Can I just fund other people's wholesale deals instead of doing one?

Question

I lend money, I don't want to own houses, so forgive the basic framing.

Everything I've read says wholesaling requires no money. Then when I read further there's earnest money, marketing spend, and title fees, plus something called transactional funding for double closings, which sounds like exactly the kind of thing I'd want to be on the other side of.

Two questions. What does one deal genuinely cost from a standing start, cash out of pocket, before any fee comes in? And is one-day funding for back-to-back closings a real product a small private lender can offer, or is that a specialty niche with three players in it?

Rena Guide · Accepted Answer

"No money" means no down payment and no mortgage, because you never take title. It doesn't mean no cash.

The out-of-pocket items on one deal are the earnest money deposit, which is the good-faith money you put up when the contract is signed and can be anywhere from $10 to $1,000 depending on the seller and local custom, your marketing to find the seller in the first place, and possibly a title search. If you're cold calling rather than mailing, a realistic first-deal budget is a couple of thousand dollars. If you're mailing, $2,000 buys you roughly 3,000 postcards and no guarantee of a contract. Marketing is the real cost, and it's the one people leave out of the "no money" claim.

On the funding side, transactional funding is short-term money, often for a single day, that lets a wholesaler close with the seller and then immediately resell to the end buyer instead of assigning the contract. Pricing is usually points on the purchase price or a flat fee, whichever is greater. Underwriting looks mostly at whether the end buyer's funds are already sitting in escrow rather than at the borrower's credit, because the lender's exit is that second closing happening within hours.

It's a real product and there are more than three providers, though it's a narrow niche and terms vary a lot. Get any lender's fee schedule and payoff conditions in writing before you commit either direction.

One thing to check early: not every title company or escrow agent will handle a back-to-back closing at all, and the practice differs by state. That single phone call decides whether the whole structure is available to you.

hannah_west29 · Answer

Let me put numbers on the marketing side because that's the part tender is asking about. 2,000 postcards at 60 cents is $1,200. Say 0.5% response, that's ten callbacks. Say one in ten of those is a seller with a real reason to move and a price that works. So one contract per $1,200 and about six weeks of follow-up. Against a $13,000 average fee that looks great, which is exactly why I distrust the 0.5%. What's the number people actually see on a cold list?

jessreyes12 · Answer

The question I've been too embarrassed to ask: whose money is the earnest money? Does the wholesaler put it up, or does the end buyer put it up once they take the contract?

gregpowell66 · Answer

@compass both, at different points. The wholesaler puts a small deposit down with the seller to make the contract real. Then when the contract gets assigned, the end buyer typically puts a deposit with the wholesaler, often $2,500 to $5,000 and often non-refundable, which is what stops the buyer from walking after the wholesaler has stopped marketing. That second deposit is the one people forget exists.

luis_carrera · Answer

I built a model for this and the variable that wrecks it isn't cost, it's cycle time. Every extra week between contract and assignment adds carrying risk on a deal where you have no asset to carry. How many days do people actually run from signed contract to assigned and closed?

bmoreno23 · Answer

Can someone tell me straight whether $500 and a phone is enough to start, or whether I'm reading marketing copy? That's genuinely what I have.

stephen_ok9 · Answer

The funding side math is what stops me. Two points on $186,000 for one day is $3,720. Annualized that's a number nobody says out loud. Borrowers accept it because it's priced per deal rather than per year, fine. What I can't price is failure: if the end buyer doesn't fund, my money is in a closing that already recorded and my borrower now owns a house with a one-day loan against it. What's the actual protection there, funds in escrow before the first leg records?

tonyv88 · Answer

Something nobody's priced in this thread: occupied properties. A good share of the houses that reach me for management after a wholesale deal have tenants with no written lease and no security deposit ledger, and the buyer discovers it after closing. That's the category the big institutional buyers skip, which is why it stays available. It's also why the fee on those deals should be larger, not smaller.

tashaford30 · Answer

If a state gives the seller a three-day cancellation right, like Connecticut's act does once it's in effect, how does anyone justify spending money on dispo during those three days? Genuinely asking, because that seems to push all the work into a shorter window.

laurenkim53 · Answer

In my market ARVs top out around $90,000 and a $13,000 assignment fee doesn't exist. It's $3,000 to $5,000 and the buyer pool is four landlords who all know each other. So the minimum question has a different answer out here. If my fee is $4,000 I can't spend $1,200 on postcards to get one contract.

Rena Expert · Answer

@ledger 0.5% response on a cold absentee list is optimistic and 0.2% to 0.3% is common, and the response-to-contract step is worse than one in ten unless the list is already filtered for a reason to sell, like probate or pre-foreclosure. Those lists carry the deeper spreads for the same reason they're harder to work.

@meridian the protection is sequencing. A transactional funder that's paying attention won't release until the end buyer's funds are verified in escrow and the closing agent has agreed to disburse both legs the same day. If your borrower's deal fails, you're a lender on a house with an unplanned holder, so your paperwork needs a mortgage that survives past the one day and a payoff schedule that continues accruing. Write that in, and have your own counsel draft it rather than adapting a hard money template.

@hollow's point is the one that reorders everything above. Marketing spend has to scale with fee size, so at a $4,000 fee your acquisition cost per contract needs to be a few hundred dollars, which means driving for dollars, referrals, and repeat calls to a small list rather than mail. The whole national average fee figure near $13,000 hides a spread from about $5,000 in one state to $22,000 in another, and the tactics don't transfer between those two ends.

@quill you don't spend during the cancellation window. You use it to verify title and confirm the seller can actually convey, then market once it's expired. That compresses the timeline @windlass is asking about, which is why the 90-day closing cap in the same statute matters more than the three-day right does.

Can I just fund other people's wholesale deals instead of doing one?

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