Make 6 Figures with Transactional Funding in 2025 | Episode 22 - The Real Estate UNLOCKED Podcast

Episode Transcript
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Joseph Marohn (00:12):
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 mosthighly anticipated topics in
real estate investing.
I'm talking about agame-changing strategy to make
your money work harder for yourather than you working harder

(00:34):
for your money One of the mostcreative ways to earn profits in
real estate without ever havingto own a single property.
Today, we're going to bebreaking down transactional
funding.
Transactional funding is ashort-term lending strategy
designed to help real estateinvestors close deals quickly.

(00:58):
It's more commonly used fordouble closings or covering
earnest money deposits.
This allows you to secure aproperty and flip it to an end
buyer without tying up your owncapital.
As the demand for creativefinancing grows, transactional
funding has become an essentialtool for investors looking to

(01:20):
scale their businesses andcapitalize on lucrative
opportunities.
For those looking to scaletheir businesses and capitalize
on lucrative opportunities.
For those looking to startgaining higher returns, becoming
a transactional lender is agame-changing opportunity.
By providing short-term loansto investors, you can earn
higher returns in a matter ofdays, while playing a vital role

(01:42):
in helping deals get across thefinish line.
Now, if transactional fundingis a strategy you want to learn
more about, then stay tuned,because we're going to be giving
you a step-by-step process onhow you could start gaining
higher returns today.
Now you know how we do it onthe Real Estate Unlocked podcast

(02:05):
.
If we're going to do it, we gotto do it right.
We can't just bring on anyoneto speak about transactional
funding.
We got to bring on MissTransactional Funding.
Today, our special guest on thepodcast is Brenda Villafranco.

(02:29):
Guests on the podcast is BrendaVillafranco.
Brenda is a part-timetransactional lender and a
full-time hospital administrator.
In just one year, she went fromknowing nothing about real
estate to becoming experiencedin transactional funding, in
which she closed over 15 dealsthis year alone.
Brenda enjoys networking andsharing her journey with others,
which has led her to befeatured on 12 different

(02:51):
podcasts, one of them being noneother than Pace Morby's Get
Creative podcast.
Her story is a testament to thepower of taking action and
embracing new opportunities.
Brenda joins us today to breakdown how transactional funding
works and how it can help youclose more deals with little to

(03:13):
no money down, unlocking a wholenew strategy to increase your
real estate returns.
So, without further ado I'vebeen talking long enough,
Everyone.
If you will please allow me toformally introduce to you Brenda
Villafranco.
Brenda, how are you doing today?

Brenda VillaFranco (03:35):
Hey, what's up Joseph?
Wow, what an introduction Likethat is amazing.

Thank you.

That was really awesome.

I appreciate you.
I appreciate you.
How's your Monday morning orafternoon going today?

You know what?
Just continuously networkingwith people, meeting new people
that's what really it's allabout.
I think people underestimatethe power of networking.
It's so key and that's actuallywhat's opened up doors for me
in my transactional lendingbusiness.

Absolutely yeah.
I think a lot of people don'treally understand the power of
networking and communities likecommunities has been an absolute
game changer for me.
I talk about it all the time onthe podcast and I'm always like
encouraging people, like gojoin a community, go to a local
meetup, and it's going to changeeverything for you and your
business.

So true, honestly, change everything for
you and your business.
So true, honestly, I try to goto a networking event here in
Houston at least twice a month,just to kind of keep going at it
and meeting new people, makingsure that the doors of
opportunities are continuouslyflowing, and I think that's
important.

Absolutely All right.
Well, brenda, well welcome tothe Real Estate Unlocked podcast
, a place where we bring valueto new and intermediate
investors by bringing on guestswho are extremely knowledgeable,
such as yourself, and coveringreal estate topics on a very
basic entry level.
I'm excited to dive into thistopic because, in my opinion,
private money is by far one ofthe most interesting and popular

(05:03):
discussions in real estate.
It's literally the backbone toevery single deal, and that goes
for any deal, not just realestate.
So every single transactioninvolves an exchange of money of
some sort, and most people, inmy opinion, I feel like, are
stuck right now or can't scaletheir business because they
don't understand how to leverageit or where to get access to it

(05:24):
.
So thank you, brenda, forjoining us today to shed some
light on this very importanttopic.

Thank you for having me.
I appreciate you.

Absolutely so, brenda.
Let's just kind of dive rightinto this.
So can you start by explainingto our listeners in simple terms
what exactly transactionalfunding is?

So transactional funding is a term
used for real estate investors.
So you won't really seetransactional funding for
someone that is purchasing ahouse and just wants to live in
it, right?
This is not going to be forthat type of audience.
This audience is specificallyfor real estate investors that

(06:05):
are trying to scale theirbusiness, are trying to actually
purchase several properties atonce or within a month.
So perfect example would be youknow you have a real estate
investor or you have awholesaler that is getting 10
properties a month locked up.

Right.

You know, your earnest money deposit is
your good faith deposit.
You're being serious aboutgetting this property under
contract and so you're puttingin, 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 amonth.
So what wholesalers will do isthey'll reach out to someone

(06:46):
like me that can come in fundtheir $5,000, and then they'll
be able to close properties andbe able to scale their business
without actually using any oftheir money.
Once that deal closes, they payme out and then they actually
get their assignment fee as well.

Great way to explain that.
Why do you feel liketransactional lending is so
important in real estate?

I think it's more of the wanting to leverage
right.
Do you want to go back incircles and just do the same
type of revenue every year?
I've actually met investorsthat are starting to use other
people's money, so to speak.
They've spent the last sevenyears just using their own funds
and they're like why are wedoing this?
Like I only get you know thisamount of cash.

(07:34):
There's only so much and youreach a certain ceiling, and so
now they're starting to branchout and use other people's money
to branch out and use otherpeople's money.

Yeah, it's incredible, right, because I've
met so many people that usetheir own capital and they don't
even understand like nothingabout private money lending.
They don't know nothing abouttransactional funding and when
you tell them about that they'relike they're kind of like they
don't really believe it, right,until you meet people like
yourself that can actually fundthe deal, get it across the
finish line and what they'repaying only interest on.
How do you structure your termswith your lending?

(08:09):
Do you structure like a monthlypayment only, or is it due up
front?
How do you structure that?

So for earnest money deposits I usually
have a $250 fee up front, justin case, if the deal doesn't
close or doesn't go through,then at least it could have been
sitting in my high yieldsavings 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

(08:36):
does fall through and again,these are learning lessons that
have been added throughout theyear where I had a deal that
didn't actually go through thefinish line and so they ended up
canceling the contract, Ireceived back my funds, but now
I actually wasted money on mywire fees and my money sat there

(08:57):
for close to a month andnothing happened.
So as you learn and go, you'llstart adding what makes you feel
comfortable with what your termshould be, but typically it's
based off relationship and it'sbased off how many deals do you
think that this consistentborrower will come back to me

(09:19):
and be able to fund some more?

Right, yeah, cause you you lost the, the
wiring fee, which those can addup over time, right.
And then, on top of that, yourmoney was tied up where you
could have been putting intowork 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 realestate, do you mind sharing,

(09:42):
like, why you chose to focusprimarily as a transactional
lender as your pathway?

Yeah, actually I started out doing
private money lending initiallyand so that was going great.
But then I figured out in thesummer, like okay, my funds are
currently tied up, what elsecould I possibly do that will
bring me in another stream ofincome?
And that's kind of where Istarted like why don't I just

(10:09):
start funding more of thetransactional lending side and
just see how it goes?
So as I started networking, Istarted telling people what I do
in more of the transactionallending space, and that actually
helped me, because then it keptme in their mind.
And so even with my firstinvestor that I ever did an EMD

(10:31):
for he actually I met him and hecalled me three weeks later and
he says hey, I remembered fromour previous conversation when
we met in person that youactually fund EMDs.
I have one coming up in a week.
I you know I would like for youto fund it.
And so it was a $5,000 EMD andwe structured it in a way where

(10:52):
I knew that he would always useme in the future.
And so that's pretty much howwe got structured.
And that was probably my firstand easiest EMD, because it went
so smooth and they don't evergo as smooth as people think
they do, but with this one itwas actually pretty smooth.
Like he called me, he gave methe title company, the prop, the

(11:14):
purchase sale agreement.
I looked over it and then heconnected me to the escrow
officer.
And once I spoke with the escrowofficer and I would like to say
that if you're ever going tofind an EMD, please make sure
that all communication is alwaysthrough email, because then you
keep an actual paper trail ofwhat they actually said, versus

(11:35):
like having a conversation withthem on the phone.
Then they'll say, oh, I don'tremember saying that, or you
know, vice versa, that or viceversa.
So once communication with theescrow officer is up to par,
then you make sure about yourinspection period and the close

(11:56):
of escrow.
They have to line up with eachother.
Ideally, what a transactionallender would love to see is for
the inspection period to go pastthe close of escrow.
That's your ideal scenario.
Half the time it does nothappen.
Usually it's always where wehave to tell the wholesaler can
you actually change the date ofthis to bring it back to at

(12:18):
least the date of close ofescrow?
And so I ended up funding the $5,000 and he closed on the
property within a week and Iended up getting back a thousand
dollars of return on profit.

That's awesome.
Now I know you.
You we mentioned earlier aboutEMD being a good faith deposit,
earnest money deposit.
Right Now, can you explain alittle bit to the audience that
maybe are unfamiliar with theterm of what exactly a double
close means?

Sure.
So double closing is usuallyagain for the audience of
wholesalers.
So typically say you have aproperty that's $80,000 and a
wholesaler gets the seller to OK, you agree upon $80,000.
Gets the seller to okay, youagree upon $80,000.

(13:09):
Well, the wholesaler actuallyfinds an end buyer and tells the
end buyer hey, I can sell youthis property for $100,000.
So they kind of want to hidethe assignment fee from the
actual seller, and so what theydo is they'll bring in a
transactional lender such asmyself.
I'll come in and fund the A toB contract, and then the end
buyer will fund the B to Ccontract.

(13:30):
But initially the B to Ccontract needs to be funded
first, before I ever wire thatmoney, and then from then my
profit will be the difference ofthat, and then the profit of
the wholesaler goes to him onthe assignment fee.

Yeah, that's so smart, right, Because there's
sometimes when you get awholesale deal, we'll just have
so much meat on the bone, right,and you definitely like your
assignment fee is so large, likesometimes it can actually kill
the deal, right, the seller seesthat on the HUD statement and
they're like hold on, manBrenda's making a hundred K on
this deal, like what's going on,you know, and it could actually

(14:05):
kill your deal.
So it's a great strategy, rightto close on it twice.
That way there's no discrepancy, there's no, you know they're
not going to see that that feeso large and actually want to
cancel the contract.
So it's definitely a smartstrategy.

I've actually spoken to a wholesaler
that said they found out howmuch they were going to make.
I think their assignment feewas going to be like $50,000.
I was like wow, that was a hugeassignment fee and that
literally killed the deal forhim.
They ended up finding out theseller did so yeah, double
closing definitely can come inand save the day on that.

Yeah, and I've even heard of people like in
buyers right, like wanting tocancel a contract just because
they found out how much thewholesaler was making.
And I never understood thatconcept Right, because my thing
is if you run your numbers right, you underwrite a deal and it
makes sense to you, then why areyou worried about how much the
wholesaler makes, right?
As long as it makes sense toyou, you shouldn't be so

(15:02):
concerned about that.
So sometimes wholesalers willeven do a double close because
they don't want the end buyer tosee that.

And then they're like OK, cool, so they
can actually close on the dealsuccessfully and get paid.
So yeah, yeah, I think doubleclosing would be the
transactional lender's dream tojust do double closing if they,
if they can.

lender's dream to just do double closing if they
can, right, and so this issomething that actually, it took
me a long time.
When I first got into realestate, it took me a long time
to wrap my head around this, butwhy would an investor choose to
use a lender's services, suchas yourself, and pay interest,
rather than just using their owncapital to fund the deal?

interest, rather than just using their own
capital to fund the deal.

The word of the day would be leverage right.

Also, with like mindset too.
Like if you have an abundancemindset, you're not going to
care about paying for someone'sservice when you're not even
having to use your money.
You know that you're stillgoing to make the amount that
you're going to make purchasingthis property.
So why not use other people'smoney?
And I actually use otherpeople's money myself sometimes

(16:10):
when I'm not able to find an EMD.
Like I have a couple of peoplethat, whenever my funds are tied
up, I'm like hey, do you wantto be partaking this EMD?
And they're like, yeah, put mein on it, and then we just split
half of the ROI with it.
So I'm okay with using otherpeople's money as well too.

Yeah, when I first got into real estate I was
buying and holding propertiesand then I would have people
come up to me and say, hey, Ican fund your deal and I'm like,
well, why would I pay interestwhen I have the capital already
in my savings account and Icould just fund my own deal?
And, like you said, I thinkit's a mindset thing because I
didn't understand that my moneywas actually best put to work

(16:52):
somewhere else than tying it upon an EMD or tying it up on my
own deals, when I could just payBrenda whatever percent she
charges it's probably between8-12% and I can actually make a
higher return having my money inanother vehicle in real estate,
right.
So it's definitely a mindsetthing and I think people really

(17:13):
need to understand that.
You know, once you get to a,you know a level where you know
you understand different streamsof income in real estate your
money is best put in othervehicles 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.
State your money is best put inother vehicles rather than
tying it up on your own deals.
Absolutely yeah, no, definitely, I think it's.
It's all requiring like amindset shift.
And even me like even in thepast, you know, I wanted to pay
off my house quickly, right, butthen in reality I'm like why,
if it's being rented out, why?
Do I want to do that, and sothat that was like a whole
nother shift even on the mindsetfor me as well too.
Yeah.

Yeah, now.
So what is the difference,brenda, between a transactional
lender or per se, like a privatemoney lender, and a hard money
lender?
What's the difference betweenthose three?

between six to nine months, six months to a
year, depending on what yourpreference is.
You will always find deals thatI feel like average.

(18:20):
The ones that get thrown at meare usually about six months or
so.
A hard-to-find lender will besomeone where they find between
75-80% of the house that you'regoing to flip.
But they're in first positionand so anyone new first position
will actually take the.
In case a borrower everdefaulted, they will be the

(18:42):
first ones to actually get thefunds first, and then you will
come in and you would you wouldactually collect the money on
gap right, you would fund for agap and so you would take second
position, which is not the bestposition.
It is riskier, which is whyunderwriting comes into play.
Don't ever fund a deal if theunderwriting doesn't pass.

Okay, now let's get into the heart of the
question, where everybody reallywants to know, and it's how
does someone get started withtransactional funding?
What are the first steps theyshould focus on?

First steps that they should focus on if I
were to start back all overagain would be to network,
network, listen to people.
Don't just like jump in to tellthem what you're doing I feel
like a lot of people do that butjust generally have a
conversation with people thatyou're networking with and then
later see how you can provideyour service for them.

(19:42):
I think listening is probablylike key as well, too, because I
get people all the time thatjust 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 upI've gotten deals just from
following up because I keptfollowing up and doesn't

(20:04):
necessarily mean you'll close adeal someday but hey, you put
them back, you put yourself backinto their mind again, like hey
, she keeps following up and shegenerally wants to build
relationships, so like, why notdo a deal with someone like her?

don't really talk about a whole lot, right, when
you're at meetups, people don'tadvertise.
Hey, I'm a private money lender, you know like why.
Why is that Is?
It is like once you really getto know that person, it kind of
comes out in the conversation.

(20:40):
But you did kind of mentionthat you know, like not to
advertise it.
Why.
Why is that?

You know, for me I think it's just more
comfortable to to hear firstwhat they may need, and I don't
want to go around telling everysingle person like, hey, I'm a
private money lender and they'relike okay, like I use my own
funds, great.
So I think it's like for me.
I think it's just like I don'twant to just jump in because

(21:04):
that's not even my character.
So I rather just like get toknow someone, like on a personal
level, and then if they were toneed my services in the future,
then great, then we can kind ofgo work towards that.

Yeah, I like that because you know, when you're
building relationships withpeople and you're building
rapport, and then you're justkind of casually having a
conversation and you're like,hey, brenda, you know what do
you need in your business orwhat are you looking for right
now, and then someone brings upthe fact like, hey, you know, I
got this deal.
Actually I'm looking forfunding right now.
And then it just comes outright, hey, you know what I
could fund that deal?
They're like oh, I didn't evenknow you were a lender.

(21:40):
Like that's amazing.
Yeah, let's, let's get it.
You know, let me show't want tobe going around telling
everybody that you're a lender,right, Because then you might
even get a bunch of peoplehitting you up and bringing
deals that are not even worthlooking at.

Yeah, no, I actually get a lot, quite a few
DMs like on Instagram, andpeople are like, hey, I need a
deal funded.
I'm like do you have a pitchdeck?
Do?

you want to get off.

I mean, it doesn't work that way.
So that's actually really funnythat you mentioned that.

Yeah, so what type of investors come to you
typically for funding?
Are you primarily working withwholesalers like fix and
flippers?
Buy and hold investors?

So my ideal audience would be a wholesaler,
but I have funded EMDs for inbuyers, fix and flippers.
But I have emds for in buyers,fix and flippers um, actually
quite a few and so that's notthe ideal.
And I'm going to tell you whyit's not the ideal.
Only because an end buyer isway riskier than a wholesaler.
With an end buyer, you canalmost think of an EMD from an

(22:48):
in-buyer as like a short-termprivate money lending deal in a
sense.
Either A you have to minimizethe risk by again having
inspection period be greaterthan the close of escrow, which
usually never happens.
And so for the in-buyer, onceyou submit that EMD for the

(23:10):
in-buyer, your money goes hardand that's it.
And so the only way to protectyourself is to either a
promissory note, which isbasically saying, hey, I promise
to pay you back, and thenactually getting like a deed of
trust and cross collateral on anasset that they have, and that
would be like the way where youwould protect yourself for an

(23:32):
end buyer.

Right, and especially for an end buyer
that's holding onto the property.
You know their cashflow has tobe a significant amount where
they can actually pay you backin the first place, right?
Because most people that arecoming to you, like you said,
their wholesalers are their fixand flippers and they're going
to make a killing on their dealmore than likely and it's way

(23:55):
easier for them to pay you backversus someone that's holding
onto a property long-term,looking to pay back that in 30
days, Right?

So it definitely makes sense and
usually for an end buyer.
Their exit strategy is for theprivate money lender that's
going to be providing funds forthe next six months to fix and
flip the property is going tohave my EMD and my return of
investment at the close ofescrow.

Okay, and now you brought up the fact about a
pitch deck, right, and so I wasgoing to ask you how are you
qualifying these investors thatcome to you for funding?
Are you running credit checks?
Are you looking at their income?
Are you taking DNA samples?

Or is it just based on experience and the
actual deal itself?
For EMD, it's just onexperience and the actual deal
itself being able to look at apurchase agreement and being
able to see the inspectionperiod and the close of escrow
versus like a private moneylending deal.
You actually have to dounderwriting, you actually have
to vet the borrower and makesure that a background check is
done, making sure like if theyhave any experience, they have

(25:05):
to show proof of that experienceand make sure that not just one
person underwrites it but atleast a few people underwrite it
, just to make sure that it's agood deal overall.
But I think for me, withprivate money lending, I'd
rather fund for someone that Iactually already know and I know

(25:26):
has a solid record, versus justlike a random stranger.

Yeah, that makes sense.
So when an investor comes toyou with the EMD opportunity,
are you not underwriting thedeal, or is that only for
private money lending, or howdoes that work?

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 ofyou losing money Basically for
EMD, the risk of you losingmoney which is still a risk
would be if the deal falls apartor if you didn't actually have
great communication and makesure that all your questions

(26:01):
were covered with the escrowofficer prior to you wiring your
funds.
Okay, amazing, Now can you walkus through a typical
transactional funding process,step by step, from finding the
deal to closing both sides ofthe transaction.
Yeah, so I can actually walkyou through one that I have that

(26:23):
just closed today, which was myfirst double close.

Oh, congratulations.

That's amazing, yeah.
So basically I met thisinvestor back in the owner's
club, so, and we developed arelationship over time.
We follow each other on socialmedia and what was cool about it
is he brought me onto his firstpodcast.
I was his first guest and then,from that first podcast, like
we actually continue building arelationship and we kept in

(26:50):
touch.
And so then he messaged me oneday and says, hey, I have a
double close from a guy that Imet, and so I was like, oh cool,
like we should totally fund itand you know we'll split profits
or whatever.
Well, what turned out was thatit was actually a probate and so
it was going to take a littlebit longer.
When he was following up.

(27:11):
He didn't actually like needhim anymore, so that deal fell
through.
Within a couple of weeks agoTim the same guy that you know
came to me about the doubleclose.
He says, hey, I'm actuallygoing to double close, so like
now I'll need your service.
And I was like nice.
And he was like, yeah, so we'rethinking of closing like

(27:33):
December 10th, unless there'slike some other issues.
And so we actually ended upwiring on Friday, but because
the cutoff time was 3 pm, weactually got the wire back today
.
So that's why it was like anofficial close now on the double
close.
But basically Tim brought so wehave, you know, tim as a

(27:54):
wholesaler.
He put a contract with theseller on a property and so he
was going to make his assignmentfee.
But he didn't want the sellerto know how much he was going to
make, and so he brought in hisA to B contract and then he
brought in his B to C contracton the end buyer contract and
then he brought in his B2Ccontract on the Empire.
So if you take it step by step,it's him just submitting those

(28:23):
two contracts and then now I getintroduced by him to the escrow
officer and the title companyand then from then on we
communicate back and forth inemail.
So there's a total of likeseveral emails that go back and
forth just to make sure, likeeverything is intact.
Like hey, is this A to Bcontract completed?
Is this B to contract?
Okay, cool funds.

(28:48):
Until that, b2c wires fundsfirst, because technically
that's how I'm getting paid outagain, 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 goesthrough.
She says the escrow officersays, ok, wire sent, here's
proof.
And then now they'll send theirwire to us and then we'll

(29:11):
receive our return of investment.
So it's really it's not a lotof work per se, like it's not
like you're outside building afoundational house or like
ground construction, but it is alot of communication back and
forth and just all of that getsdone within a couple of hours.

I love that story right, because it shows the
power of networking in thecommunity.
Right, shout out to Tim, shoutout to Owners Club.
That made all this possible foryou guys to meet and do a deal
together.
And you know, when you weretalking about, you know wiring
the funds.
I want to bring mention thatbecause I I it's really
important that you guys neverwire directly to the person

(29:51):
itself.
Right?
You want to wire directly toescrow?
That's how you're protectingyourself.
Right?
Because I've heard so manyhorror stories where people deal
with somebody and they're like,hey, I need this funding within
24 hours.
Can you just wire directly tome?
That's a no, no, that's a redflag, right?

Right, right .
But you know it's so funny thatyou mentioned that is because
I've met other different groupsoutside of like Pace's community
and they actually wire withintheir LLC and so to me that was
new.
So I was like huh.
And so one of the guys that Imet, their hard money lender

(30:28):
doesn't allow a second positionand so it has to show like their
funds within their LLC account,and so they've done that way.
So there are different and again, like, I think it depends on
the relationship and the trustright, making sure that your
paperwork is done correctly andmaking sure that your funds are

(30:50):
still secured within thepaperwork.
But it's good to know, like,the more and more I network, the
more and more I learn newthings about how certain deals
are done.
They're not all going to bedone the same, or at least
that's the interpretation thatI've had as well with other
communities.
But in similarities you stillhave to have the same paperwork,

(31:13):
such as promissory note, deedof trust as well to record it.
So in that sense it's just amatter of the relationship how
do you feel, how comfortable doyou feel?
And just making sure that yourfunds are secure, most
importantly.

Yeah, I think it's really based off your own
risk tolerance and, like yousaid, kind of how well you know
that person, because I know Pace.
He teaches us like hey, don'teven trust your own mom with
your money, right.
But, obviously you know if Ineed to wire mom money, I'm
going to wire mom money.
But yeah, the point he's reallytrying to hone in on is like,
hey, just because they're yourfriend, just because you guys

(31:52):
are in a good relationship,doesn't mean that that person
won't screw you over.
So the way you a hundredpercent protect yourself is, you
know, sending it directly toescrow.
But I know there are somepeople that they go around it
and you know they send direct.
But just know that your money'sat risk when you do that,
because there's really no way toprotect yourself, right?
If you're wiring directly to anLLC, how do you protect

(32:14):
yourself?

Well, you still have the promissory note
and the deed of trust as welltoo.
Yeah, so I mean you still.
If you have cross collateral,even better, because then you
can actually take that asset.

Okay, Now you did bring up promissory note and I
want to ask now what type ofcontracts or paperwork is
involved with transactionallending and how are both sides
protected in the transaction?

what I'm funding for this property.

This is going to be my return, and then they both
sign and then we have that asthe agreement, but the rest
again goes back to title andcommunication.

(33:04):
Okay, so is it just?

a JV agreement.
There's no promissory note oranything.
There's no promissory note.

Yeah, that's only for private money lending.
Okay, perfect.
Now what are the usual terms ortimeframes for, you know, like
these type of deals?
So you mentioned there are 30days right now and sometimes
they go to 45 days.
Is that the max?
You've seen them?

Yeah, so people have different terms.
The max I've seen is 45 days,but some transactional lenders
have terms so like say, forinstance, your usual transaction
is usually 14 days to 30 daysand then, if it were to go above
30 days, I know lenders thatactually add an extra percentage
to 30 days, up to the 45 days,because in their eyes they're

(33:51):
like well, I can easily have putthis on another 30 day deal and
now I'm still sitting here withwith my money still sitting
there in escrow until the dealcloses.
So 45 days.
Is is probably the highest I'veseen so far, but doesn't
typically go.
It really does close by the30th day or so.

And at what percent are most transactional
lenders charging?

The average is 40% 40%.

That's a hefty return.
It's a great return actually,and I know they teach that in
Gator lending and all thatBecause I've heard people do
like 10 to 12.
But that's more on the privatemoney side, right?
So when it comes totransactional lending, it's a 40
, it's a higher, it's a 30 to40%.
Is that what it is?

Some, some people do 30,.
The average is 40.
And then again some people thathave a repeated borrower may
lower it down to 30, 25, justdepending again, based off
relationship.

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 inthe first year if they follow
the blueprint and only dotransactional lending?

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-transcriptout perfectly, because I don't

(35:46):
have that time, like I do have,you know, 12 hour shifts I'm
usually not able to talk on thephone, like my job is actually
pretty demanding and so I'm notable to actually be on calls
while I'm working or anythinglike that, because at work I am
on a lot of calls, so to speak.

Awesome.
Now can you be a transactionallender if you don't have a whole
lot of money.

Yes, yes, you can.
And, by the way, I would sayit's just to collaborate with
other people.
So say, for instance, someonecomes to me and says, brenda, I
don't have any money, but I wantto do my first EMD transaction.
So then I would say, okay, soif you bring me a deal, then I
will split 50-50 with you.
And so there's really no excuseto make money in the

(36:35):
transactional lending space oreven the private money lending
space.
In the transactional lendingspace, or even the private money
lending space, it's just amatter of, like, building good
relationships and making surethat you can actually bring
deals to someone.
If you can solve that problemfor a transactional lender by
bringing them deals, then youwill be making money yourself.

Perfect.
Now let's say someone has moneyto lend.
They follow all the advice here, but they don't know where to
lend or who to lend to.
How do they market themselvesand find potential borrowers?

So you can do various.
So my main thing is in-personmeetups.
That's been my, my biggest.
Also, the second thing that youcan do is you can go to
Facebook groups and you can lookup wholesaling groups by state
or you can do fix and flippersby state and also just kind of,

(37:26):
you know, see the comments andkind of pick out some people
that you want to actuallymessage and say, hey, I see that
you know you posted about thisproperty.
Um, if you're ever interested injust kind of start a
conversation but not jump intothe hey, I'm a transactional
lender, like I feel like thatalways turns people off.
It's just like again, like whenyou're meeting in person, right

(37:46):
For the first time, like you'renot going to jump to them and
say, hey, I'm a transactionallender, like I have money, right
, and so it's the same way toonline, like you just get to
know someone and you're goingback and forth and so once you
kind of start building andhaving them get warm and then
you can actually, you know, havethe services for you and

(38:07):
they'll keep you in mind forthat.
So you can either do a lot ofoutreach on Facebook groups or
you can do actually some likewarm leads.
So anyone of your friends sosay, for instance, you're my
warm lead, joseph, because Iknow you right.
We're both in community and soif you ever needed any EMD

(38:27):
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 doingit.
And then the third way is, justthrough social media, is
telling people out there whatare you doing, what do you plan
on doing, and documenting thatjourney.

Yeah, and it goes both ways right, like so, even
for myself.
Like I'm active withwholesaling, I'm active with
buying properties and I'm alwaysposting content and showing
that to the world of buyingproperties.
And I'm always posting contentand showing that to the world
because then I get people likeyourself reaching out to me and
saying, hey, I saw you just didthat last deal, do you need any
funding?
I literally will get people inmy inbox from just sharing my

(39:08):
content of what I'm doing on aday-to-day basis.
So it goes both ways right.

Yeah, and I actually saw on someone's story
two days ago they were thinkingof either doing a double closing
or a novation deal, but they'rekind of iffy on which one's
going to work the best.
I saw that on their story.
I sent them a message sayinglike hey, I saw you were going
back and forth.
If you ever need a doubleclosing like, I fund those as

(39:33):
well.
And he says I didn't know that,so there you go.
That was like a niceintroduction to if you ever need
me, here you go.

That's awesome.
Now, one thing I do like tohone in on this podcast is I
like to be fully transparent.
You know I don't like to alwayspaint out that everything's
rainbows and unicorns right.
So let's talk about the risksinvolved with lending.
Have you ever had a deal gosideways, or what's the riskiest
deal you've ever funded and howclose did it come to falling

(40:04):
apart?

So riskiest deal so far for EMD was an end
buyer Right.
So with that end buyer we didhave the good thing is we got
paperwork to secure it.
So the deal, the moment wefunded the money went hard and

(40:42):
in this case it did go hard andso thankfully we have paperwork
for cross collateral on an assetfrom the borrower in case they
didn't pay us back.
So could have gone bad if itdidn't because in reality that
borrower wasn't able to close onthe property because she wasn't
able to bring in um her pml forthe gap funding and typically

(41:07):
that strategy.
So thankfully we had crosscollateral.
But again, if you, if you goback to the paperwork and if you
don't have those things instructure, then you can lose
money.
That is true, like.
So just know that with thetransactional lending, with
private money lending, if you donot underwrite correctly, if

(41:29):
you do not put structure on yourdeals, if you know that let's
just say, for an example, aborrower is needing a second
position to fund for his gapfunding, for his fix and flip,
but if you don't put thestructure of having draws on
each phase and just giving yourfunds all to him all at once,

(41:54):
then that increases the risk ofhim, you know, either A not
finishing the job or B somethingcan happen where he uses his
money on another project, or youknow what I mean.
So you always want to minimizethat risk.
You want to keep your draws onthat.
You want to make sure that theunderwriting passes before you
even fund.
You want to make sure that theborrower's LLC is intact and in

(42:16):
good standing.
You want to make sure that youvet the title company, make sure
they actually have good Googlereviews greater than a year or
two.
You want to make sure that.
How is your communication?
How is this borrower'scommunication?
Are they going to be the typeto only text you once a month or
keep it?

(42:37):
Are they going to?
Are you going to structure itwhere you want photos every week
or two to know how the processof your flip is coming?
So I think just putting thosestructures how you feel is
everyone's different.
Some people are OK not havingpictures, right, but it depends
at the end, like your risktolerance.
But just know, like in thelending space there is always a

(43:00):
risk to lose money.

I love the fact that you said you know you
learned a lesson from it, right?
Because I think, no matter howmuch knowledge you have in real
estate, how much experience youhave, I think mistakes or things
go sideways in real estate, nomatter what right, and it really
depends on your risk tolerance.
Mistakes are, are things gosideways in real estate, no
matter what Right and you're, itreally depends on your risk
tolerance.
But the fact is, you know if,if you do make a mistake or

(43:24):
something happens, the key thereis 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.
A little tip I want to give youguys now sometimes when you get,
like you know, when they sendthe EMD instructions right, the
wiring instructions, and you'llgo off that based off the email
Now what I physically do isbecause I've seen horror stories

(43:46):
where people actually Photoshopthese wire instructions, I will
actually call the title companymyself and I will verify, like
I will Google it, like I won'tgo off the phone number that's
on that sheet.
I will actually Google thattitle company and I'll just ask
them hey, is this accurate, thiswiring instructions accurate?
And you know because I've seenpeople Photoshop it.

(44:08):
People do some crazy stuff tosteal people's money.
So that's a little tip for youguys Make sure whenever you guys
get those wiring instructions,actually Google the business and
call them directly.
Don't go off the phone numberbecause you may be calling
somebody else that's ready toset you up Right.

That's so good that you brought that up,
because I do the same thing.
So, yeah, if you get wireinstructions via email, make
sure that you actually don'tcall the number on the wiring
instructions, but instead youtake the time to Google the
title company and call that mainnumber to make sure that the
wire instructions is legit.

Absolutely.
Now, what are some of thebiggest mistakes you see other
lenders make when they startlending money, and how can our
listeners avoid these commonpitfalls?

High risk returns.
I think it's like the one thatlike blinds them completely,
just like, oh my gosh, I'm goingto get a 30 percent return, a
40 percent return.
I've seen some crazy likepeople DM me on like a return,
I'm just like no pass.

And so.

So that's, that's one.
Crazy returns.
You get blinded on that.
And then I see a lot of newreal estate investors that want
to get in the lending space andthey want to have a deal so bad,
so bad.
And so usually, if I get achance to talk to them, I always
tell them look, never rush it.
Build relationships and thedeals will always come.

(45:35):
People will always fix and flip, people will always need a loan
.
It doesn't end.
So just don't worry that you'regoing to miss out on a certain
loan or you're going to miss outon a certain deal.
It'll come back, and there'sone literally every day, so
don't even sweat the small stuff.

Yeah, definitely.
I think you touched a goodpoint there, because some people
they get impatient.
They understand the proper duediligence, they understand all
the risks involved and they knowhow to avoid them.
That they learn and they take arisk action right, and so

(46:20):
that's definitely a common wayto lose your money.
So definitely make sure you youknow whatever you learn on the
proper way to protect yourself.
Just stick to that.
You know, when you see somebodysaying, hey, I need an AMD in
24 hours, like what is yourminimum timeframe for you to
send, you know to wire the money.

The same day .
It can be the same day as longas I'm able to see that purchase
sale agreement and making surethat the inspection period is so
, like, say, I've had deals thathave fallen through only
because they say, oh, I need EMDtoday.
Today's the day, right, and ina borrower's eyes, you want them
to be considerate of your money, but unfortunately most of them

(46:58):
are not, and so they wantsomething 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, verifyand make sure that the
inspection period can at leastgo.
I'm like, okay.
So, for instance, perfectexample was I had an EMD about a
month and a half ago and theyneeded funding that day.

(47:23):
This was at 11 o'clock in themorning when I got on the call
with them and they said, okay, Ineed EMD within like the next,
by 2 pm.
And so I said, okay, send meall the information.
And it turns out that theinspection period ended that
same day at 5 pm.
So I said, hey, I can't fundyour EMD because you need an

(47:43):
extension on your inspectionperiod and close of escrow.
And he was like oh, like youknow, we're working on it, yada,
yada.
And I didn't fund it that daybecause I told him like, hey,
there's no point in me wearingsomething at 2 pm when I have to
cancel it before 5 pm.
Doesn't make any sense.
And so finally got it extendedtwo more days.

(48:06):
But then by the time the twomore days came, it was
technically Monday by 5 pm.
So here we are again in thesame situation, and so you can
tell that the borrower wasfrustrated and I said it's not a
matter of that, I can't fundthis is that my funds will not
be secured, and so once I wasable to explain that to him, I

(48:28):
think the cool thing about it isthat he called back later on
that week and apologize forallowing me to be in a position
to making me feel rushed.
Yeah.

In reality.

You know he, he knew that he should have
probably done better and had abetter inspection date to be
extended at least a week.

It's good he reached back out to you and
apologize.
Right, because you want to doright by your lenders, right?
And I always say this if I'mever going to borrow money from
a, from a lender that's trustingme with their funds, I will do
everything in my power to makesure that they get paid back.
Whether I have to borrowagainst 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, theytook the risk on lending to me.

(49:13):
I never want them to ever feellike they're going to lose their
money on risking on me.
And two, my name is everythingin this industry right.
Once you do a bad deal likethat or you don't pay a lender
back, your name is tarnished,right, and then you kind of have
, like this, you know, red flagwritten all over you.
So anytime you want to borrowmoney, people already know like
hey, you know what that guy's nogood man, he don't pay anybody

(49:34):
back yes, exactly so I'm sureyou get a ton of people reaching
out to you all the time askingfor 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'slooking for funding, what's the
best way to present anopportunity to you and give us

(49:55):
an example of like a goodapproach versus a bad approach
to you and give us an example oflike a good approach versus a
bad approach.

So a good approach would be someone that
the more information you give onwhat you want funded, the
better, because then I'm able todo my due diligence, I'm able
to underwrite it, I'm able tosee who you are, what you do,
what experience you have, andthen I'm able to see the
property that you want fundedand then I'm able to do my own

(50:23):
due diligence and go and searchthe 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'mwilling to risk per se, or is
this something that you know Ifeel comfortable with doing?
That also gives me, like otheroptions with do I want to JV my

(50:48):
funds with someone else as well,too, and just go half and half,
because it's not really alwaysabout the return of investment.
I feel like it's more fun whenyou collaborate with other
people and are able to be partof a deal.
I think that makes it way waymore fun.
This how to not approach me oranyone that has funds is to send

(51:08):
me a message and say, hey, Ihave a deal that needs to be
funded ADK.
I get this all the time and I'mjust like like the worst
approach ever.
Hi, what's your name?
Like I don't know what you do.
Never approach someone likethat.
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 futureand just start building on that

(51:32):
relationship and maybe sendthat information to someone that
already has funded for you.
That's, that's usually how.
I's usually how I would likethat approach.

There you go, guys, take notes, stop being
lazy.
You know it's not up to Brendato do the work for you, or any
lender for that matter, likeit's our job to put everything
in place where you have to dominimal research.
Right, I want to provide asmuch information to you so you
know everything about the dealand you feel comfortable lending
on the deal.
But yeah, just approaching youand saying, hey, I need 80K on
this deal, I need it by tomorrowor I need it by today, like

(52:04):
that's the worst approach ever.
Never do that.

Yeah, no, definitely, and you'd be
surprised how many times I getthat.

Oh, I believe you Now.
Have you ever witnessed someoneuse transactional funding to
make 50K, 7k, even 100K in oneday?
Or what's the wildest dealyou've ever seen?

Well, the wildest probably.
Someone made about 10 to 15K inlike a Morby method.

Okay.

Yeah, so definitely there's room for
money to be made.
They've made that quite a fewtimes actually.
So I haven't done a Morbymethod and I'm actually I'm a
little bit familiar with theconcept, but until I actually go
through one I think I'llunderstand it a little bit
better.

Yeah.
So I'm glad you actuallybrought that up, because I
actually brought on IngridHernandez onto the podcast and
she's one of the first peopleever to do the Morbid Method
inside of Sub2.
And we touched everything onthat topic and you know it's a
very complicated topic tounderstand.
So we went over all the basicson it and so if you guys want to

(53:13):
watch that, we'll make surethat we link it onto this
podcast.

Now, how can you leverage transactional
funding to scale your realestate business?
I think just being able toprovide that and always be
within their circle, I thinkthat's how you can make the most
money, instead of having toalways try to find new people,
new borrowers to new wholesalersor new fix and flippers and

(53:53):
buyers I think just keeping theones that you have.
You have a good handful thatyou've done transactions with.
Just keep those.
They're not going to stop Likethey have their own business
Right and the more you help them, the more they'll come to you.

So Absolutely, and being quick too.
Right, because I see a lot oflike transactional lenders, like
they fund them, like quick,like you really have to be quick
in this business becausesometimes people are moving
Right and if it takes forever toget a response from Brenda, I'm
just going to go to my otherlender and then they're going to
fund it and they're the onethat's going to actually make
the money you know it's funnythat you said that.

Now is that you're actually right.
You have to be very like, swiftabout it as well, too right
Like you have to move in a way.
I had someone reach out to meand I saw the message within
five minutes.
I reached out to them and theysaid oh wow, that was quick.
I'll need you for funding,because he reached out to other
people and they took like morethan an hour to respond.

(54:48):
So, yeah, so I got a deal fromthat.

Perfect.
Now I always like to givesomebody a call to action that
made it this far in the episode.
What are three action steps abeginner can take today to start
using transactional funding andstart making money in real
estate?

Number one educate yourself, know the ins
and outs of it, because the moreyou educate yourself, the more
confident you'll be.
Confident you'll be so when youapproach people to provide your
services.
Then you're able to say, hey, Ican fund this.
And then, if they havequestions, you're able to
actually provide the answers andnot be and if you do, that's
okay, too right.

(55:28):
You can always say, hey, I'mnot sure, but my funding partner
does know the answer to that.
So, regardless, you know.
So.
I think it's just a matter oflike A you don't have to feel
like you know everything.
So, regardless, you know.
So I think it's just a matterof like a you don't have to feel
like you know everything.
We don't all know everything.

Right.

And every transaction I learned something
new and different.
So yeah, it goes back to likethe experience.
The second thing is just starttaking action.
Start reaching out to people.
Start even just looking atFacebook groups.
Start doing your searches, dowholesale California, do
wholesale Florida and just seewhat you get and kind of start

(56:05):
looking at oh maybe I canmessage this person and maybe I
can message this person.
Just start taking action andyou'll see.
Eventually you have no choicebut to compound.

Right, absolutely .
And did you have a third one?

The third one would be start attending
more real estate in-personmeetups.

Love it.
That is definitely.
And then you know I do a lot ofyou know quite a few wholesale
deals.
I'm definitely going to bringsome opportunities your way
because a lot of time people arelooking for EMD funding and
I'll make sure I refer them toyou to bring some more business
your way Now.
Are there any resources, anybooks, podcasts or tools you'd

(56:44):
recommend to learn more abouttransactional lending?

Absolutely.
Ryan Shrope has a schoolcommunity.
You can actually join hiscommunity 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 inthere for you.
Or he has a YouTube channel tooas well.

Yeah, he was actually one of the ones I was
talking about that funds themvery quickly.
I see him like he funds withinminutes.
It's amazing.
I guess he has a system inplace where he can respond very
quickly and again, that's thekey, right there, right?

So I'm actually part of his school
community.

Awesome.

Yeah, and so if I get funds tied up that I
can't fund myself, I refer it tothat.

Okay, Now lastly, what's a question you wish more
investors would ask abouttransactional funding, but they
don't.

How to do it correctly, Like how, like the
actual, like how to do.
I feel like wholesalers.
They love shortcuts and I wishwholesalers would actually take
the time to like, really knowthe ins and out of it Like I had
a wholesaler reach out to me.
He didn't know what a doubleclose was, but he wanted to

(57:57):
start doing that, and so I gavehim like a few resources on what
double close is.
I even sent him like a coupleof videos from YouTube, and so
he actually took the time versuslike most, if they don't know,
they act like they know, butthey don't really know, and so
it makes the whole process likeeven more of a headache.

So, yeah, and that's that's the whole purpose
of these podcasts.
Right, I want to educate theaudience because I feel like a
lot of people they're.
They're either afraid to askthe questions because they don't
want to look dumb, you know andthere's no such thing as a
stupid question because youshould be asking questions or
they just don't take the time toreally educate themselves.
So a lot of people don't liketo read books.

(58:37):
They don't like to read books,they don't like to do stuff like
that.
So to have a visual or watch apodcast where you can learn from
, I think that's really key,right there.
So that's why I like to go overall these questions and have
people like yourself break down.
You know double closings, youknow what is that, what is EMD?
You know and how to properlyprotect yourself on a
transaction.
So definitely good, good pointthere, awesome.

(58:58):
Well, brenda, I am so impressedby you and what you've been able
to accomplish.
Not only are you working in agreat career where people rely
on you for their health, butyou're constantly getting
nominated for awards such as aGood Samaritan Award and
Employee of the Quarter.
What that's amazing, you know.
So it says a lot about yourcharacter and the type of person
you really are.
You know the type of personthat puts people's needs before

(59:21):
her own.
Not to mention, you'veidentified the time you've that
you have in your day right, andyou figured out a way to make
even more money in real estate.
You're an all-star and I'mhonored to be a friend of yours
and be involved in the samecommunity as you.
So thank you.

Thank you so much for having me.
I appreciate the kind words andyou know I look forward to us
even like collaborating in thefuture.

Definitely, we will definitely be collaborating
.
So now, how can our audienceconnect with you or learn more
about your expertise in thisarea?

Follow me on Instagram at Brenda builds
wealth.
That's usually where I'm kindof starting to kind of get out
there and filming more of myjourney.
It's been social media and Iwere.
I'm not the social media person, but slowly and slowly I've
learned that the more and more Imake a post about what I'm
doing, the more people actuallylearn about it.

(01:00:13):
So it's I've taken a differentperspective on if I can help one
person, then I at least canhelp one person get started.

Joseph Marohn (01:00:21):
Absolutely, even if it's just picking up your
iPhone, or picking up your phoneand just recording yourself,
document everything and put thecontent out.

Brenda VillaFranco (01:00:28):
No, absolutely.

Joseph Marohn (01:00:30):
Awesome.
Now, if you guys are findingvalue from this podcast, don't
forget to show your boys somelove.
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 providingvalue to others by reaching a
broader audience.
We're out here to serve, learntogether and help as many people
as possible.
Make sure to also smash thatlike button and drop a comment

(01:00:53):
down below if you plan to startlending yourself or if you're
actually looking for funding onyour next deal.
Appreciate all the continuedsupport and, guys, stay tuned,
because we're pumping theseepisodes out every two weeks.
I got some awesome topics andguests coming up next in 2025.
That will change the entire wayyou do business.

(01:01:14):
You definitely don't want tomiss out best, believe i'ma.
Keep bringing you that firepeace.

Brenda VillaFranco (01:01:21):
Thank you, brenda thank you so much,
appreciate you.
Thanks for watching.

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Make 6 Figures with Transactional Funding in 2025 | Episode 22

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Make 6 Figures with Transactional Funding in 2025 | Episode 22