accounts.
The process of closing the deal between the lender and the end user by the same day is known as the double closing. It is one of the technical and legal terms used during the flipping of the houses by the investors. In simple words, it is known as back-to-back flipping of houses. In order to understand the steps involved in the double closing deal, it becomes mandatory to learn the entire process of the transactional funding and how it takes place.
Transaction Fund Mechanism and Profit Gaining Ways
Well, transaction funding happens among 3 parties. One is the lender, other the investor, and the third party the end buyer. It happens like this: for instance let the government or the bank which owns the property be labeled “A”, the investor as “B”, and the end buyer as “C”. The lender (A) sells the property to the investor (B) at lesser costs by signing a contract between A and B. The next step would be signing deals between the investor (B) and the end buyer (C).
It is a wise move to sign a contract between the end buyer (C) and the investor (B) based on the contingent contract between lender (A) and investor (B). Double closing is something like this: the lender (A) sells the property to the (B) investor who in turn sells it to the end buyer (C) within the same day. In simple it is the closing of the deal on the same day. As two types of transactions and closing happen (between A and B followed by B and C) back-to-back within a day, the term double closing is used to denote the process.
In order to learn about the approximate profit that can be obtained from the real estate investment using the transaction funding is clearly understood from the following illustration: for example the lender may sell the property for $20,000 to the investor. If the investor possesses a buyer who is willing to buy the property for $40,000; then, it goes without saying that are about to earn an additional amount as profit. However, remember the buyer should be immediately in a position to buy the property from the investor.
The investor never needs any credit to buy the property unless he an end buyer is not ready to buy the property from the investor. Due to this reason, the transaction funding has been constantly gaining popularity all over the globe. Remember, the money of the investor is never used in the process of the contract signing between the investor and lender. Hence, anyone with an end buyer can easily opt out for the transactional funding. Sometimes the Proof of Funds letter would play a crucial role in the transaction funding process. As the investor is not applying for a loan or any of his valuable money for buying the property, the investors are always on the safer side and their money is secure.
Real estate is one of the places using which anyone who buys or sells property can make a large amount of profits. In order to make use of the benefits out of the real estate, simultaneous and flipping of the houses are quite necessary. However, the funding source has to be readily available for this purpose. Once if investor is ready with the lender and numerous buyers backing him, then he is all supposed to make profit in the real estate area using the transactional funding.
However, there is one complication associated with the above procedure. In case if the end buyer is someone who has to buy cash from other sources, then it would become difficult to close the deal. It is very important that the lender should be willing to loan the money to the buyer. If the buyer is not willing, then at the closing you have to look out for some other alternative. One of the best ideas would be buying the land in the name of the trust from the lender (however, the end buyer has to be present at this time) and then resell the land to the end buyer instantly from the name of the trust. There are many last minute closing deals in practice across various countries like the one which has been mentioned above.
Selling of the foreclosure property is not that easy as the lending institution completely claims the right of the entire property and it is pretty difficult to sell it. Buying the foreclosures using the transaction funds is an excellent option. Foreclosure properties are nothing but REOs and the same procedure mentioned in the above paragraphs can be followed for them. In general the foreclosure properties are available at the market price and someone who buys them can easily sell the property for higher rates. Obviously, it will result in huge profits.
Hiring Professionals for Transaction Fund Process
Approaching a specific company like ours which helps in a quick transaction funding the agent is very important as they lessen your burden on buying a reliable property. If any discrepancy is associated with the end buyer buying the property from the investor, then the entire process would not work out. However, agencies like Plum Investors can be quite handy in bring in the buyer to help you acquire profit. The only thing which has to be ensured is that a few companies come up with title companies which have to be specified during the entire process (during the contract signing) of the transaction fund. The reason behind it is very simple. They will use the same company for signing the deal between the investor and the end buyer. It really helps to speed up the process and the whole process will be carried out in contracted legal way between the parties.
Companies like Plum Investors offer even some valuable assistance which could be quite useful for transaction funds. One of the best tips is that get double the amount as your initial deposit from the end buyer to deposit to the seller. Mention it clearly that the amount will not be refunded. Accept only cleared funds like Cashier’s check for the buying and selling purpose or inform to companies like Plum Investors. Inform the companies well in advance to execute a perfect deal.
Even companies like this find the buyer and help you earn profit as they have a database of the buyers who are looking for the properties. However, note that the profit anyone can earn will become 50/50 of the net and closing fee. In the case of transactional funding the investor has to pay the transactional funding fee. As quite a lot of buyers are in the databases of the companies like this, any deals between the Miami and Port St. Lucie is quite easy. In addition they are capable of assisting investor who is interested in transaction funding for buying the properties located anywhere in Florida and other states in the United States.
Based on the request of the investor, end buyers can be brought in easily from other areas besides Miami, Fort Lauderdale, Pembroke Pines, Coral Springs, etc. It is never a big problem as Plum Investors has teams of people that can reside outside of these areas. Also, it becomes necessary to learn the basics about the real estate investment and the facts associated with it to invest money in the right place and to earn considerable amount of profit.
