Why a double close needs its own funding
Wholesalers usually profit by assigning a purchase contract to an end buyer for a fee. But sometimes you can’t assign — the seller forbids it, the end buyer’s lender won’t allow it, or you simply don’t want the parties to see your spread. In those cases you actually take title (the A-to-B close) and immediately resell (the B-to-C close). Transactional funding supplies the cash for that brief moment you own the property.
The two closings happen back-to-back, often the same day. The transactional lender funds your purchase from the seller; minutes or hours later your end buyer’s funds close the resale and pay the transactional loan back. The money is outstanding for an extremely short time, which is why it is priced as a flat fee rather than an annual rate.
What it costs and what it requires
Transactional funding is priced as a flat fee on the amount funded plus closing costs, reflecting the one-or-two-day term rather than an interest rate. The defining requirement is a non-negotiable one: the end buyer must already be in place and ready to close. Transactional lenders fund only simultaneous or near-simultaneous closings — they are not a bridge to go find a buyer later.
Because the loan is repaid almost immediately by the end buyer’s purchase, the lender’s risk is low and qualification is light — the deal, the signed B-to-C contract, and the title work matter far more than your personal credit.
Pros and cons
Pros
- Close a wholesale deal without using your own cash
- Keeps your spread private (vs. a visible assignment fee)
- Works when a contract can’t legally be assigned
- Light qualification — the funded deal repays it same-day
Cons
- Requires a ready, funded end buyer to close simultaneously
- Flat fee plus two sets of closing costs eats into the spread
- Useless for any deal you’ll hold more than a day or two
- Not all title companies handle double closings smoothly
Frequently asked questions
How much does transactional funding cost?
It is charged as a flat fee on the amount funded — reflecting the one-to-two-day term — rather than an annual interest rate, plus the closing costs on the purchase. Because the spread on the resale has to cover both, transactional funding only makes sense on a deal with a healthy margin.
When should I use transactional funding instead of assigning a contract?
Use it when you cannot or do not want to assign: the seller prohibits assignment, the end buyer’s lender won’t allow it, or you want to keep your profit confidential. If assignment is allowed and the parties are fine with it, a simple assignment is cheaper.