Gator Lending and Transactional Funding: Funding the Deposit and the Double Close

People in creative-finance circles sometimes use gator for any short-term money in a deal, including the purchase on a double close. The two needs are different sizes, happen at different times and are repaid differently. Treat them as two requests.

What does gator lending fund?

Pace Morby's REI Pocket Dictionary describes a gator as someone who lends bite-sized chunks of money to transactions. In practice that usually means the earnest money deposit (EMD), the good-faith money that goes into escrow when the purchase contract is signed. At Axelrad, a gator loan is our EMD funding product.

What does transactional funding fund?

The A-B purchase in a double close. A is the seller, B is you and C is your end buyer. On closing day, the transactional lender wires the purchase money for A-B, the B-C closing follows, and title repays the lender out of the end buyer's funds. See the transactional funding page for current terms.

Can a gator fund the double close itself?

Sometimes people try. But the A-B purchase is the whole price of the property, not a deposit, and a double close only works if that wire is certain on the day. A same-day close needs a funder with the money ready, the experience to coordinate with title and a plan if the B-C leg is late. That is the job of a transactional lender. Most wholesalers use gator or EMD money for the deposit and a transactional lender for the purchase.

How do the two compare?

How do both fit on one wholesale deal?

1. Contract signed. The deposit is due. EMD funding wires it to title on a fully refundable deposit.
2. Marketing period. You line up your end buyer and sign the B-C contract.
3. Before closing. You send both contracts and the end buyer's proof of funds to the transactional lender. Title confirms both legs are ready.
4. Closing day. The transactional lender wires the A-B purchase money. Your deposit is credited toward the price, so the wire covers the balance.
5. B-C closes. Title repays the transactional lender from the end buyer's funds, and the EMD funding is repaid as agreed.
6. You are paid. What is left of the spread, after costs and fees, goes to you.

Each piece needs its own review. Approval for the deposit does not mean approval for the purchase, and the other way around.

If you end up assigning the contract instead of double closing, the funded EMD can stay on the deal, but the new parties must also sign for the EMD so it remains assignable.

What happens if the end buyer falls through?

It depends where you are in the timeline. Before your contingencies expire, you can cancel and get the deposit back. With Axelrad EMD funding, the refunded deposit comes back to us and nothing more is owed: the fee was paid up front, and there is no failure or non-performance fee. After your contingencies expire, the deposit can go hard. Without an end buyer, there is no B-C closing to underwrite, so standard transactional funding is off the table. If the buyer is only delayed, Axelrad has delayed and extended options on the transactional side. Tell us early either way.

Why use one lender for both?

You can use different funders for each piece. Using one lender for both means one team sees the whole deal, the deposit timeline and the closing timeline together. Axelrad can fund both sides of the same deal. For a broader comparison that includes bridge loans, see transactional funding vs. EMD funding vs. bridge loans, and for the label question, gator funding vs. EMD vs. transactional funding.

Key takeaways

• Gator money usually means the deposit; transactional funding means the A-B purchase on closing day.
• The two are different sizes, needed at different times and repaid from different sources.
• Many wholesale deals use both: EMD funding at contract, transactional funding at closing.
• Each piece needs its own approval; one does not imply the other.
• Axelrad funds both: EMD for an upfront fee (flat or a percentage of the deal, typically a percentage, $500 minimum), and transactional funding on the closing side, with no credit pull on either.
• If the deal cancels inside contingencies, nothing more is owed on the EMD funding.

Talk to Axelrad

Need the deposit now and the purchase later? Send the deal through Axelrad's application and we will look at both sides together. Current terms are on the EMD funding and transactional funding pages.