Gator money covers the earnest money deposit that opens escrow. Transactional funding pays the A-to-B purchase in a same-day double close. Hard money finances a purchase, often with rehab, for months, secured by a recorded lien. They pay for different things at different moments, so most wholesale deals need one of them, some need two, and almost none need all three.
Educational only. This explains how these situations generally work. It is not legal, tax or financial advice, and the rules differ by state — talk to an attorney or CPA about your own situation before you act on any of it.
Ask when the money goes out.
On a plain assignment you never take title, so only the first one can apply. On a double close the first two can. Hard money enters only when you, or your end buyer, actually own the property for a while. For the full definition of the first one, see gator lending explained.
What it pays for: the deposit only. When it is wired: right after the contract is signed, often within a day or two, into the escrow account named in the contract. Term: from the deposit deadline until closing or cancellation, typically days to a few weeks, longer if closing slips. How it is repaid: at closing, the deposit is credited to the buyer side and the lender’s principal and fee are paid as a separate line on the settlement statement. If the deal cancels inside the inspection period, the refund goes back from escrow.
Fee structure: usually a flat fee per deal, sometimes a percentage per period. There is no standard rate; it is negotiated deal by deal. Lender risk: the money goes out before title is cleared and before anyone knows whether the deal closes, and it is protected by contract language and escrow instructions, not a lien on the house. Borrower risk: if the deposit goes hard and the deal dies, you lose the deposit and still owe the lender.
A careful EMD lender reads the refund clause and talks to title before funding; see how to find a gator lender.
What it pays for: your purchase price in the first leg (A to B) of a double close. When it is wired: on closing day, to the title company or closing attorney handling the A-to-B closing. Term: usually hours to a day or two, because the B-to-C sale closes back to back. How it is repaid: out of the end buyer’s funds in the B-to-C closing, through the settlement statement.
Fee structure: commonly a fee tied to the amount funded, often with a minimum. Get it quoted in dollars. Lender risk: the amount is large, but the funder usually commits only once the end buyer’s contract is signed and their funds are on the way or already at title, so the money is out for a short window. Borrower risk: if the B-to-C side fails after A-to-B funds, you own a house you did not plan to keep, with a loan due almost immediately.
Whether a double close is worth its extra cost over an assignment is its own decision, worked through line by line in double closing vs. assignment.
What it pays for: most of a purchase price and often the rehab, for an investor who will own the property. When it is wired: at the closing where the borrower takes title, with rehab money usually released in draws as work is done. Term: months, often up to a year or so, with extensions available at a cost. How it is repaid: when the property is sold or refinanced.
Fee structure: an interest rate, usually paid monthly, plus points (a percentage of the loan) at closing, and often fees for draws and extensions. Lender risk: lower per dollar than the other two, because the loan is secured by a recorded mortgage or deed of trust and sized against the property’s value. Borrower risk: carrying cost grows every month the project runs, and a down payment and closing costs are the borrower’s own cash.
Most wholesalers meet hard money through their end buyers, not their own deals. Their lender’s rules on recently acquired property can affect a double close. Under HUD’s rule at 24 CFR 203.37a, for example, a same-day resale to an FHA buyer is not eligible for FHA insurance, and other lenders set their own seasoning rules.
| Gator / EMD money | Transactional funding | Hard money | |
|---|---|---|---|
| Pays for | The deposit | The A-to-B purchase price | Purchase and often rehab |
| Wired | Right after signing | Closing day | At the borrower’s purchase closing, then draws |
| Typical term | Days to weeks | Hours to a day or two | Months |
| Security | Contract clause, escrow instructions, written agreement | Structure of the same-day closings | Recorded mortgage or deed of trust |
| Repaid from | Settlement statement at closing, or the escrow refund | End buyer’s funds in the B-to-C closing | Sale or refinance |
| Priced as | Usually a flat fee | Usually a fee tied to the amount | Interest plus points |
| Lender’s main risk | Deal dies after the deposit goes hard | End buyer fails after A-to-B funds | Property value or project fails |
| Borrower’s main risk | Owing principal and fee on a dead deal | Owning a house with a loan due now | Monthly carry on a slow project |
| Who usually borrows it | Wholesalers, creative buyers | Wholesalers doing double closes | Flippers, often your end buyer |
The repayment for the first two lands on the settlement statement, so ask title early how they will show each line. ALTA publishes the standard settlement statement forms most title companies use.
A hypothetical house is under contract with the seller at $120,000 with a $2,000 deposit. Your end buyer has agreed to $140,000. Gross spread: $20,000. Every fee and rate below is an assumption for the arithmetic, not a market rate or anyone’s quote.
Path 1, assignment. You need only the deposit. Say a gator lender charges a flat $400 for the $2,000. At closing your end buyer pays the price plus your fee, title repays the lender $2,000 + $400 = $2,400, and your assignment agreement has the buyer reimburse your $2,000 deposit. Your fee nets $20,000 − $400 = $19,600 before your own costs.
Path 2, double close, title will not let the end buyer’s funds fund your purchase. You need the deposit and transactional funding. On the A-to-B closing the $2,000 deposit is credited, so you owe $118,000 before costs. Assume a transactional fee of 1.5% of the amount funded: $118,000 × 0.015 = $1,770. Add the same $400 gator fee: $2,170 in funding costs, before the extra closing costs a double close carries. Spread after funding: $20,000 − $2,170 = $17,830.
Path 3, no buyer, you close and flip it yourself. Now you need hard money. Assume the lender funds 80% of the price, $96,000, at 12% a year interest-only with 2 points. Points: $96,000 × 0.02 = $1,920. Monthly interest: $96,000 × 0.12 ÷ 12 = $960. Four months: $3,840 + $1,920 = $5,760, plus your $24,000 down payment, closing costs and rehab. That is flipping, not wholesaling.
Usury and licensing vary by state. A gator or EMD loan is a private, business-purpose loan, and a flat fee on a short loan can be treated as interest when a court or regulator does the math. Usury limits and lender-licensing rules differ from state to state, and in some states they can apply even to business loans. Check your state before you lend or borrow.
Educational only — talk to a real estate attorney in your state before you rely on this.
Restar Acquisitions is a family-owned principal cash buyer of single-family houses, and Trevor McAmis underwrites every deal personally. On the funding side we do one thing: we fund earnest money deposits on business-purpose deals through our EMD funding program. We read the contract and call title before funding, wire only to title after verifying instructions by phone, and get repaid at closing from the settlement statement for a flat fee agreed in writing. We quote the same business day, and you do not have to sell the deal to us.
We do not provide transactional funding or hard money loans. If you are doing a double close, our transaction coordination team can run both title orders, the signing order and both settlement statements with whichever transactional funder you use. We do not fund owner-occupant or consumer purchases, and we may decline a deal because of a state’s lending rules.
Send the contract, title contact and closing date through our EMD funding form. We reply the same business day with a flat fee or a straight no.
All wholesaler services · Request EMD funding · Coordinate a double close · How to find a gator lender
Keep reading: Gator Lending: What It Is and How the Math Really Works · How to Find a Gator Lender (and Vet One Before You Wire) · Earnest Money in Wholesaling: How Much, and Getting It Back
