The numbers

Calculating profit on a wholesale deal with transactional funding

When you use transactional funding for a wholesale deal, you need to account for the additional costs to accurately calculate your profit. This involves more than just subtracting your assignment fee from the purchase price.

November 1, 2026 · 3 min read

Understand the two-part closing

Transactional funding facilitates a double close, meaning there are two separate transactions: your purchase from the seller (A-B) and your sale to the end buyer (B-C). Each of these transactions has its own set of closing costs.

Your profit isn't just the difference between your 'buy' price and 'sell' price; it's that difference minus all the costs incurred across both closings, plus the cost of the funding itself.

Factor in transactional funding fees

Transactional lenders charge a fee for their service, typically a flat fee or a percentage of the loan amount, and sometimes a minimum fee. This is a direct deduction from your gross profit.

Suppose you borrow $100,000 for the A-B transaction with a hypothetical 2% fee and a $1,000 minimum. Your fee would be $2,000. This is a significant cost you must subtract when you crunch the numbers.

Account for both sets of closing costs

In the A-B transaction, you, as buyer B, will incur closing costs. These can include title insurance, escrow fees, recording fees, and potentially other charges. In the B-C transaction, the end buyer (C) typically pays most of their closing costs, but you (B) might still have some seller-side costs.

You need to get a clear estimate of all these closing costs from your title company or attorney for both sides of the transaction. Don't assume they will be minimal.

Calculate the net spread

Start with your contract price with the seller (A-B price) and the contract price with your end buyer (B-C price). The difference is your gross spread. From this gross spread, subtract the transactional funding fees and all your closing costs from both the A-B and B-C transactions.

This calculation gives you the net profit you actually put in your pocket. It's often lower than the initial spread looks on paper, but it's the real number that matters.

Don't forget due diligence and holding costs

While transactional funding is designed for same-day or very short-term closes, you might still incur some holding costs if there's an unexpected delay. Property taxes, insurance, and utilities for even a few days can add up.

Also, your initial due diligence costs, like property research, skip tracing, and inspection fees, are part of your overall investment in the deal. While not directly tied to the double close, they reduce your overall profitability.

Disclaimer: Not financial advice

This information is for illustrative purposes to help you understand profit calculations in wholesale deals using transactional funding. It is not financial or accounting advice. Always consult with a qualified financial advisor or accountant for personalized guidance on your specific investment strategies and tax implications.

Questions people ask

Can I use transactional funding for a regular assignment deal?

No, transactional funding is specifically for double closes. In an assignment, you assign your contract to an end buyer who then closes directly with the original seller. There's no need for you to take title, so no funding is required.

What if the end buyer backs out during a double close?

If the B-C transaction falls through, you are still obligated to close on the A-B transaction with the original seller. This is where transactional funding becomes critical, as it ensures you can still buy the property. You then have to find a new buyer quickly.

Are transactional funding fees negotiable?

Sometimes, especially for experienced investors with a good track record or for larger deals. It's worth asking, but many lenders have set fee structures. Focus on building a relationship with a reliable transactional lender.