What Is Transactional Funding? A Straightforward Guide for Real Estate Investors
What Is Transactional Funding?
Transactional funding is short-term capital used to complete a real estate transaction when you need to buy and resell a property within a short period.
It is most commonly used for a double close:
- A-B closing: The original seller sells the property to you.
- B-C closing: You sell the property to the end buyer.
The funding supports the A-B purchase. The B-C sale then provides the money used to repay the funding.
In practical terms, transactional funding helps you move from contract to closing without using all of your own cash for the purchase.
It is designed for a specific transaction, not a long-term property hold.
Transactional Funding Real Estate Structure
A typical transactional funding real estate deal has three parties.
| Party | Role | Transaction |
|---|---|---|
| A | Original property seller | Sells to the investor |
| B | Investor or wholesaler | Buys from A and resells to C |
| C | End buyer | Purchases from the investor |
The funding provider supplies capital for the A-B closing. Once the B-C closing is completed, the end buyer’s funds repay the provider. Your remaining proceeds are the spread between the purchase price and resale price, less funding fees and closing costs.
Simple Example
- A-B purchase price: $180,000
- B-C resale price: $225,000
- Gross spread: $45,000
- Transactional funding fee and closing costs: deducted at closing
- Remaining proceeds: paid to the investor after repayment
The numbers must work before funding. Review both contracts, all closing costs, the end buyer’s ability to close, and the timing between transactions.
For additional background, Ramp’s guide to transactional funding explains the general A-B and B-C structure and how transactional funding differs from longer-term financing.
How A-B and B-C Closings Work
1. A-B Closing
You have a property under contract with the original seller.
The A-B contract identifies:
- The purchase price
- The closing date
- The buyer and seller
- The title company or closing attorney
- Any required earnest money deposit
At the A-B closing, transactional funds are sent to the closing agent so the purchase can be completed.
2. Temporary Ownership
After the A-B closing, you hold title to the property, even if only briefly.
The property is then ready for the resale transaction. The timing may be the same day or within the approved funding period, depending on the deal structure and closing requirements.
3. B-C Closing
You sell the property to the end buyer under a separate B-C contract.
The end buyer’s funds are delivered to the closing agent. Those funds repay the transactional funding provider and cover the applicable closing costs and fees.
Your net proceeds are distributed after the closing statement is finalized.
Same Title Company vs. Different Title Companies
The title-company structure matters.
Double Close: Same Title Company
Both the A-B and B-C closings take place through the same title company.
This structure can simplify coordination because one closing team manages both transactions, documents, incoming funds, outgoing funds, and repayment.
The title company still needs to be comfortable handling a double close and the required funding instructions.
Double Close: Different Title Companies
The A-B and B-C closings take place through separate title companies.
This structure requires additional coordination between the two closing teams. Funding instructions, title work, wire timing, settlement statements, and payoff details must align.
Different-title-company transactions can still be workable, but the timing and documentation must be confirmed early.
Before submitting a deal, verify that each title company understands the structure and can meet the required closing timeline.
Who Uses Transactional Funding?
Transactional funding for wholesalers and investors is usually based on the deal structure and exit plan.
Common users include:
Real Estate Wholesalers
Wholesalers may use a double close when an assignment is not suitable for the transaction or when the buyer and seller need separate closing documents.
Real Estate Investors
Investors may need short-term capital to acquire and resell a property without tying up their own funds.
Acquisition Companies
Acquisition companies can use transactional funding to complete a purchase when a committed resale buyer is already in place.
Dealmakers
Dealmakers handling time-sensitive purchases may need funding for the A-B leg while the B-C transaction is being finalized.
The key requirement is a clear path from purchase to resale. The funding is built around the transaction, the contracts, and the expected closing proceeds.
Where EMD Funding Fits
Earnest money deposit funding and transactional funding solve different problems.
EMD Funding supports the deposit required to secure a property under contract. It does not typically fund the entire purchase price.
Transactional Funding supports the purchase side of a double close. It is used when you need capital to complete the A-B closing before reselling to the end buyer.
Use EMD funding when your immediate need is the deposit.
Use double close funding when your immediate need is the purchase capital for a confirmed A-B and B-C transaction.
If you are comparing these two options, the earlier guide, EMD Funding vs. Transactional Funding: What’s the Difference (and Which Do You Need?), addresses the decision at a high level. The practical test is simple: identify whether you need to secure the contract or complete the resale structure.
Transactional Funding vs. Hard Money vs. DSCR
These funding types support different real estate strategies.
| Funding Type | Primary Use | Typical Time Frame | Underwriting Focus |
|---|---|---|---|
| Transactional Funding | A-B purchase in a double close | Hours to a few days | Contracts, end buyer, exit |
| Hard Money | Purchase, renovation, or short-term hold | Months | Property, borrower, renovation plan |
| DSCR Financing | Long-term rental property financing | Years | Property income and debt coverage |
Transactional Funding
Built for a short closing window.
The focus is the transaction and the repayment from the B-C closing. It is not designed to fund a renovation, long-term hold, or rental strategy.
Hard Money
Built for a property that will be held, improved, and sold or refinanced later.
Hard money financing may include interest, points, a down payment, property underwriting, and a longer repayment period.
DSCR Financing
Built primarily for income-producing rental properties.
DSCR financing evaluates whether the property’s expected rental income supports the debt. It is generally not the right tool for a same-day or back-to-back wholesale closing.
Choose the funding category based on what must happen next, not simply on the property type.
Big Wallet Lending Funding Categories
Big Wallet Lending provides several options for real estate transactions:
- EMD Funding: funding for the earnest money deposit required to secure a property under contract
- Double Close Funding, Same Title Company, funding for A-B and B-C closings handled by the same title company
- Double Close Funding, Different Title Companies, funding for transactions closing through separate title companies
- Stack Method Funding: layered financing using sources such as seller carryback financing or DSCR financing
- Other Deal Funding: a review path for unique transactions outside the standard categories
If your deal does not fit one category immediately, use Other Deal Funding and provide the transaction details.
The Four-Step Funding Process
The process is designed to keep the next step clear.
Step 1: Submit the Deal
Provide the deal type, transaction details, funding request, contracts, title information, and end-buyer information where applicable.
Step 2: Receive Funding Approval
The deal is reviewed based on the requested funding structure, documents, closing timeline, and repayment plan.
Step 3: Complete Contracts and Pay Applicable Fees
Finalize the required agreements and review the applicable fees before funding.
Step 4: Get Funded
Once the requirements are complete, funds are sent according to the approved closing instructions.
That is the full path. Submit the deal, receive approval, complete the requirements, and get funded.
What You Should Prepare
Have these items ready before submitting:
- Executed A-B purchase contract
- Executed B-C resale contract, if requesting double close funding
- End-buyer proof of funds or financing information
- Title company contact information
- Closing dates for both transactions
- Requested funding amount
- Property address
- Entity and borrower details
- Any seller financing or DSCR documents for a Stack Method request
Complete information helps keep the review organized and prevents avoidable delays.
Frequently Asked Questions
Is transactional funding the same as a double close?
No. A double close is the transaction structure with separate A-B and B-C purchases. Transactional funding is the capital used to support the A-B purchase in that structure.
Can transactional funding be used with different title companies?
Yes, subject to approval and coordination. The A-B and B-C closings must be managed by title companies that can support the required timing, documents, and funding instructions.
Do I need an end buyer?
For a standard double close, you need a clear B-C exit and a buyer capable of closing. The end buyer’s contract and funding strength are important parts of the review.
Is transactional funding a long-term loan?
No. It is short-term capital for a specific transaction. It is not designed for renovations, long-term ownership, or rental property financing.
What if my deal is not a standard double close?
Submit it under Other Deal Funding. Unique transactions can be reviewed based on their contracts, funding need, structure, and exit plan.
Ready to Move the Deal Forward?
Transactional funding is straightforward when the structure is clear:
- Property under contract
- End buyer identified
- A-B and B-C closings coordinated
- Funding request submitted
- Contracts and fees completed
- Closing funded
Review your numbers, confirm the title-company structure, and submit the deal for approval.