If you’ve been involved in real estate beyond just buying and selling your primary home, you might have heard the term transactional funding or transactional loans. Transactional funding is not as commonly known as some other forms of financing, but it is definitely a valuable addition to your arsenal of loan options.

Understanding what these loans are, how they work, and the pros and cons of using them will help you evaluate when they might be a good fit for your investment strategy.

What is Transactional Funding?

Transactional funding is a short-term, hard money loan that allows a wholesaler or investor to purchase a property without using any of their own funds. Lenders provide 100% of the required financing, as long as the borrower can prove that there is another end buyer in place to purchase the property within a short time frame.

Some transactional lenders allow for a loan period of only 24 hours, but most provide a timeframe of two to five days. Transactional funding is a great way to do a fast flip, and can be highly profitable if done correctly.

Transactional loans are also sometimes referred to as flash funding, same-day funding, or ABC funding.