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Transactional Funding: Hidden Costs You Should Know

Photorealistic image of a real estate wholesaler meticulously reviewing a financial document in a modern office. The desk features a detailed document, a calculator, and financial charts in the background, symbolizing the careful analysis of hidden costs in transactional funding

Transactional funding has emerged as a cornerstone in the realm of real estate wholesaling, especially in the context of EMD (Earnest Money Deposit) Funding and Double Close Funding. However, it’s important to be aware of the hidden costs associated with this financial strategy. This article sheds light on these costs, helping you make more informed decisions in your real estate ventures.

1. Administrative and Processing Fees

Though transactional funding is not traditional lending, it does involve specific administrative processes. These processes can include application fees, processing charges, and other administrative costs. As noted by OnPurpose Real Estate Lending, a $395 processing fee is typical, along with a flat 3% funding fee for their transactional funding services.

2. Joint Venture Partnership Costs

In a limited scope joint venture partnership, there are inherent costs related to legal documentation, partnership agreement drafting, and possible attorney consultations. UpCounsel emphasizes that these costs depend on the nature of the agreement and are crucial for the legal foundation of your deal.

3. Interest or Profit Sharing in the Deal

While transactional funding isn’t a loan, agreements often include profit sharing between the wholesaler and the funding partner. EquityMax, a transactional funding provider, mentions that 100% of the funds, including closing costs, are financed by them, indicating a profit-sharing model in place (EquityMax).

Photorealistic image of a real estate professional and a client engaged in a conversation in a modern office setting, discussing transactional funding. The focus is on the two individuals, highlighting their professional interaction in an elegantly furnished office, devoid of any visible text, documents, or alphanumeric characters, emphasizing the personalized and professional nature of the consultation

4. Potential Holding Costs

In Double Close Funding scenarios, where the wholesaler briefly owns the property, there might be short-term holding costs. Sudduth Realty explains that these costs can include property taxes, utility payments, and insurance for the period between the two closings.

5. Risk Mitigation Expenses

Investing in comprehensive risk assessment is crucial in transactional funding, especially in a joint venture setup. Effective risk mitigation strategies, as discussed by Team Sobiko, can include property appraisals, market analysis, and legal consultations.


Understanding the hidden costs of Transactional Funding is vital for successful real estate wholesaling. Being aware of these expenses allows for better financial planning and more effective investment strategies. By staying informed about these costs, wholesalers can ensure their investments are sound and profitable.

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