Which is the better type of financing for real estate investors today; transactional funding or hard money loans?
Are hard money lenders still relevant? Why might some property wholesalers opt for hard money loans even though they have been using transactional funding successfully day in and out for years?
New Hard Money Loans, New Applications
Hard money has changed a bit over the last two decades. The application process is a little different, and new regulations have made hard money loans slightly more challenging than they used to be. However, hard money mortgages are still the easiest mortgage loans to obtain and continue to be an essential tool for all types of real estate investors.
It was recently revealed that former fed chairman Ben Bernanke hasn’t even been able to refinance his own home despite being able to earn $250k in less than an hour for speaking engagements, and has a signed book deal. So clearly equity based lending like hard money remains absolutely invaluable in the market, for an even wider base of borrowers and buyers, and will continue to.
While hard money can still be used for flipping houses as in the early 2000s and before, prior to transactional funding making it to the mainstream, there are also new applications and reasons to use these loans.
This includes:
The Advantages of Transactional Funding
When hard money lenders exited the industry as the market began to fall apart in 2006 lenders like Best Transaction Funding stepped up, and into the market to serve real estate investors in their greatest time of need.
Previously this type of financing was only available to a few very privileged real estate investors. Yet, instead of shrinking or tightening up guidelines transactional funding became one of the best, and virtually only ways to fund wholesale property deals.
Transactional funding does a lot of what hard money used to do, and private money has done with, but with organized transactional lenders offering ease, systematization, and scale for real estate wholesalers serious about scaling to substantial volumes of business.
It couldn’t be easier to use. Find your property, circulate the deal to your list, close with 100% of someone else’ cash, get paid, and repeat.
Transactional funding offers far easier qualifying, lower overall borrowing costs, and is great when you don’t want to deal with the additional paperwork and time of hard money.
Still, both forms of real estate investor financing are absolutely critical, essential and beneficial for investors at different times.
"I want thank you for the excellent service I received from Best Transaction Funding.The quick response I received from your company from the beginning of the transaction and to the end was unbelievable. I also want to give a special compliment to you as well. You went to great lengths to keep me informed and gave my title company all the information they needed to complete a successful closing. I cannot express how thankful I am. Such service builds great working relationships. I will definitely recommend Best Transaction Funding to all my fellow investors. Thank You."
- Frank Olaitan, Real Estate Investor, MD
"I can't thank you and your company enough for providing funding for our latest project, and right at the last minute. You came through with funding in less than 24 hours and coordinated with the closing agent and attorneys like you had been involved with our project the entire way. I'll know exactly where to call for the funding we'll need for our next project."
- Dave Pricken, Real Estate Investor, NJ
"Thank you so much! I just had a talk with our Realtor on both properties and told him amazing things about your company!... Normally I rehab the houses and re resells them. I just don't have the patience for that work anymore. This [transactional funding] is such a better way for me and less stress."
- Steven Kupecz, Real Estate Investor, TN
"We want to thank you for the exceptional customer service you provided. No one comes close. We had contacted a competitor the same time we contacted your company. Your company responded with in a few minutes while the competitor has yet to respond weeks later even after multiple phone calls and emails. Thanks again for the unmatched customer service."
"We had looked into several transaction lenders for a couple properties we were trying to flip. Your company was the most responsive and had the best pricing. Even though we had logistics issues with the B/C lender, your company acted very professionally and handled our requests beyond our expectations."
"Thank you for your commitment to an excellent customer experience."
- Phoenix Properties, LLC, Ronald Destefani, Investor, PA
"I was studying on how transactional funding works and you guys had the best and most thorough explanations posted so I could fully understand the details in back to back closing. I'd already started setting everything up but your video confirmed that I'm on the right track."
- La'Donna Turnipseed-Scott, Investor, LA
"....a few months back, I happened upon a video, on your site, regarding the use of transactional funding with Hud properties; and I found myself replaying the video over and over because of the value that I saw in the message...it actually explained the process, step-by-step on how to submit a Hud deal by using transactional funding. Once I completed the video, my initial response was to take immediate action by duplicating what I had learned from the video into real time. So I did some research on properties in a market where I knew I had buyers; and put together a hud deal. I then located a realtor able and willing to submit my bid online and within a couple of days, to my surprise, received a call telling me that I had won – my very 1st Hud bid."
"To you I say, ”KUDOS to Best Transactional Funding and Thank you for providing the education and services to Real Estate Entrepreneurs like me. Please keep up the good work!'"
- T. A. Davis, Investor, NJ
"You each deserve high marks for your wonderfully quick response time to each of our questions and requests! You hit home runs with us! Your application system was easy to use. Our deal met your qualifications and every time Rob Kozak or any member of Mystic Properties, LLC phoned, we received a "real" person dialing back to speak with us.
Your patience and persistence were exceptional in dealing with our business interests. Thank you for such great customer service! We look forward to working with your staff, again, in the future. We like referring people to you, as us, our team would have missed-out on an excellent earning opportunity.
Your help negotiating with our title company made our back-to-back deal, finally happen. People noticed on settlement day how effectively and efficiently your part of the transaction was organized and executed. Again, thank you for truthfully being the "BEST" at what you do!"
- Diane McAdams, Mystic Properties, LLC, Real Estate Investor, Pennsylvania
"Boy, you guys are impressive! I can’t thank you enough for scrambling and getting my deal done at the last minute like that. You and your team were awesome!"
- Donna Bauer, The NoteBuyer Inc., Real Estate Investor, OH
"Thank you so much for working so diligently with me. Your services really are the "BEST". I look forward to working with you in the near future!"
- Ericka B., Real Estate Investor, CA