The Real Estate UNLOCKED Podcast
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The Real Estate UNLOCKED Podcast
Make 6 Figures with Transactional Funding in 2025 | Episode 22
Ready for another income source? Or better yet... have you ever wondered how you can make 6 figures in real estate without using ANY of your own cash? Well guess what? In episode 22 of the Real Estate UNLOCKED Podcast, I’m sitting down with Brenda VillaFranco, a seasoned transactional lender, to break down how all of this transactional funding stuff works
We’re breaking it ALL down from A to Z—what transactional funding is, how it works, and how you can leverage it to close deals quickly and make big profits in 2025! Whether you’re an investor looking for funding or thinking about becoming a lender yourself, this episode is packed with everything you need to know to succeed in 2025
✅ Learn how to turn $0 into big profits with double closings
✅ Discover why transactional funding is a game-changer for real estate investors
✅ Find out how you can start lending and earn high returns in no time
✅ Get insider tips on how to structure deals and protect yourself as a lender
This isn’t just theory—it’s actionable advice from someone who’s been there and done it. If you’re ready to take your real estate game to the next level, you won’t want to miss this one!
👉 Watch now and start building your path to six figures with transactional funding in 2025
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What up everyone and welcome back to the Real Estate Unlocked podcast. I am your host, Joseph Marohn, and today we're going to be diving into one of the most highly anticipated topics in real estate investing. I'm talking about a game-changing strategy to make your money work harder for you rather than you working harder for your money One of the most creative ways to earn profits in real estate without ever having to own a single property. Today, we're going to be breaking down transactional funding. Transactional funding is a short-term lending strategy designed to help real estate investors close deals quickly. It's more commonly used for double closings or covering earnest money deposits. This allows you to secure a property and flip it to an end buyer without tying up your own capital. As the demand for creative financing grows, transactional funding has become an essential tool for investors looking to scale their businesses and capitalize on lucrative opportunities. For those looking to scale their businesses and capitalize on lucrative opportunities. For those looking to start gaining higher returns, becoming a transactional lender is a game-changing opportunity. By providing short-term loans to investors, you can earn higher returns in a matter of days, while playing a vital role in helping deals get across the finish line. Now, if transactional funding is a strategy you want to learn more about, then stay tuned, because we're going to be giving you a step-by-step process on how you could start gaining higher returns today. Now you know how we do it on the Real Estate Unlocked podcast. If we're going to do it, we got to do it right. We can't just bring on anyone to speak about transactional funding. We got to bring on Miss Transactional Funding. Today, our special guest on the podcast is Brenda Villafranco.
Joseph Marohn:Guests on the podcast is Brenda Villafranco. Brenda is a part-time transactional lender and a full-time hospital administrator. In just one year, she went from knowing nothing about real estate to becoming experienced in transactional funding, in which she closed over 15 deals this year alone. Brenda enjoys networking and sharing her journey with others, which has led her to be featured on 12 different podcasts, one of them being none other than Pace Morby's Get Creative podcast. Her story is a testament to the power of taking action and embracing new opportunities. Brenda joins us today to break down how transactional funding works and how it can help you close more deals with little to no money down, unlocking a whole new strategy to increase your real estate returns. So, without further ado I've been talking long enough, Everyone. If you will please allow me to formally introduce to you Brenda Villafranco. Brenda, how are you doing today?
Brenda VillaFranco:Hey, what's up Joseph? Wow, what an introduction Like that is amazing.
Joseph Marohn:Thank you.
Brenda VillaFranco:That was really awesome.
Joseph Marohn:I appreciate you. I appreciate you. How's your Monday morning or afternoon going today?
Brenda VillaFranco:You know what? Just continuously networking with people, meeting new people that's what really it's all about. I think people underestimate the power of networking. It's so key and that's actually what's opened up doors for me in my transactional lending business.
Joseph Marohn:Absolutely yeah. I think a lot of people don't really understand the power of networking and communities like communities has been an absolute game changer for me. I talk about it all the time on the podcast and I'm always like encouraging people, like go join a community, go to a local meetup, and it's going to change everything for you and your business.
Brenda VillaFranco:So true, honestly, change everything for you and your business. So true, honestly, I try to go to a networking event here in Houston at least twice a month, just to kind of keep going at it and meeting new people, making sure that the doors of opportunities are continuously flowing, and I think that's important.
Joseph Marohn:Absolutely All right. Well, brenda, well welcome to the Real Estate Unlocked podcast, a place where we bring value to new and intermediate investors by bringing on guests who are extremely knowledgeable, such as yourself, and covering real estate topics on a very basic entry level. I'm excited to dive into this topic because, in my opinion, private money is by far one of the most interesting and popular discussions in real estate. It's literally the backbone to every single deal, and that goes for any deal, not just real estate. So every single transaction involves an exchange of money of some sort, and most people, in my opinion, I feel like, are stuck right now or can't scale their business because they don't understand how to leverage it or where to get access to it. So thank you, brenda, for joining us today to shed some light on this very important topic.
Brenda VillaFranco:Thank you for having me. I appreciate you.
Joseph Marohn:Absolutely so, brenda. Let's just kind of dive right into this. So can you start by explaining to our listeners in simple terms what exactly transactional funding is?
Brenda VillaFranco:So transactional funding is a term used for real estate investors. So you won't really see transactional funding for someone that is purchasing a house and just wants to live in it, right? This is not going to be for that type of audience. This audience is specifically for real estate investors that are trying to scale their business, are trying to actually purchase several properties at once or within a month. So perfect example would be you know you have a real estate investor or you have a wholesaler that is getting 10 properties a month locked up.
Joseph Marohn:Right.
Brenda VillaFranco:You know, your earnest money deposit is your good faith deposit. You're being serious about getting this property under contract and so you're putting in, let's just say, an earnest money deposit of $5,000. Then, if you do the math, that's $50,000. That would be tied up in a month. So what wholesalers will do is they'll reach out to someone like me that can come in fund their $5,000, and then they'll be able to close properties and be able to scale their business without actually using any of their money. Once that deal closes, they pay me out and then they actually get their assignment fee as well.
Joseph Marohn:Great way to explain that. Why do you feel like transactional lending is so important in real estate?
Brenda VillaFranco:I think it's more of the wanting to leverage right. Do you want to go back in circles and just do the same type of revenue every year? I've actually met investors that are starting to use other people's money, so to speak. They've spent the last seven years just using their own funds and they're like why are we doing this? Like I only get you know this amount of cash. There's only so much and you reach a certain ceiling, and so now they're starting to branch out and use other people's money to branch out and use other people's money.
Joseph Marohn:Yeah, it's incredible, right, because I've met so many people that use their own capital and they don't even understand like nothing about private money lending. They don't know nothing about transactional funding and when you tell them about that they're like they're kind of like they don't really believe it, right, until you meet people like yourself that can actually fund the deal, get it across the finish line and what they're paying only interest on. How do you structure your terms with your lending? Do you structure like a monthly payment only, or is it due up front? How do you structure that?
Brenda VillaFranco:So for earnest money deposits I usually have a $250 fee up front, just in case, if the deal doesn't close or doesn't go through, then at least it could have been sitting in my high yield savings account and been making money for that entire month. So I look at it as like okay, this is a way if, in case, it does fall through and again, these are learning lessons that have been added throughout the year where I had a deal that didn't actually go through the finish line and so they ended up canceling the contract, I received back my funds, but now I actually wasted money on my wire fees and my money sat there for close to a month and nothing happened. So as you learn and go, you'll start adding what makes you feel comfortable with what your term should be, but typically it's based off relationship and it's based off how many deals do you think that this consistent borrower will come back to me and be able to fund some more?
Joseph Marohn:Right, yeah, cause you you lost the, the wiring fee, which those can add up over time, right. And then, on top of that, your money was tied up where you could have been putting into work on another deal, so you're actually losing money. That's an unfortunate situation. Um, let me ask you this so, with with so many different avenues you can take in real estate, do you mind sharing, like, why you chose to focus primarily as a transactional lender as your pathway?
Brenda VillaFranco:Yeah, actually I started out doing private money lending initially and so that was going great. But then I figured out in the summer, like okay, my funds are currently tied up, what else could I possibly do that will bring me in another stream of income? And that's kind of where I started like why don't I just start funding more of the transactional lending side and just see how it goes? So as I started networking, I started telling people what I do in more of the transactional lending space, and that actually helped me, because then it kept me in their mind. And so even with my first investor that I ever did an EMD for he actually I met him and he called me three weeks later and he says hey, I remembered from our previous conversation when we met in person that you actually fund EMDs. I have one coming up in a week. I you know I would like for you to fund it. And so it was a $5,000 EMD and we structured it in a way where I knew that he would always use me in the future. And so that's pretty much how we got structured. And that was probably my first and easiest EMD, because it went so smooth and they don't ever go as smooth as people think they do, but with this one it was actually pretty smooth. Like he called me, he gave me the title company, the prop, the purchase sale agreement. I looked over it and then he connected me to the escrow officer.
Brenda VillaFranco:And once I spoke with the escrow officer and I would like to say that if you're ever going to find an EMD, please make sure that all communication is always through email, because then you keep an actual paper trail of what they actually said, versus like having a conversation with them on the phone.
Brenda VillaFranco:Then they'll say, oh, I don't remember saying that, or you know, vice versa, that or vice versa. So once communication with the escrow officer is up to par, then you make sure about your inspection period and the close of escrow. They have to line up with each other. Ideally, what a transactional lender would love to see is for the inspection period to go past the close of escrow. That's your ideal scenario. Half the time it does not happen. Usually it's always where we have to tell the wholesaler can you actually change the date of this to bring it back to at least the date of close of escrow? And so I ended up funding the $ 5,000 and he closed on the property within a week and I ended up getting back a thousand dollars of return on profit.
Joseph Marohn:That's awesome. Now I know you. You we mentioned earlier about EMD being a good faith deposit, earnest money deposit. Right Now, can you explain a little bit to the audience that maybe are unfamiliar with the term of what exactly a double close means?
Brenda VillaFranco:Sure. So double closing is usually again for the audience of wholesalers. So typically say you have a property that's $80,000 and a wholesaler gets the seller to OK, you agree upon $80,000. Gets the seller to okay, you agree upon $80,000. Well, the wholesaler actually finds an end buyer and tells the end buyer hey, I can sell you this property for $100,000. So they kind of want to hide the assignment fee from the actual seller, and so what they do is they'll bring in a transactional lender such as myself. I'll come in and fund the A to B contract, and then the end buyer will fund the B to C contract. But initially the B to C contract needs to be funded first, before I ever wire that money, and then from then my profit will be the difference of that, and then the profit of the wholesaler goes to him on the assignment fee.
Joseph Marohn:Yeah, that's so smart, right, Because there's sometimes when you get a wholesale deal, we'll just have so much meat on the bone, right, and you definitely like your assignment fee is so large, like sometimes it can actually kill the deal, right, the seller sees that on the HUD statement and they're like hold on, man Brenda's making a hundred K on this deal, like what's going on, you know, and it could actually kill your deal. So it's a great strategy, right to close on it twice. That way there's no discrepancy, there's no, you know they're not going to see that that fee so large and actually want to cancel the contract. So it's definitely a smart strategy.
Brenda VillaFranco:I've actually spoken to a wholesaler that said they found out how much they were going to make. I think their assignment fee was going to be like $50,000. I was like wow, that was a huge assignment fee and that literally killed the deal for him. They ended up finding out the seller did so yeah, double closing definitely can come in and save the day on that.
Joseph Marohn:Yeah, and I've even heard of people like in buyers right, like wanting to cancel a contract just because they found out how much the wholesaler was making. And I never understood that concept Right, because my thing is if you run your numbers right, you underwrite a deal and it makes sense to you, then why are you worried about how much the wholesaler makes, right? As long as it makes sense to you, you shouldn't be so concerned about that. So sometimes wholesalers will even do a double close because they don't want the end buyer to see that.
Brenda VillaFranco:And then they're like OK, cool, so they can actually close on the deal successfully and get paid. So yeah, yeah, I think double closing would be the transactional lender's dream to just do double closing if they, if they can.
Joseph Marohn:lender's dream to just do double closing if they can, right, and so this is something that actually, it took me a long time. When I first got into real estate, it took me a long time to wrap my head around this, but why would an investor choose to use a lender's services, such as yourself, and pay interest, rather than just using their own capital to fund the deal?
Brenda VillaFranco:interest, rather than just using their own capital to fund the deal.
Joseph Marohn:The word of the day would be leverage right.
Brenda VillaFranco:Also, with like mindset too. Like if you have an abundance mindset, you're not going to care about paying for someone's service when you're not even having to use your money. You know that you're still going to make the amount that you're going to make purchasing this property. So why not use other people's money? And I actually use other people's money myself sometimes when I'm not able to find an EMD. Like I have a couple of people that, whenever my funds are tied up, I'm like hey, do you want to be partaking this EMD? And they're like, yeah, put me in on it, and then we just split half of the ROI with it. So I'm okay with using other people's money as well too.
Joseph Marohn:Yeah, when I first got into real estate I was buying and holding properties and then I would have people come up to me and say, hey, I can fund your deal and I'm like, well, why would I pay interest when I have the capital already in my savings account and I could just fund my own deal? And, like you said, I think it's a mindset thing because I didn't understand that my money was actually best put to work somewhere else than tying it up on an EMD or tying it up on my own deals, when I could just pay Brenda whatever percent she charges it's probably between 8-12% and I can actually make a higher return having my money in another vehicle in real estate, right. So it's definitely a mindset thing and I think people really need to understand that. You know, once you get to a, you know a level where you know you understand different streams of income in real estate your money is best put in other vehicles rather than tying it up on your own deals absolutely, yeah, no, definitely, I think it's.
Brenda VillaFranco:It's all requiring like a mindset shift. State your money is best put in other vehicles rather than tying it up on your own deals. Absolutely yeah, no, definitely, I think it's. It's all requiring like a mindset shift. And even me like even in the past, you know, I wanted to pay off my house quickly, right, but then in reality I'm like why, if it's being rented out, why? Do I want to do that, and so that that was like a whole nother shift even on the mindset for me as well too. Yeah.
Joseph Marohn:Yeah, now. So what is the difference, brenda, between a transactional lender or per se, like a private money lender, and a hard money lender? What's the difference between those three?
Brenda VillaFranco:between six to nine months, six months to a year, depending on what your preference is. You will always find deals that I feel like average. The ones that get thrown at me are usually about six months or so.
Brenda VillaFranco:A hard-to-find lender will be someone where they find between 75-80% of the house that you're going to flip. But they're in first position and so anyone new first position will actually take the. In case a borrower ever defaulted, they will be the first ones to actually get the funds first, and then you will come in and you would you would actually collect the money on gap right, you would fund for a gap and so you would take second position, which is not the best position. It is riskier, which is why underwriting comes into play. Don't ever fund a deal if the underwriting doesn't pass.
Joseph Marohn:Okay, now let's get into the heart of the question, where everybody really wants to know, and it's how does someone get started with transactional funding? What are the first steps they should focus on?
Brenda VillaFranco:First steps that they should focus on if I were to start back all over again would be to network, network, listen to people. Don't just like jump in to tell them what you're doing I feel like a lot of people do that but just generally have a conversation with people that you're networking with and then later see how you can provide your service for them. I think listening is probably like key as well, too, because I get people all the time that just send me messages and I'm not even part of that service, and so I think just networking, putting the word out there, being intentional, being intentional with following up I've gotten deals just from following up because I kept following up and doesn't necessarily mean you'll close a deal someday but hey, you put them back, you put yourself back into their mind again, like hey, she keeps following up and she generally wants to build relationships, so like, why not do a deal with someone like her?
Joseph Marohn:don't really talk about a whole lot, right, when you're at meetups, people don't advertise. Hey, I'm a private money lender, you know like why. Why is that Is? It is like once you really get to know that person, it kind of comes out in the conversation. But you did kind of mention that you know, like not to advertise it. Why. Why is that?
Brenda VillaFranco:You know, for me I think it's just more comfortable to to hear first what they may need, and I don't want to go around telling every single person like, hey, I'm a private money lender and they're like okay, like I use my own funds, great. So I think it's like for me. I think it's just like I don't want to just jump in because that's not even my character. So I rather just like get to know someone, like on a personal level, and then if they were to need my services in the future, then great, then we can kind of go work towards that.
Joseph Marohn:Yeah, I like that because you know, when you're building relationships with people and you're building rapport, and then you're just kind of casually having a conversation and you're like, hey, brenda, you know what do you need in your business or what are you looking for right now, and then someone brings up the fact like, hey, you know, I got this deal. Actually I'm looking for funding right now. And then it just comes out right, hey, you know what I could fund that deal?
Joseph Marohn:They're like oh, I didn't even know you were a lender. Like that's amazing. Yeah, let's, let's get it. You know, let me show't want to be going around telling everybody that you're a lender, right, Because then you might even get a bunch of people hitting you up and bringing deals that are not even worth looking at.
Brenda VillaFranco:Yeah, no, I actually get a lot, quite a few DMs like on Instagram, and people are like, hey, I need a deal funded. I'm like do you have a pitch deck? Do?
Joseph Marohn:you want to get off.
Brenda VillaFranco:I mean, it doesn't work that way. So that's actually really funny that you mentioned that.
Joseph Marohn:Yeah, so what type of investors come to you typically for funding? Are you primarily working with wholesalers like fix and flippers? Buy and hold investors?
Brenda VillaFranco:So my ideal audience would be a wholesaler, but I have funded EMDs for in buyers, fix and flippers. But I have emds for in buyers, fix and flippers um, actually quite a few and so that's not the ideal. And I'm going to tell you why it's not the ideal. Only because an end buyer is way riskier than a wholesaler. With an end buyer, you can almost think of an EMD from an in-buyer as like a short-term private money lending deal in a sense. Either A you have to minimize the risk by again having inspection period be greater than the close of escrow, which usually never happens. And so for the in-buyer, once you submit that EMD for the in-buyer, your money goes hard and that's it. And so the only way to protect yourself is to either a promissory note, which is basically saying, hey, I promise to pay you back, and then actually getting like a deed of trust and cross collateral on an asset that they have, and that would be like the way where you would protect yourself for an end buyer.
Joseph Marohn:Right, and especially for an end buyer that's holding onto the property. You know their cashflow has to be a significant amount where they can actually pay you back in the first place, right? Because most people that are coming to you, like you said, their wholesalers are their fix and flippers and they're going to make a killing on their deal more than likely and it's way easier for them to pay you back versus someone that's holding onto a property long-term, looking to pay back that in 30 days, Right?
Brenda VillaFranco:So it definitely makes sense and usually for an end buyer. Their exit strategy is for the private money lender that's going to be providing funds for the next six months to fix and flip the property is going to have my EMD and my return of investment at the close of escrow.
Joseph Marohn:Okay, and now you brought up the fact about a pitch deck, right, and so I was going to ask you how are you qualifying these investors that come to you for funding? Are you running credit checks? Are you looking at their income? Are you taking DNA samples?
Brenda VillaFranco:Or is it just based on experience and the actual deal itself? For EMD, it's just on experience and the actual deal itself being able to look at a purchase agreement and being able to see the inspection period and the close of escrow versus like a private money lending deal. You actually have to do underwriting, you actually have to vet the borrower and make sure that a background check is done, making sure like if they have any experience, they have to show proof of that experience and make sure that not just one person underwrites it but at least a few people underwrite it, just to make sure that it's a good deal overall. But I think for me, with private money lending, I'd rather fund for someone that I actually already know and I know has a solid record, versus just like a random stranger.
Joseph Marohn:Yeah, that makes sense. So when an investor comes to you with the EMD opportunity, are you not underwriting the deal, or is that only for private money lending, or how does that work?
Brenda VillaFranco:That's correct For earnest money deposit EMD. You don't have to underwrite, so that's the cool thing about it. Basically for EMD, the risk of you losing money Basically for EMD, the risk of you losing money which is still a risk would be if the deal falls apart or if you didn't actually have great communication and make sure that all your questions were covered with the escrow officer prior to you wiring your funds.
Brenda VillaFranco:Okay, amazing, Now can you walk us through a typical transactional funding process, step by step, from finding the deal to closing both sides of the transaction. Yeah, so I can actually walk you through one that I have that just closed today, which was my first double close.
Joseph Marohn:Oh, congratulations.
Brenda VillaFranco:That's amazing, yeah. So basically I met this investor back in the owner's club, so, and we developed a relationship over time. We follow each other on social media and what was cool about it is he brought me onto his first podcast. I was his first guest and then, from that first podcast, like we actually continue building a relationship and we kept in touch. And so then he messaged me one day and says, hey, I have a double close from a guy that I met, and so I was like, oh cool, like we should totally fund it and you know we'll split profits or whatever. Well, what turned out was that it was actually a probate and so it was going to take a little bit longer.
Brenda VillaFranco:When he was following up. He didn't actually like need him anymore, so that deal fell through. Within a couple of weeks ago Tim the same guy that you know came to me about the double close. He says, hey, I'm actually going to double close, so like now I'll need your service. And I was like nice. And he was like, yeah, so we're thinking of closing like December 10th, unless there's like some other issues. And so we actually ended up wiring on Friday, but because the cutoff time was 3 pm, we actually got the wire back today. So that's why it was like an official close now on the double close.
Brenda VillaFranco:But basically Tim brought so we have, you know, tim as a wholesaler. He put a contract with the seller on a property and so he was going to make his assignment fee. But he didn't want the seller to know how much he was going to make, and so he brought in his A to B contract and then he brought in his B to C contract on the end buyer contract and then he brought in his B2C contract on the Empire. So if you take it step by step, it's him just submitting those two contracts and then now I get introduced by him to the escrow officer and the title company and then from then on we communicate back and forth in email. So there's a total of like several emails that go back and forth just to make sure, like everything is intact. Like hey, is this A to B contract completed? Is this B to contract? Okay, cool funds.
Brenda VillaFranco:Until that, b2c wires funds first, because technically that's how I'm getting paid out again, right. And so once that is completed, all of this is between the escrow officer and Tim and I, right? And so finally the wire goes through. She says the escrow officer says, ok, wire sent, here's proof. And then now they'll send their wire to us and then we'll receive our return of investment. So it's really it's not a lot of work per se, like it's not like you're outside building a foundational house or like ground construction, but it is a lot of communication back and forth and just all of that gets done within a couple of hours.
Joseph Marohn:I love that story right, because it shows the power of networking in the community. Right, shout out to Tim, shout out to Owners Club. That made all this possible for you guys to meet and do a deal together. And you know, when you were talking about, you know wiring the funds. I want to bring mention that because I I it's really important that you guys never wire directly to the person itself. Right? You want to wire directly to escrow? That's how you're protecting yourself. Right? Because I've heard so many horror stories where people deal with somebody and they're like, hey, I need this funding within 24 hours. Can you just wire directly to me? That's a no, no, that's a red flag, right?
Brenda VillaFranco:Right, right. But you know it's so funny that you mentioned that is because I've met other different groups outside of like Pace's community and they actually wire within their LLC and so to me that was new. So I was like huh. And so one of the guys that I met, their hard money lender doesn't allow a second position and so it has to show like their funds within their LLC account, and so they've done that way.
Brenda VillaFranco:So there are different and again, like, I think it depends on the relationship and the trust right, making sure that your paperwork is done correctly and making sure that your funds are still secured within the paperwork. But it's good to know, like, the more and more I network, the more and more I learn new things about how certain deals are done. They're not all going to be done the same, or at least that's the interpretation that I've had as well with other communities. But in similarities you still have to have the same paperwork, such as promissory note, deed of trust as well to record it.
Brenda VillaFranco:So in that sense it's just a matter of the relationship how do you feel, how comfortable do you feel? And just making sure that your funds are secure, most importantly.
Joseph Marohn:Yeah, I think it's really based off your own risk tolerance and, like you said, kind of how well you know that person, because I know Pace. He teaches us like hey, don't even trust your own mom with your money, right.
Joseph Marohn:But, obviously you know if I need to wire mom money, I'm going to wire mom money. But yeah, the point he's really trying to hone in on is like, hey, just because they're your friend, just because you guys are in a good relationship, doesn't mean that that person won't screw you over. So the way you a hundred percent protect yourself is, you know, sending it directly to escrow. But I know there are some people that they go around it and you know they send direct. But just know that your money's at risk when you do that, because there's really no way to protect yourself, right? If you're wiring directly to an LLC, how do you protect yourself?
Brenda VillaFranco:Well, you still have the promissory note and the deed of trust as well too. Yeah, so I mean you still. If you have cross collateral, even better, because then you can actually take that asset.
Joseph Marohn:Okay, Now you did bring up promissory note and I want to ask now what type of contracts or paperwork is involved with transactional lending and how are both sides protected in the transaction?
Brenda VillaFranco:what I'm funding for this property.
Joseph Marohn:This is going to be my return, and then they both sign and then we have that as the agreement, but the rest again goes back to title and communication. Okay, so is it just?
Brenda VillaFranco:a JV agreement. There's no promissory note or anything. There's no promissory note.
Joseph Marohn:Yeah, that's only for private money lending. Okay, perfect. Now what are the usual terms or timeframes for, you know, like these type of deals? So you mentioned there are 30 days right now and sometimes they go to 45 days. Is that the max? You've seen them?
Brenda VillaFranco:Yeah, so people have different terms. The max I've seen is 45 days, but some transactional lenders have terms so like say, for instance, your usual transaction is usually 14 days to 30 days and then, if it were to go above 30 days, I know lenders that actually add an extra percentage to 30 days, up to the 45 days, because in their eyes they're like well, I can easily have put this on another 30 day deal and now I'm still sitting here with with my money still sitting there in escrow until the deal closes. So 45 days.
Brenda VillaFranco:Is is probably the highest I've seen so far, but doesn't typically go. It really does close by the 30th day or so.
Joseph Marohn:And at what percent are most transactional lenders charging?
Brenda VillaFranco:The average is 40% 40%.
Joseph Marohn:That's a hefty return. It's a great return actually, and I know they teach that in Gator lending and all that Because I've heard people do like 10 to 12. But that's more on the private money side, right? So when it comes to transactional lending, it's a 40, it's a higher, it's a 30 to 40%. Is that what it is?
Brenda VillaFranco:Some, some people do 30,. The average is 40. And then again some people that have a repeated borrower may lower it down to 30, 25, just depending again, based off relationship.
Joseph Marohn:Okay, now I know it's going to vary and it's pretty much a vague question, but what kind of returns can an investor realistically make in the first year if they follow the blueprint and only do transactional lending?
Brenda VillaFranco:30. If they even did it part-time, Like I only do it part-time because I have a full-time job, but they can easily do between 30 and 50K Right no-transcript out perfectly, because I don't have that time, like I do have, you know, 12 hour shifts I'm usually not able to talk on the phone, like my job is actually pretty demanding and so I'm not able to actually be on calls while I'm working or anything like that, because at work I am on a lot of calls, so to speak.
Joseph Marohn:Awesome. Now can you be a transactional lender if you don't have a whole lot of money.
Brenda VillaFranco:Yes, yes, you can. And, by the way, I would say it's just to collaborate with other people. So say, for instance, someone comes to me and says, brenda, I don't have any money, but I want to do my first EMD transaction. So then I would say, okay, so if you bring me a deal, then I will split 50-50 with you. And so there's really no excuse to make money in the transactional lending space or even the private money lending space. In the transactional lending space, or even the private money lending space, it's just a matter of, like, building good relationships and making sure that you can actually bring deals to someone. If you can solve that problem for a transactional lender by bringing them deals, then you will be making money yourself.
Joseph Marohn:Perfect. Now let's say someone has money to lend. They follow all the advice here, but they don't know where to lend or who to lend to. How do they market themselves and find potential borrowers?
Brenda VillaFranco:So you can do various. So my main thing is in-person meetups. That's been my, my biggest. Also, the second thing that you can do is you can go to Facebook groups and you can look up wholesaling groups by state or you can do fix and flippers by state and also just kind of, you know, see the comments and kind of pick out some people that you want to actually message and say, hey, I see that you know you posted about this property.
Brenda VillaFranco:Um, if you're ever interested in just kind of start a conversation but not jump into the hey, I'm a transactional lender, like I feel like that always turns people off.
Brenda VillaFranco:It's just like again, like when you're meeting in person, right For the first time, like you're not going to jump to them and say, hey, I'm a transactional lender, like I have money, right, and so it's the same way to online, like you just get to know someone and you're going back and forth and so once you kind of start building and having them get warm and then you can actually, you know, have the services for you and they'll keep you in mind for that. So you can either do a lot of outreach on Facebook groups or you can do actually some like warm leads. So anyone of your friends so say, for instance, you're my warm lead, joseph, because I know you right. We're both in community and so if you ever needed any EMD funding or any double closing, you know you can come to me and I'm able to fund that for you. So that's another way of doing it. And then the third way is, just through social media, is telling people out there what are you doing, what do you plan on doing, and documenting that journey.
Joseph Marohn:Yeah, and it goes both ways right, like so, even for myself. Like I'm active with wholesaling, I'm active with buying properties and I'm always posting content and showing that to the world of buying properties. And I'm always posting content and showing that to the world because then I get people like yourself reaching out to me and saying, hey, I saw you just did that last deal, do you need any funding? I literally will get people in my inbox from just sharing my content of what I'm doing on a day-to-day basis. So it goes both ways right.
Brenda VillaFranco:Yeah, and I actually saw on someone's story two days ago they were thinking of either doing a double closing or a novation deal, but they're kind of iffy on which one's going to work the best. I saw that on their story. I sent them a message saying like hey, I saw you were going back and forth. If you ever need a double closing like, I fund those as well. And he says I didn't know that, so there you go. That was like a nice introduction to if you ever need me, here you go.
Joseph Marohn:That's awesome. Now, one thing I do like to hone in on this podcast is I like to be fully transparent. You know I don't like to always paint out that everything's rainbows and unicorns right. So let's talk about the risks involved with lending. Have you ever had a deal go sideways, or what's the riskiest deal you've ever funded and how close did it come to falling apart?
Brenda VillaFranco:So riskiest deal so far for EMD was an end buyer Right. So with that end buyer we did have the good thing is we got paperwork to secure it. So the deal, the moment we funded the money went hard and in this case it did go hard and so thankfully we have paperwork for cross collateral on an asset from the borrower in case they didn't pay us back. So could have gone bad if it didn't because in reality that borrower wasn't able to close on the property because she wasn't able to bring in um her pml for the gap funding and typically that strategy.
Brenda VillaFranco:So thankfully we had cross collateral. But again, if you, if you go back to the paperwork and if you don't have those things in structure, then you can lose money. That is true, like. So just know that with the transactional lending, with private money lending, if you do not underwrite correctly, if you do not put structure on your deals, if you know that let's just say, for an example, a borrower is needing a second position to fund for his gap funding, for his fix and flip, but if you don't put the structure of having draws on each phase and just giving your funds all to him all at once, then that increases the risk of him, you know, either A not finishing the job or B something can happen where he uses his money on another project, or you know what I mean. So you always want to minimize that risk. You want to keep your draws on that. You want to make sure that the underwriting passes before you even fund. You want to make sure that the borrower's LLC is intact and in good standing. You want to make sure that you vet the title company, make sure they actually have good Google reviews greater than a year or two. You want to make sure that.
Brenda VillaFranco:How is your communication? How is this borrower's communication? Are they going to be the type to only text you once a month or keep it? Are they going to? Are you going to structure it where you want photos every week or two to know how the process of your flip is coming? So I think just putting those structures how you feel is everyone's different. Some people are OK not having pictures, right, but it depends at the end, like your risk tolerance. But just know, like in the lending space there is always a risk to lose money.
Joseph Marohn:I love the fact that you said you know you learned a lesson from it, right? Because I think, no matter how much knowledge you have in real estate, how much experience you have, I think mistakes or things go sideways in real estate, no matter what right, and it really depends on your risk tolerance. Mistakes are, are things go sideways in real estate, no matter what Right and you're, it really depends on your risk tolerance. But the fact is, you know if, if you do make a mistake or something happens, the key there is really to learn from that so you don't do it again, right, and so I love that you you mentioned you learn from that.
Joseph Marohn:A little tip I want to give you guys now sometimes when you get, like you know, when they send the EMD instructions right, the wiring instructions, and you'll go off that based off the email Now what I physically do is because I've seen horror stories where people actually Photoshop these wire instructions, I will actually call the title company myself and I will verify, like I will Google it, like I won't go off the phone number that's on that sheet. I will actually Google that title company and I'll just ask them hey, is this accurate, this wiring instructions accurate? And you know because I've seen people Photoshop it. People do some crazy stuff to steal people's money. So that's a little tip for you guys Make sure whenever you guys get those wiring instructions, actually Google the business and call them directly. Don't go off the phone number because you may be calling somebody else that's ready to set you up Right.
Brenda VillaFranco:That's so good that you brought that up, because I do the same thing. So, yeah, if you get wire instructions via email, make sure that you actually don't call the number on the wiring instructions, but instead you take the time to Google the title company and call that main number to make sure that the wire instructions is legit.
Joseph Marohn:Absolutely. Now, what are some of the biggest mistakes you see other lenders make when they start lending money, and how can our listeners avoid these common pitfalls?
Brenda VillaFranco:High risk returns. I think it's like the one that like blinds them completely, just like, oh my gosh, I'm going to get a 30 percent return, a 40 percent return. I've seen some crazy like people DM me on like a return, I'm just like no pass.
Joseph Marohn:And so.
Brenda VillaFranco:So that's, that's one. Crazy returns. You get blinded on that. And then I see a lot of new real estate investors that want to get in the lending space and they want to have a deal so bad, so bad. And so usually, if I get a chance to talk to them, I always tell them look, never rush it. Build relationships and the deals will always come. People will always fix and flip, people will always need a loan. It doesn't end. So just don't worry that you're going to miss out on a certain loan or you're going to miss out on a certain deal. It'll come back, and there's one literally every day, so don't even sweat the small stuff.
Joseph Marohn:Yeah, definitely. I think you touched a good point there, because some people they get impatient. They understand the proper due diligence, they understand all the risks involved and they know how to avoid them. That they learn and they take a risk action right, and so that's definitely a common way to lose your money. So definitely make sure you you know whatever you learn on the proper way to protect yourself. Just stick to that. You know, when you see somebody saying, hey, I need an AMD in 24 hours, like what is your minimum timeframe for you to send, you know to wire the money.
Brenda VillaFranco:The same day. It can be the same day as long as I'm able to see that purchase sale agreement and making sure that the inspection period is so, like, say, I've had deals that have fallen through only because they say, oh, I need EMD today. Today's the day, right, and in a borrower's eyes, you want them to be considerate of your money, but unfortunately most of them are not, and so they want something funded that day and they don't care about your funds, and so the only person responsible is myself. And so I have to like, verify and make sure that the inspection period can at least go. I'm like, okay.
Brenda VillaFranco:So, for instance, perfect example was I had an EMD about a month and a half ago and they needed funding that day. This was at 11 o'clock in the morning when I got on the call with them and they said, okay, I need EMD within like the next, by 2 pm. And so I said, okay, send me all the information. And it turns out that the inspection period ended that same day at 5 pm. So I said, hey, I can't fund your EMD because you need an extension on your inspection period and close of escrow. And he was like oh, like you know, we're working on it, yada, yada. And I didn't fund it that day because I told him like, hey, there's no point in me wearing something at 2 pm when I have to cancel it before 5 pm. Doesn't make any sense.
Brenda VillaFranco:And so finally got it extended two more days. But then by the time the two more days came, it was technically Monday by 5 pm. So here we are again in the same situation, and so you can tell that the borrower was frustrated and I said it's not a matter of that, I can't fund this is that my funds will not be secured, and so once I was able to explain that to him, I think the cool thing about it is that he called back later on that week and apologize for allowing me to be in a position to making me feel rushed. Yeah.
Joseph Marohn:In reality.
Brenda VillaFranco:You know he, he knew that he should have probably done better and had a better inspection date to be extended at least a week.
Joseph Marohn:It's good he reached back out to you and apologize. Right, because you want to do right by your lenders, right? And I always say this if I'm ever going to borrow money from a, from a lender that's trusting me with their funds, I will do everything in my power to make sure that they get paid back. Whether I have to borrow against my own properties, whatever, like if I'm. If I know I can't pay them back, I will figure out how to pay them back because, one, they took the risk on lending to me. I never want them to ever feel like they're going to lose their money on risking on me. And two, my name is everything in this industry right. Once you do a bad deal like that or you don't pay a lender back, your name is tarnished, right, and then you kind of have, like this, you know, red flag written all over you.
Joseph Marohn:So anytime you want to borrow money, people already know like hey, you know what that guy's no good man, he don't pay anybody back yes, exactly so I'm sure you get a ton of people reaching out to you all the time asking for money or asking you to fund their deals, and the truth is, most people don't know understand how to ask properly, right? So, as an investor who's looking for funding, what's the best way to present an opportunity to you and give us an example of like a good approach versus a bad approach to you and give us an example of like a good approach versus a bad approach.
Brenda VillaFranco:So a good approach would be someone that the more information you give on what you want funded, the better, because then I'm able to do my due diligence, I'm able to underwrite it, I'm able to see who you are, what you do, what experience you have, and then I'm able to see the property that you want funded and then I'm able to do my own due diligence and go and search the property and be able to do comps, be able to underwrite it, and then after that, I'm like okay, is this an amount that I'm willing to risk per se, or is this something that you know I feel comfortable with doing? That also gives me, like other options with do I want to JV my funds with someone else as well, too, and just go half and half, because it's not really always about the return of investment. I feel like it's more fun when you collaborate with other people and are able to be part of a deal. I think that makes it way way more fun.
Brenda VillaFranco:This how to not approach me or anyone that has funds is to send me a message and say, hey, I have a deal that needs to be funded ADK. I get this all the time and I'm just like like the worst approach ever. Hi, what's your name? Like I don't know what you do. Never approach someone like that. I think. Just again, just take your time, get to know that person, Even if you know that I have funds. Like keep me in mind for future and just start building on that relationship and maybe send that information to someone that already has funded for you. That's, that's usually how.
Brenda VillaFranco:I's usually how I would like that approach.
Joseph Marohn:There you go, guys, take notes, stop being lazy. You know it's not up to Brenda to do the work for you, or any lender for that matter, like it's our job to put everything in place where you have to do minimal research. Right, I want to provide as much information to you so you know everything about the deal and you feel comfortable lending on the deal. But yeah, just approaching you and saying, hey, I need 80K on this deal, I need it by tomorrow or I need it by today, like that's the worst approach ever. Never do that.
Brenda VillaFranco:Yeah, no, definitely, and you'd be surprised how many times I get that.
Joseph Marohn:Oh, I believe you Now. Have you ever witnessed someone use transactional funding to make 50K, 7k, even 100K in one day? Or what's the wildest deal you've ever seen?
Brenda VillaFranco:Well, the wildest probably. Someone made about 10 to 15K in like a Morby method.
Joseph Marohn:Okay.
Brenda VillaFranco:Yeah, so definitely there's room for money to be made. They've made that quite a few times actually. So I haven't done a Morby method and I'm actually I'm a little bit familiar with the concept, but until I actually go through one I think I'll understand it a little bit better.
Joseph Marohn:Yeah. So I'm glad you actually brought that up, because I actually brought on Ingrid Hernandez onto the podcast and she's one of the first people ever to do the Morbid Method inside of Sub2. And we touched everything on that topic and you know it's a very complicated topic to understand. So we went over all the basics on it and so if you guys want to watch that, we'll make sure that we link it onto this podcast.
Brenda VillaFranco:Now, how can you leverage transactional funding to scale your real estate business? I think just being able to provide that and always be within their circle, I think that's how you can make the most money, instead of having to always try to find new people, new borrowers to new wholesalers or new fix and flippers and buyers I think just keeping the ones that you have. You have a good handful that you've done transactions with. Just keep those. They're not going to stop Like they have their own business Right and the more you help them, the more they'll come to you.
Joseph Marohn:So Absolutely, and being quick too. Right, because I see a lot of like transactional lenders, like they fund them, like quick, like you really have to be quick in this business because sometimes people are moving Right and if it takes forever to get a response from Brenda, I'm just going to go to my other lender and then they're going to fund it and they're the one that's going to actually make the money you know it's funny that you said that.
Brenda VillaFranco:Now is that you're actually right. You have to be very like, swift about it as well, too right Like you have to move in a way. I had someone reach out to me and I saw the message within five minutes. I reached out to them and they said oh wow, that was quick. I'll need you for funding, because he reached out to other people and they took like more than an hour to respond. So, yeah, so I got a deal from that.
Joseph Marohn:Perfect. Now I always like to give somebody a call to action that made it this far in the episode. What are three action steps a beginner can take today to start using transactional funding and start making money in real estate?
Brenda VillaFranco:Number one educate yourself, know the ins and outs of it, because the more you educate yourself, the more confident you'll be. Confident you'll be so when you approach people to provide your services. Then you're able to say, hey, I can fund this. And then, if they have questions, you're able to actually provide the answers and not be and if you do, that's okay, too right. You can always say, hey, I'm not sure, but my funding partner does know the answer to that. So, regardless, you know. So. I think it's just a matter of like A you don't have to feel like you know everything. So, regardless, you know. So I think it's just a matter of like a you don't have to feel like you know everything. We don't all know everything.
Joseph Marohn:Right.
Brenda VillaFranco:And every transaction I learned something new and different. So yeah, it goes back to like the experience. The second thing is just start taking action. Start reaching out to people. Start even just looking at Facebook groups. Start doing your searches, do wholesale California, do wholesale Florida and just see what you get and kind of start looking at oh maybe I can message this person and maybe I can message this person. Just start taking action and you'll see. Eventually you have no choice but to compound.
Joseph Marohn:Right, absolutely. And did you have a third one?
Brenda VillaFranco:The third one would be start attending more real estate in-person meetups.
Joseph Marohn:Love it. That is definitely. And then you know I do a lot of you know quite a few wholesale deals. I'm definitely going to bring some opportunities your way because a lot of time people are looking for EMD funding and I'll make sure I refer them to you to bring some more business your way Now. Are there any resources, any books, podcasts or tools you'd recommend to learn more about transactional lending?
Brenda VillaFranco:Absolutely. Ryan Shrope has a school community. You can actually join his community and it's free. He has a paid one as well too, but you can join the free one and he has like enough value in there for you. Or he has a YouTube channel too as well.
Joseph Marohn:Yeah, he was actually one of the ones I was talking about that funds them very quickly. I see him like he funds within minutes. It's amazing. I guess he has a system in place where he can respond very quickly and again, that's the key, right there, right?
Brenda VillaFranco:So I'm actually part of his school community.
Joseph Marohn:Awesome.
Brenda VillaFranco:Yeah, and so if I get funds tied up that I can't fund myself, I refer it to that.
Joseph Marohn:Okay, Now lastly, what's a question you wish more investors would ask about transactional funding, but they don't.
Brenda VillaFranco:How to do it correctly, Like how, like the actual, like how to do. I feel like wholesalers. They love shortcuts and I wish wholesalers would actually take the time to like, really know the ins and out of it Like I had a wholesaler reach out to me.
Brenda VillaFranco:He didn't know what a double close was, but he wanted to start doing that, and so I gave him like a few resources on what double close is. I even sent him like a couple of videos from YouTube, and so he actually took the time versus like most, if they don't know, they act like they know, but they don't really know, and so it makes the whole process like even more of a headache.
Joseph Marohn:So, yeah, and that's that's the whole purpose of these podcasts. Right, I want to educate the audience because I feel like a lot of people they're. They're either afraid to ask the questions because they don't want to look dumb, you know and there's no such thing as a stupid question because you should be asking questions or they just don't take the time to really educate themselves. So a lot of people don't like to read books. They don't like to read books, they don't like to do stuff like that. So to have a visual or watch a podcast where you can learn from, I think that's really key, right there. So that's why I like to go over all these questions and have people like yourself break down. You know double closings, you know what is that, what is EMD? You know and how to properly protect yourself on a transaction. So definitely good, good point there, awesome.
Joseph Marohn:Well, brenda, I am so impressed by you and what you've been able to accomplish. Not only are you working in a great career where people rely on you for their health, but you're constantly getting nominated for awards such as a Good Samaritan Award and Employee of the Quarter. What that's amazing, you know. So it says a lot about your character and the type of person you really are. You know the type of person that puts people's needs before her own. Not to mention, you've identified the time you've that you have in your day right, and you figured out a way to make even more money in real estate. You're an all-star and I'm honored to be a friend of yours and be involved in the same community as you. So thank you.
Brenda VillaFranco:Thank you so much for having me. I appreciate the kind words and you know I look forward to us even like collaborating in the future.
Joseph Marohn:Definitely, we will definitely be collaborating. So now, how can our audience connect with you or learn more about your expertise in this area?
Brenda VillaFranco:Follow me on Instagram at Brenda builds wealth. That's usually where I'm kind of starting to kind of get out there and filming more of my journey. It's been social media and I were. I'm not the social media person, but slowly and slowly I've learned that the more and more I make a post about what I'm doing, the more people actually learn about it. So it's I've taken a different perspective on if I can help one person, then I at least can help one person get started.
Joseph Marohn:Absolutely, even if it's just picking up your iPhone, or picking up your phone and just recording yourself, document everything and put the content out.
Brenda VillaFranco:No, absolutely.
Joseph Marohn:Awesome. Now, if you guys are finding value from this podcast, don't forget to show your boys some love. If you like what we bring you, don't forget to show your boys some love. If you like what we bring you, don't forget to subscribe. It helps us continue providing value to others by reaching a broader audience. We're out here to serve, learn together and help as many people as possible. Make sure to also smash that like button and drop a comment down below if you plan to start lending yourself or if you're actually looking for funding on your next deal. Appreciate all the continued support and, guys, stay tuned, because we're pumping these episodes out every two weeks. I got some awesome topics and guests coming up next in 2025. That will change the entire way you do business. You definitely don't want to miss out best, believe i'ma. Keep bringing you that fire peace.
Brenda VillaFranco:Thank you, brenda thank you so much, appreciate you. Thanks for watching.