Transactional Funding Commercial Real Estate: Why Transactional Funding Isn’t Just for Wholesalers
Most investors associate transactional funding with quick wholesaling of single-family homes. But it’s also being used in commercial real estate deals where spreads are six figures or more.
Imagine flipping:
- A 40-unit apartment building
- A small retail strip
- An office conversion project
In these cases, transactional funding can cover the short-term gap between two closings — without requiring millions in investor capital upfront.
As Neal Bawa says:
“Creativity in financing is the edge. The market rewards those who can close fast.”
What Is Transactional Funding in Commercial Deals?
Transactional funding is a short-term loan (often same-day or 48 hours) that covers the A-to-B closing so the investor can immediately sell to the end buyer in the B-to-C closing.
- Investor doesn’t use personal capital
- Loan is repaid same-day after second closing
- Used to protect large spreads from being exposed
Real-Life Story: Cleveland Multifamily Flip
An investor in Cleveland, Ohio contracted a 24-unit apartment building for $1.1M.
- End buyer already lined up for $1.35M
- Spread: $250,000
- Problem: Seller refused an assignment contract
- Solution: Investor used transactional funding for the first closing
The same day, the end buyer closed, paying $1.35M. The investor repaid the transactional lender and kept $230,000 net profit after costs.
Without transactional funding, the deal never would’ve closed.
Why Use Transactional Funding in Commercial Deals?
- Protect Big Profits
In assignment contracts, your fee is visible. Sellers and buyers may push back. Transactional funding keeps your spread private. - Close Larger Projects
Allows investors to flip apartment complexes, retail, or mixed-use buildings. - Win More Deals
Sellers take your offer seriously because you can show a “cash close.”
Transactional Funding Commercial Real Estate: Challenges & Risks
- Bigger funding amounts: Commercial deals may require $1M+ in transactional loans.
- Timing is critical: Both closings must align.
- Lender selection: Not all transactional lenders are comfortable funding commercial deals.
Our Solution: We provide transactional funding for residential and commercial projects, including multifamily, office, and mixed-use properties.
Transactional Funding Commercial Real Estate: Best Practices
- Build relationships with transactional lenders experienced in commercial.
- Have your end buyer lined up and verified.
- Work with a title company familiar with double closings.
- Factor in double closing costs when calculating spreads.
FAQs About Transactional Funding Commercial Real Estate
Q: Is transactional funding legal for commercial deals?
Yes, as long as both closings are properly documented and compliant with state law.
Q: How much does it cost?
Typically 1–2% of the loan amount for 24–48 hours.
Q: Do I need my own capital?
No. That’s the power of transactional funding — your buyer’s funds repay the lender.
Q: Can your company provide commercial transactional funding?
Yes. We specialize in funding both residential and commercial double closings.
