A transactional loan (also called a transactional funding or flash funding) is a very short-term hard money loan, often lasting only 24 to 72 hours, used primarily by real estate investors to facilitate a quick, back-to-back property sale.
How Transactional Funding Works:
It’s most often used in “double closing” scenarios, where:
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Investor A puts a property under contract to buy at a low price.
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Investor A has a buyer (Investor B) ready to pay more for the same property.
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Investor A uses transactional funding to buy the property from the original seller, then immediately sells it to Investor B — all on the same day or within a short period.
Key Features:
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100% financing (typically no money down)
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No credit check (approval is based on the end buyer’s ability to close)
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Short duration (usually 1–3 days)
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Used only when a resale is guaranteed
Pros:
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Enables investors to do deals with no cash
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Allows legally compliant double closings
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No long-term interest payments
Cons:
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High fees for short-term use (often 1–3% of loan amount)
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Must have a solid end buyer lined up
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Risk if second closing doesn’t happen