Key takeaways
- The gator method is short-term funding, usually for an EMD or a double close, not a wholesaling strategy on its own.
- The gator lender is repaid straight out of the resale closing, so most of this money never touches the wholesaler's bank account.
- It only makes sense with a confirmed end buyer already under contract, not a hoped-for one.
- The biggest risk isn't the fee, it's the exit buyer falling through after you've already closed on Deal A.
- Wholesaling and contract assignment are regulated at the state level, and a few states now require specific disclosures, so check local rules before you close.
The gator method is a short-term funding strategy that helps real estate wholesalers cover the cash gap in a deal, usually the earnest money deposit or the funds needed to close and immediately resell a property. A “gator lender” puts up that capital for a matter of hours or days, not months, and gets repaid the moment the deal closes.
It was popularized by real estate investor Pace Morby and sits closest to what the industry calls transactional funding, the financing tool behind most double closings. Unlike a standard wholesale assignment, where the wholesaler never actually owns the property, the gator method involves a brief moment of ownership, which makes it more flexible but also more legally involved. It’s aimed squarely at wholesalers and newer investors who have a deal lined up, a buyer ready to close, and a gap in cash they can’t fill any other way.
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What Is The Gator Method of Funding Real Estate Deals?
Gator lending is short-term, asset-backed money that fills a specific, narrow gap: the cash a wholesaler needs between putting a property under contract and getting paid on the resale. Morby coined the term to describe helping buyers cover an earnest money deposit when they didn’t have the cash sitting in a bank account.
In practice, it functions as transactional funding (sometimes called same-day or flash funding). A private lender wires the money a wholesaler needs to close on a property, and the wholesaler turns around and sells that same property to an end buyer they’ve already lined up, often before the day is out. That two-step purchase-then-resell sequence is a double close, and it’s the reason gator funding exists at all: without it, most wholesalers running double closes would need six figures of their own cash sitting idle for a day.
How The Money Actually Moves
This is the part most explanations gloss over, and it’s exactly what people searching this term want answered. Here’s the sequence, dollar by dollar:
Wholesaler signs the purchase contract
Deal A is signed with the seller. In most cases an end buyer is already lined up under a separate contract, Deal B, at a higher price.
Gator lender wires funds to the title company
Money goes straight to title, not to the wholesaler. It covers the EMD alone, or the full purchase price on Deal A, depending on what the lender agreed to fund.
Deal A closes
Title passes to the wholesaler, even if only for minutes. This brief ownership moment is what separates the gator method from a straight assignment.
Deal B closes
Usually the same day or the next business day. The end buyer's funds land at the title company.
Title repays the gator lender first
Repayment comes straight out of Deal B's proceeds, including the agreed fee or interest. Whatever's left is the wholesaler's profit.
Due to the fact that the lender is repaid at the same closing table where the money arrives, most gator loans never actually touch the wholesaler’s bank account. The whole loop, wire in, deed transfer, wire out, typically happens inside a single business day, which is the entire point of using it.
Gator Method vs. Double Closing vs. Wholesaling
These three terms get used almost interchangeably online, which causes most of the confusion. Here’s how they actually fit together:
- Wholesaling is the umbrella strategy: finding a discounted property and profiting from the spread without long-term ownership.
- Assignment of contract is one way to wholesale. The wholesaler never takes title. They simply sell their contractual right to buy to an end buyer for a fee, and the seller deeds the property straight to that buyer.
- Double closing is the other way to wholesale, used when the wholesaler doesn’t want the end buyer to see the original purchase price, or when the seller’s contract prohibits assignment. It requires two closings and, therefore, cash to fund the first one.
- The gator method is the financing tool that makes a double close possible without the wholesaler fronting their own money. It’s not a separate wholesaling strategy so much as the funding layer underneath one specific type of wholesale exit.
So: is the gator method “the same as” wholesaling? No, it’s how you fund one particular flavor of it.
A Worked Example, Start To Finish
Numbers make this concrete. Say a wholesaler puts a distressed single-family property under contract for $180,000, with an end buyer already agreed at $205,000.
- Gator lender funds the $2,000 EMD plus the $180,000 purchase price at Deal A’s closing: $182,000 out.
- Lender fee for a same-day turn, commonly 2 to 5 points on the funded amount: roughly $3,640 to $9,100.
- Deal B closes hours later at $205,000. Title repays the lender $182,000 plus the agreed fee straight out of that closing.
- After paying the lender, closing costs on both sides (title, recording, wire fees, often another $2,000 to $3,500 combined), and any assignment or coordination costs, the wholesaler nets somewhere in the $10,000 to $17,000 range on this deal, depending on the fee tier they negotiated.
The exact split moves around a lot by lender and market, but the shape of it, big number in, big number out, thin margin left over, is what every gator deal looks like.
What Gator Funding Covers, and What it Doesn't
The EMD is the classic use case, but coverage varies a lot by lender. Breaking it down:
Can sometimes cover
- Renovation holdback or minor repair credits negotiated into the resale
- A small buffer for unexpected title or closing cost overruns
Usually covers
- The earnest money deposit on the initial contract
- The full purchase price on Deal A when structured as a true double close
Often doesn’t cover
- Long-term holding costs if the resale falls through
- Marketing or lead-generation costs to find the end buyer in the first place
- Legal fees beyond standard closing paperwork
Conditions that typically have to be met
- A signed contract already in place on the resale (Deal B), not just a verbal interest
- A title company or attorney experienced with double closings
- A tight, verifiable closing timeline, usually inside a few business days
Is The Gator Method Right For You?
Here’s the honest version of who this actually suits:
Risks: What Can Actually Go Wrong
The gator method’s risk profile is different from wholesaling’s because you briefly hold title. That changes what “going wrong” looks like:
- Delayed closing on either side. If Deal A or Deal B slips even a day, the loan clock keeps running and fees can climb.
- Title issues surfacing late. A lien, an unresolved probate matter, or a missing signature can freeze the whole double close mid-transaction.
- The exit buyer backs out. This is the big one. If Deal B collapses after Deal A has already closed, you own the property and owe the gator lender in full, on their timeline, not yours.
- Underestimated fees. Lender points, title fees on two closings instead of one, and wire costs add up faster than first-time users expect.
- Timeline mismatch between lenders and title companies. Not every title company handles double closings smoothly, and not every gator lender moves at the same speed. Mismatched expectations here cause most of the actual failures in this strategy.
Gator Method vs. Traditional Financing vs. Hard Money
Every option here trades speed against cost against flexibility. Here’s how they measure up:
| Factor | Gator method | Hard money loan | Traditional mortgage |
|---|---|---|---|
| Speed to fund | Hours to 1 day | 5 to 14 days | 30 to 45 days |
| Typical cost | 2 to 5 points on the funded amount, plus standard closing costs on both sides of a double close | Rates commonly starting around 8.5 to 9% plus origination points, see current hard money rates | Lowest ongoing rate, but slow underwriting and full documentation |
| Ownership required | Brief, often same-day | Yes, for the loan term (6 to 24 months) | Yes, long-term |
| Credit dependency | Low, deal-based underwriting | Light, typically 650+ FICO | High, full credit and income review |
| Best for | Wholesalers double closing a deal same day | Fix and flip or rental purchases needing weeks, not hours | Long-term buy and hold at the lowest possible rate |
Alternatives To The Gator Method
If this doesn’t fit your deal, your experience level, or your risk tolerance, there are other well-worn paths:
Hard money loans. Short-term, asset-backed financing with interest-only payments and terms of 6 to 24 months. Slower to fund than a gator loan but far more flexible if you’re planning renovations rather than a same-day resale. New Silver’s fix and flip loans close in as little as 5 business days, and the hard money loan calculator is a quick way to sanity-check a deal before you commit to it.
Traditional assignment wholesaling. No property ownership, no transactional loan, no double-closing paperwork. You’re selling the contract itself, not the property. Slower to scale in states that restrict assignment marketing, but far lower risk for a first deal.
Bridge loans. Short-term financing that gets an investor from one property to the next, commonly secured against existing assets rather than the deal itself.
Joint ventures. Partner with someone who has capital while you handle sourcing and negotiation. Splits the profit, but also splits the exposure if a deal goes sideways.
Real estate crowdfunding. Pool capital from multiple contributors for a specific project. Slower to arrange than any of the above, but it doesn’t require a lender relationship at all.
Final Thoughts: Should You Try It?
Yes, if you already have an end buyer under contract, a title company that’s handled double closes before, and enough margin in the deal to absorb a delay without panicking. The gator method exists to solve one specific problem, a wholesaler needing cash for a few hours, and it solves that problem well.
No, if you’re still hoping to find a buyer after you close, or if this would be your first double closing and you don’t have someone experienced walking you through it. Newer investors should avoid using the gator method on their very first deal for exactly that reason. Get one or two straight assignment wholesales under your belt first, then bring in gator funding once you understand how a double close actually moves through title.
Before you use it: confirm your exit buyer in writing, price in the lender’s fee before you calculate your profit, and have a real answer for what happens if the resale falls through on day one.
FAQ
Yes, in the sense that transactional funding and double closings are legal, widely used structures. That said, wholesaling itself is regulated at the state level, and a handful of states now require specific disclosures around contract assignment. Check your state’s real estate commission guidance, such as South Carolina’s advisory opinion on wholesaling exceptions or Maryland’s new assignment disclosure requirement, before you close a deal.
No, that’s the entire point. A gator lender funds the EMD, the purchase price, or both, and gets repaid out of the resale.
Usually, yes. Covering the earnest money deposit alone is the most common and lowest-risk use of gator funding.
Not quite. A double close is the transaction structure, two closings back to back. The gator method is the financing that makes that structure possible without using your own cash.
Mostly, yes. It’s built around the wholesaler’s need to briefly hold title between two closings, though any investor doing a fast resale with a confirmed buyer could use the same structure.
