Transactional Lending: The $1.7 Million Wire That Saved a Deal

by Anita Sonawane
October 16, 2026
Investments, Real Estate Education
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04 Mins

I was at the Idaho REICon recently when one of the speakers told a story that stuck with me. He had a deal about to die — a hard deadline, no time for conventional financing, and seven figures on the line. A transactional lender wired $1.7 million just before the cutoff. He closed the purchase, and he was able to get hold of the money the next day to repay the lender! He joked to me that the money left the lender only for a few hours.

That’s transactional lending in its purest form: money that exists only to bridge a timing gap inside a deal that’s already lined up. It’s a fascinating corner of finance, and it shows up in more places than most investors realize.

What Is Transactional Lending?

Strip away the jargon and the template is simple: a very short-term loan — hours to a few days, occasionally a few weeks — extended against a specific, confirmed transaction rather than against the borrower’s creditworthiness. The lender isn’t betting on you. It’s betting on the deal, and on the fact that a second, already-arranged transaction will repay it almost immediately.

Because the duration is measured in hours, interest rates are meaningless. Lenders charge in points or flat fees instead — typically 1% to 3% of the amount funded in real estate, often with minimum fees of $1,000 to $2,000 on smaller deals. One active lender publishes a tiered schedule: 1.5% up to $1 million, 2.5% up to $5 million, with surcharges for rush jobs. Annualize those numbers and the APR looks insane — but nobody annualizes them, because the money is out for a day.

Where It’s Used in Real Estate: The Double Close

The classic application is wholesaling. You (the investor) get a property under contract with the seller — call that the A-to-B transaction. Then you find an end buyer at a higher price — the B-to-C transaction. The problem: you need cash to buy from the seller before you can sell to your buyer, and you may not have it (or don’t want to tie it up).

The transactional lender funds your A-to-B purchase — usually 100% of the purchase price plus closing costs. The same day, or the next, your B-to-C sale closes. The end buyer’s funds repay the lender, and you keep the spread. A $100,000 purchase resold at $120,000 the same day leaves you the $20,000 difference minus two sets of closing costs and the lender’s fee.

Here’s what surprises most people: the lender underwrites almost nothing about you. No credit check, usually no appraisal. What they scrutinize is your end buyer — they want a signed purchase contract, proof the buyer’s funds are real, and typically require both closings to run through the same title company, sometimes refusing to wire until the end buyer has signed and their wire has landed.

Why not just assign the contract and skip the loan entirely? Sometimes you can’t: REO sales, auctions, and some sellers prohibit assignments. And sometimes you don’t want to — a double close keeps your profit spread private from both the seller and the end buyer.

The Same Template, Outside Real Estate

Once you see the pattern — bridge a timing gap inside a confirmed deal — you start spotting it everywhere:

Purchase order financing. A small manufacturer lands a large order from a creditworthy retailer but can’t afford the raw materials to fulfill it. A lender pays the suppliers directly and is repaid when the customer pays, usually within 30 to 90 days. Just like the real estate version, the lender evaluates the customer’s creditworthiness, not the borrower’s.

Bridge loans in M&A. A company borrows short-term to close an acquisition, then repays from permanent financing. Same “close now, sort out the money right after” logic at corporate scale.

Flash loans in crypto. The purest — and wildest — version. On protocols like Aave, anyone can borrow millions with zero collateral, provided the loan plus a small fee (around 0.05%) is repaid within the same blockchain transaction — seconds. If repayment fails, the entire transaction reverts as if it never happened, so the lender mathematically cannot lose. Traders use them for arbitrage; attackers have occasionally used them for exploits.

Precautions Before You Ever Use It

Transactional lending is a precision tool, and precision tools punish carelessness:

Your end buyer is everything. If the B-to-C leg falls apart, you now own a property with a very expensive short-term loan and no exit. Never arrange transactional funding without a committed, verified buyer — and verify their financing yourself.
Know your buyer’s loan type. If your end buyer is using FHA financing, the FHA’s anti-flipping rule makes properties resold within 90 days of acquisition ineligible for FHA insurance — which kills a same-day double close outright.
Confirm the title company will cooperate. Not every title company will handle back-to-back closings. Confirm this before you need it, and schedule both closings tightly.
Do the math on the spread. You pay two sets of closing costs plus the funding fee. The fee is a flat cost of doing the deal — make sure the spread comfortably covers it.

The Bottom Line

Transactional lending won’t help you buy a rental property — for buy-and-hold, you want real, durable financing. But it’s one of those tools every serious investor should understand before the day they need it. When a deadline is measured in hours and a seven-figure deal hangs in the balance, the investor who knows this space makes a phone call. The one who doesn’t watches the deal die.