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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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