Transactional Hard Money Lenders
This type of lender is used when you already
have a loan approved buyer lined up to buy
the property from you. Your transactional
lender will loan you the money to purchase
the property from a bank, or at an auction,
or from a private seller. This is also
known as an A to B transaction. You buy
the property from Seller A. You are Buyer B.
And, your End-Buyer is Buyer C. So, in this
transaction, you become Seller after you
have purchased the property and you basically
re-sell or "flip" the property for a profit.
The transactional private hard money lender
loans you the funds for 1 or 2 days to facilitate
your purchase of the property. These transactions
are generally done through a title company who
verifies to the transactional lender that a
back-to-back closing is ready. The end-buyer's
mortgage company may or may not have a seasoning
requirement so you will need to determine that
in advance. The advantage of having a
transactional lender is usually a flat rate fee and
less up-front points that other types
of private hard money lenders. These types of
loans are usually 100% of purchase, although
there may be minor fees for title insurance,
closing, etc. The only requirement for some
transactional lenders is to show that you
will make a profit on the B to C transaction.
Once you have the property under contract, you
can proceed to line up the end-buyer and
therefore you will have a second purchase
agreement signed by yourself as seller
and the end-buyer, contingent on the closing of
the first purchase agreement. If you have
questions, most transactional lenders have
in-house attorneys, and your chosen title
company will also have in-house attorneys as well.
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