***Guest Appearance
Credits to:
https://www.youtube.com/@keithborie
“Episode#83: A Quick and Easy Way To Fund Your Real Estate Deals – Jay Conner”
https://www.youtube.com/watch?v=rdGt4Y2U4zg
Suppose you’ve ever wondered how seasoned real estate investors secure funding and scale their businesses, even when banks turn their backs. In that case, Jay Conner’s story is a masterclass in resourcefulness and strategic networking. Appearing on Keith Borie’s “The Wealth Flow” podcast, Jay Conner shared how losing his traditional lines of credit transformed his career and unlocked a world of private money lending that anyone, even beginners, can tap into with the right approach.
From Banks to Private Lenders: A Pivotal Shift
Jay Conner’s journey in real estate began like many others: relying on institutional money and local banks to finance deals. For six years, this strategy served him well until 2009, when his line of credit was abruptly cut off during the global financial crisis. Instead of calling it quits, Jay asked himself a simple but powerful question: “Who do I know who can help me with my problem?”
A quick call to a friend and fellow investor, Jeff Blankenship, introduced Jay to the concept of “private money”—capital lent by individuals outside the traditional banking system, often using investment funds or retirement accounts. For Jay, this was the game-changer. Within ninety days, he raised over $2.1 million in private money, laying the foundation for hundreds of future deals.
Teaching, Not Asking: The Secret Sauce
One key lesson Jay emphasizes is the importance of having the right mindset. Most new investors fear rejection when asking for money. Jay flips the script: he never “asks” for money—instead, he “offers” an opportunity. He approaches potential lenders as a teacher: educating them about how private lending works, what rates they can earn, and how their investment will be protected with promissory notes and first-position mortgages.
By separating the “teaching conversation” from the “deal conversation,” Jay removes the desperation (which, as he puts it, “has a smell to it”) and builds genuine relationships. When he has a deal ready, he calls existing interested lenders with what he calls the “good news phone call”—simply presenting the details and timeline, no begging or selling involved.
Why Private Lenders Jump In
Jay describes his network of 47 private lenders, none of whom had ever heard of private lending before meeting him. For many, the appeal is simple: higher, more consistent returns than stocks or CDs, backed by real estate collateral, with zero day-to-day management hassles. Whether it’s putting idle cash to work or leveraging retirement funds through self-directed IRAs, private lending offers passive income and strong security.
To make investing even easier, Jay handles everything: matching funds with deals, ensuring proper legal documentation, securing insurance, and, crucially, maintaining flexibility with terms. Lenders have options for monthly, quarterly, or semiannual payouts, and built-in clauses allow for early exits or substitutions if life circumstances change.
A Win-Win Mindset
What sets Jay apart is his win-win mentality. He firmly believes in putting the lender’s needs first, educating rather than selling, and building relationships that last for years. Most of his lenders have stayed with him since 2009—a testament to his integrity and the effectiveness of his system.
He also recommends that every serious investor establish a relationship with a reputable self-directed IRA company, such as Quest Trust, to unlock the vast pool of retirement funds waiting for better returns.
Getting Started: Jay’s Advice
For investors eager to follow his path, Jay’s advice is clear: Know your program, be confident, and start talking. Don’t worry about rejection—focus on educating your network, offering true value, and building trust. Host informational luncheons, tap into business groups, and always serve with a teacher’s heart.
To dive deeper into Jay Conner’s approach, real-life scripts, and step-by-step methods, check out his book, “Where To Get The Money Now,” and tune into his podcast “Raising Private Money.”
The Bottom Line
Private money isn’t just for the seasoned pro—it’s a creative, reliable way for investors at every stage to fund deals, build wealth, and transform lives (their own and their lenders’). As Jay’s story proves, with the right mindset and a willingness to educate, the money does come first.
10 Discussion Questions from this Episode:
- Jay Conner talks about the transition from relying on banks to using private money. What were the key factors that pushed him to pursue private lending instead of traditional bank loans?
- Jay mentions he never “asks” for money but instead “offers” the opportunity through education. How does this approach differ from the traditional fundraising or borrowing model? What are its advantages?
- Self-directed IRAs play a significant role in Jay’s strategy for raising private capital. For listeners unfamiliar with this, what are the main benefits and potential risks that come with using self-directed IRAs in real estate investing?
- Jay emphasizes building programs that make it “easy” and “passive” for private lenders. What are some specific steps he takes to ensure his investors are well-protected and their experience is seamless?
- Keith and Jay talk about the “desperation smell” in raising capital. Why is timing so important in the process of asking for investment, and how can investors maintain leverage when seeking funding?
- The episode covers how to educate your network about private lending opportunities. What are some effective methods Jay uses to introduce private investing concepts to potential lenders?
- What are some misconceptions about private lending that Jay encounters from both investors seeking money and potential private lenders themselves?
- Jay and Keith discuss the flexibility of private money, like the 90-day call option. How does this flexibility benefit both lenders and borrowers compared to more rigid traditional financing structures?
- Jay has built relationships with 47 private lenders. What strategies can newer investors use to start building a network of private lenders, even if they feel their network is currently limited?
- Towards the end of the episode, Jay highlights the importance of mentorship and community for real estate success. What do you think are the key elements in finding and maintaining beneficial professional relationships in your investing journey?
Fun facts that were revealed in the episode:
- Jay Conner rebuilt his real estate business overnight: When Jay lost his bank line of credit in January 2009, instead of panicking, he quickly pivoted to private money and raised over $2,150,000 in less than ninety days—all without ever directly “asking” for money.
- Jay’s private lending program has created a financial win-win: Jay teaches regular people, many who had never heard of private money investing before, how to earn steady, passive income by funding his real estate deals. Some of his private lenders have been working with him since 2009!
- Self-directed IRAs are a secret weapon: Over half of Jay’s 47 private lenders use self-directed IRAs to invest in his deals, allowing them to grow their retirement savings outside the volatile stock market and without the headaches of being a landlord.
Timestamps:
00:01 Fast-Track Wealth with The Wealth Flow
06:13 Credit Line Closure Shock
08:20 Introduction to Self-Directed IRAs
10:20 Raising Real Estate Funds Unasked
14:36 Effortless Private Lending Investment
19:19 Importance of Self-Directed IRA Relations
23:27 Flexible Loan Terms Explained
24:18 Flexible Lender Call Option Explained
30:01 Understanding Private Money Lending
31:38 Secure High-Return Investment Guide
37:28 Educational Program Presentation Strategy
38:36 Finding Private Lenders: Your Network
41:58 Raising Private Money: Getting Started
46:10 Real Estate Investment Syndication Basics
47:40 Apartment Investment Market Bloodbath
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book, Where to Get the Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Building Passive Wealth with Private Money Lending: Insights from Jay Conner
Narrator [00:00:01]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money, because the money comes first. Now here’s your host, Jay Conner.
Narrator [00:00:33]:
Are you like most sales and other professionals who want to grow their wealth faster than what they are currently doing through their company, 401K, even with that company match, the stock market, or just plain saving money? Would you sleep better at night if you had the financial freedom to be job optional in just three to five years through investing in real assets? Maybe you don’t want to stop working, but wouldn’t it be cool if you could retire a decade earlier than most and do the traveling you and your family have planned for years while you’re still young and can enjoy it? Let’s face it. Most busy professionals don’t have the time or desire to take on more work outside of their work to grow their wealth. On the wealth flow, each week we share the stories, the investments, and take a deep dive into the various asset classes that can deliver that accelerated growth to your portfolio passively. That’s right. No extra work for you. Instead, we’ll put your money to work. Learn what the 95% aren’t talking about and join the top 5% of earners today on The Wealth Flow.
Keith Borie [00:01:51]:
Okay. Welcome to the Wealth Flow. My guest today is Jay Connor. Jay has been buying and selling houses since 02/2003 in a town of only 40,000 people with profits now averaging $78,000 per deal. He has rehabbed over 475 houses. He’s been involved in over a hundred and $18,000,000 in transactions. Jay has completely automated his annual 7 figure income business to where he works, in his buying and selling houses, businesses, and to just ten hours a week. Can’t wait to hear about that, Jay.
Keith Borie [00:02:35]:
And then his passion is motivating and teaching other real estate investors how to raise private money without ever asking for it. As a result, Jay has consulted with over 2,000 real estate investors. When he lost his line of credit back in 02/2009, Jay raised 2,150,000 in less than ninety days in private money when cut off from the banks. Jay is also a commercial developer of shopping centers and condominium communities. He’s a national speaker on topics of private money, foreclosures, this side of COVID, and automation of your business, and personal development. In addition, Jay is a two-time national best-selling author and a past president of the Business Network International. Jay, welcome to the Wealth Flow.
Jay Conner [00:03:33]:
Hello, Keith. Thank you so much for inviting me to come along in my lands. We’re gonna be talking today about my favorite subject, which I’m so passionate about, that being private money and private lending. And I’m so passionate about it because it’s made more of a difference in our real estate investing business than any other strategy or business practice that we do.
Keith Borie [00:03:55]:
That’s fantastic. I always like, Jay, to really start with, kinda where you grew up and what eventually got you into real estate.
Jay Conner [00:04:04]:
Sure. Well, I grew up here in Eastern North Carolina. And I grew up around my dad and his company, which was he was in mobile homes or manufactured housing. And, Keith, you’ve been out there in Texas. You’ve probably seen a few mobile homes along the hillside, out there in Texas. Well, the mobile home business, manufactured housing, if you will, was very good to our family for many, many years. My dad’s company was the largest retailer of manufactured homes, which is affordable housing, for many, many years. But then, unfortunately, the financing for that product went away for the consumer.
Jay Conner [00:04:47]:
So I knew if I ever got out of manufactured housing and mobile homes, I wanted to get into single-family houses. And so it was in 02/2003 that my wife, Carol Joy, and I started investing in single-family houses here in Eastern North Carolina. In our first year in 02/2003, we only did three flips, and I relied on the local banks to fund our deals. That’s all I knew to do. And so from 02/2003 until 02/2009, the first six years that we were here in the business investing in single-family houses, we relied on institutional money, local banks to fund our deals, but then something happened in January 2009 that changed everything.
Keith Borie [00:05:36]:
And what would that be, Jay?
Jay Conner [00:05:38]:
Well, I don’t know if you want me to tell that story now or not.
Keith Borie [00:05:41]:
No. No. No. Please do. Please do.
Jay Conner [00:05:43]:
Because that changed everything. You know, I remember it just like it was yesterday. I was sitting here at my desk, this very desk, in January 2009. And, you know, it may be hard to believe, but we still have handsets and cords attached to telephones here. A lot of people don’t even know what a landline is. But I was sitting here, and I picked up the phone, and I called my banker. His name was Steve. I called my banker many times about deals for six years.
Jay Conner [00:06:13]:
I called him up, and Keith, I told him about these two houses that I had under contract to close on. So I told him about the deals like I’d done for six years and, you know, the funding required and when I wanted to close. Well, I learned very quickly, like that on that telephone conversation, that the bank had closed my line of credit with no notice. And I said, Steve, I said, what do you mean? What do you mean, and why are you closing my line of credit with no notice? He said, Jay, don’t you know there’s a global financial crisis going on right now worldwide, and everything is shutting down? I said, No, Steve. I didn’t know that, but now you just gave me a global financial crisis in my little world to where I can’t fund my deals. Right? He says, Sorry, Jay. Not loaning money out to real estate investors anymore. So my first thought was, you know, I sure wish I had known my line of credit had been closed before I put earnest money down on these two properties.
Jay Conner [00:07:13]:
And then my second thought was, what am I gonna do? Now let me tell you something, Keith. I can’t stand these people running around all the time saying, Oh, every problem’s an opportunity. I wanna throw up. I didn’t have an opportunity. I had a problem. Right? This was a problem. So I sat here for a second, and I thought to myself, and here’s a rider downer for those of you that are listening. Anytime you’ve got a problem, here’s how to fix your problem.
Jay Conner [00:07:42]:
I asked myself, Who do I know that can help me with my problem? And I immediately thought of Jeff Blankenship, who lived in Greensboro, North Carolina, at the time. He and I were good friends and still are. He was investing in real estate back then. And I called him up, and I told him what had just happened, losing my line of credit at the bank. And he said, Well, welcome to the club, Jay. I said, What club? He said the club is being shut down by the bank. They shut me down last week. And I said, well, how are you gonna fund your deals? He said, Well, have you ever heard of private money? And I said, no.
Jay Conner [00:08:20]:
He said, Have you ever heard of self-directed IRAs? I said, no. So he told me a little bit about them, and I started studying private money and private lending, and how people can use their investment capital to make high rates of return safely and securely. And in addition to that, how people can use their retirement funds that they’ve already got and transfer them over to a self-directed IRA, and then invest in real estate totally passively. So I put together, Keith, what I call my private lending program. So what’s my private lending program? My program is what I teach other people how to be a private lender. You know, it’s interesting. Carol Joy and I right now have 47 private lenders, individuals, human beings that are loaning us money, investing in our deals. And you know what, Keith? Not one of them had ever heard of private money and private lending until I put on my teacher hat and started teaching people what private money is.
Jay Conner [00:09:27]:
And, you know, here’s the interesting thing. You know, the traditional way to borrow money for real estate is you go to the bank or you go to the hard money lender or traditional lender, and you get on your hands and knees and you put your hands underneath your chin. You say, Please fund my deal. Please fund my deal. Right? Applications, credit score, verification of income, and all that. Here’s the interesting thing, Keith. In this world of private money, the way I do it and the way so many other people do it now that I’ve been able to teach how to do it, we don’t ask for a mortgage. We offer a mortgage.
Jay Conner [00:10:02]:
You see, when I was borrowing money from the banks, they made the rules. The bank set the interest rate. The bank set the frequency of payments. The bank made the rules. But guess what? In this world of private money, we make the rules. It’s my program. I’m teaching it. I’m offering it.
Jay Conner [00:10:20]:
I’ve never asked for money since I lost my line of credit, and I’ll finish my sentence with this and turn it back to you, Keith. People ask me all the time. I said, Jay, how do you have eight and a half million dollars of funding for your real estate deals that you use from project to project to project, and you never ask for money. Here’s the secret sauce and the secret answer. I separate the conversation between teaching people. That’s how I raised $2,150,000 when I was cut off. I just started sharing with people that in my network, people I go to church with, people in the Rotary Club, people in Business Networking International, that I had now opened up my real estate investing business to people that I know and trust, and here’s how you can make high rates of return safely and securely. So I teach what the interest rate is I was paying, how they’re protected, and how they can get their money back in case of emergency.
Jay Conner [00:11:16]:
But I didn’t bring up a deal in the conversation because you see, here’s another rider downer. Desperation’s got a smell to it. Okay? Desperation’s got a smell. The worst time to be raising money is when you need it for a deal. So I separate the conversations between teaching what private money is to a potential private lender, a human being just like you and me. And then when I’ve got a deal for them to fund, I pick up the phone, and I call them with what I call the good news phone call. Well, the good news phone call simply tells them four things about the deal. You see, they’ve already told me how much money they’ve got to work with, and they like the program, and they like the rates of return that we pay.
Jay Conner [00:12:00]:
I say, well, I’ll put your money to work for you just as soon as possible. If they’ve got retirement funds, I introduce them to the self-directed IRA company in Texas that I recommend for them to move their retirement funds over to fund my deals. So then I give them the good news phone call. I call them up. I say, I got great news. I can now put your money to work. I got a house in Newport with an after-repaired value of $200,000. The funding for the deal is one hundred and 50,000.
Jay Conner [00:12:29]:
They’ve already told me they got a hundred and 50, so I’m matching the deal up to them. Closing is next Tuesday, so you’ll need to have your funds wired to my real estate attorney’s trust account by next Monday. I’m gonna have my attorney email you the wiring instructions. End of conversation. Notice I did not ask them if they want to fund the deal. Of course, they want to fund the deal. They’ve been waiting for the good news phone call for me to put their money to work. And particularly, if I have introduced them to the self-directed IRA company and they’ve moved their funds over, they’re waiting for the phone call because they’re not making any money until I put their money to work.
Keith Borie [00:13:11]:
No. I love that. That’s great. And I agree with you that desperation has, has a smell for sure. Tell me a little bit about what your, you know, I know, talking just a little bit before the show, you’d mentioned that you’re primarily in residential. But tell me a little bit about, like, what a typical deal is. And are all these deals that you and your wife are doing together, or are you helping to raise the money for maybe outside investors that, are are raising for their deals?
Jay Conner [00:13:46]:
Both. Both. Okay. So all of our deals that we invest in are here locally in Eastern North Carolina. But I’ve got some I’ve I’ve got an amazing mastermind family of members. And, in that mastermind elite group, I work with them, and I help them raise, you know, money for their deals as well. So I’m doing deals here, but I’m helping other people raise money as well.
Keith Borie [00:14:16]:
Yeah. That’s great. What do you want? What are some of the things in talking with individuals that, you know, maybe they have this nest egg that they’ve been wanting to put to work? What are maybe some of the misconceptions or things that were surprises to them when it comes to being able to invest in some of your deals?
Jay Conner [00:14:36]:
Well, one thing that was so surprising was how easy we make it for the private lenders to invest with us. I don’t want them to have to do anything except just sit back, collect checks, and watch their accounts grow. So being a private lender is just a wonderful way to be passive in real estate to where a private lender doesn’t have to negotiate deals. They don’t have to market for deals; they find deals. If there’s renovations or rehab involved, they don’t have to, you know, oversee that. So, probably the biggest surprise to a private lender when they come on with us is how easy it is. I mean, you know, like, if they’re gonna be using retirement funds to invest and they’re not happy with the returns or maybe they’ve got their retirement funds invested in the stock market and they’re just sick and tired of the volatility of the stock market, You know, once we explain the program to them and how it works, what they love about it is, number one, they make a lot of money. More so than, you know, they don’t have the volatility in the stock market or the local CD.
Jay Conner [00:15:45]:
The second thing they love about it is you see we’re not borrowing unsecured funds. Legally, we can borrow unsecured funds, but we don’t borrow unsecured funds. We back every promissory note with a deed of trust or mortgage, which of the same thing that collateralizes the note. We back that note with the real estate. In addition, what they love and are surprised about is how well they are secured and protected. We name our private lenders on the insurance policy for that property as a mortgagee. You see, the private lender is not a joint venture partner. The private lender is acting in the same capacity as the local bank, and we give our private lenders the same security, the same exact protection as the local bank would have.
Jay Conner [00:16:34]:
Therefore, their name is the mortgagee on the insurance policy. If there’s ever an insurance claim on that property, the insurance company makes the check payable not only to you, the owner of the property, or your entity, but they also make the check payable to the mortgagee. I mean, the private lender’s gotta sign up on that check. We also give the private lender, make them an additional insured on the title insurance policy in case there are any title issues down the road. So, so many times, these private lenders, in fact, all 47 of our private lenders, had never heard of private money or private lending until we taught them about it. And so, really, the responsibility is on us to protect and look after our private lenders. Because after all, we’re not looking for a short-term relationship. We’re looking for a very, very long-term relationship.
Jay Conner [00:17:25]:
Some of our private lenders have been with us and still are with us ever since 02/2009.
Keith Borie [00:17:32]:
Oh, wow. Okay. That’s, ‘s pretty amazing. And, yeah. And so most of them, they’re not familiar at all with the fact that they can be a private lender. You know, Jay, one of the things I always find a little bit surprising, you know, I got my start is, in in rental property, but I did everything. It was all hands-on. Right? And, there’s a huge difference, you know, between doing that, even though that’s how most people seem to start in real estate, than to just participate like one of these investors, right? And not have to deal with the day-to-day, all of those additional things have, as you mentioned, the steady return that comes in.
Keith Borie [00:18:18]:
But, yeah, tell us, I guess, maybe a little bit, about some of the surprises that you’ve seen there, but also if you don’t mind talking a little bit more about the self-directed IRA piece as well.
Jay Conner [00:18:30]:
Well, that’s huge right there. So here’s another rider downer. If you’re looking to raise funds for your real estate deals, establish a relationship with a reputable self-directed IRA company. It’s also known as a third-party custodian. And here’s the reason you want a relationship with a self-directed IRA company. You see, over half of our 47 private lenders, over half, are using their retirement funds that they already had in place. It was either a four-zero-one k from a previous employer or a current employer, or they had retirement funds invested in the stock market. So, over half of our private lenders already had these retirement funds in place, but they weren’t happy with the return.
Jay Conner [00:19:19]:
Well, you see, if I didn’t already have a relationship with the self-directed IRA company to refer my new potential private lender to, I’d be missing out on over half of my funding. And so I’ve, you know, I’ve done business and referred more than one self-directed IRA company to my private lenders. And some have great customer service, and some do not have great customer service. But the important thing is for you to have that relationship in place so that when you’re talking with a new potential private lender, and what I call your warm market or your network, and you’re having a conversation, then you learn they have retirement funds that they’re not happy with. Well, unless you’ve got that relationship in place with a self-directed IRA company, you don’t have anywhere to recommend or refer these people to, and you’ll miss out on that funding.
Keith Borie [00:20:16]:
Yeah. That makes sense. And you mentioned a company in Texas. Do you mind mentioning on the show who that is that you typically refer to?
Jay Conner [00:20:26]:
Absolutely. Let me tell you something. These people, this company, hands down, are the best. And the reason I can say that is number one, I have no financial stake in this company. And number two, I’ve got experience with other companies whose customer service was horrible. So here’s the name of the company. I recommend you write down their website, check them out. I’ll even give you a name to call and talk to.
Jay Conner [00:20:51]:
But the company is, w w w dot quest, q u e s t, trust, with another t, quest trust dot com. They’re based out of Houston, Texas. They have other satellite locations, but they service the whole nation. You don’t know, your private lender doesn’t have to live in Texas to have an account there. And, I’ll even give you the name. Our representative that we refer all of our new private lenders to is Colin Taylor. Colin Taylor. And I mean per I mean personal.
Jay Conner [00:21:25]:
He’s an IRA specialist. He’s been with the company now for about four years. And pretty much any self-directed IRA question you’ve got, Colin Taylor can answer it for you. Now, from what I mean, it’s beau, they’re beautiful with the customer service for their account holders. But let me tell you from my side of the equation why I love them. With QuestTrust, I get my deals funded within three days. Three business days. Three business days.
Jay Conner [00:21:54]:
I mean, you know, you borrow traditional funds from the bank or any kind of institutional money. You know, you’re pretty lucky if you can get that thing funded in thirty days. And that’s even if they are loaning money out. I mean, as of right now, when you and I are visiting, Keith, it’s tight.
Keith Borie [00:22:11]:
It’s It
Jay Conner [00:22:11]:
Is. Tight out there. And the interest rates have gone crazy, but let me tell you something. I’ve got more private money chasing me today than ever before. I mean, when COVID came along in 02/2020, I started having even more private money chasing me. But just last week, I got a text from one of my current private lenders that says, Jay, I just came into another $500,000. How soon can you put that to work? Well, isn’t that a nice problem to have more money than you can put to work? But, again, when it comes to working with self-directed IRA companies and getting your deals funded like that, QuestTrust, hands down, best customer service I’ve experienced out there, and I’ve been watching it for a long time.
Keith Borie [00:22:57]:
Yeah. For sure. Yeah. I’ve heard, heard Quest and had them speak at some of the Rias here in San Antonio, so, familiar with them. Let’s talk, maybe a little bit about the length of time for which some of the investments are made. So, you know, in a typical transaction, and I know things can vary from transaction to transaction, but in a typical one, what is the typical amount of time that the money is outstanding for?
Jay Conner [00:23:27]:
Sure. And that can vary depending on how you want to use the money. Are you doing buy and hold? Are you doing a flip or whatever? But, typically, my rule of thumb, it depends on where the money’s coming from. So if the private lender is just using investment capital, liquid capital, you know, funds just lying around in a checking account or a savings account that’s earning them nothing. Then we’ll make the term or the length of the note two years. And then, if it’s a retirement fund, and particularly if you want to use it for a buy-and-hold, we’ll do the term for five years. However, even though that’s what we set the length of the note on, there are a couple of comments I’d like to make. That term is very flexible, and here’s what I mean.
Jay Conner [00:24:18]:
First of all, we give our private lenders in the promissory note what’s called a ninety-day call option. So, let’s talk about that for a moment. What’s a ninety-day call option? A ninety day call option means we give our lenders the right that if they have something come along and they need their money, their investment capital, their retirement funds back before the note being due, then we just ask for a ninety day notice, and that gives us plenty of time to replace their funds with another one of our private lenders. We don’t even need ninety days. Typically, we can do it within two weeks, but the paperwork says a ninety-day notice. So even though we set the terms for two years or five years, there’s a way they can get their money back with no penalty. You know, most of these programs, if the lender calls the note due early, then there’s a penalty, just like putting money in a CD at the bank. But in the way we do it, there is no penalty because we wanna just make it simple and very easy for our private lenders to do business with us.
Jay Conner [00:25:24]:
On our side of the equation, even though the note is two years or five years, as the borrower, we can pay the note off early, in case we cash out before the note comes due. However, we do put a caveat in the promissory note where we promise to pay at least six months of interest on that note in the unlikely event we cash out in less than six months. And that’s because we wanna give an incentive to our private lenders to do business with us. After all, they don’t want us to just get in and out, in and out, you know, that type of thing.
Keith Borie [00:26:02]:
Yeah. That makes sense. So let me make sure I heard that correctly. It sounds like even though you’re going for a term, of two years, and there’s obviously, there may be an opportunity to get out before that. But if you decide to be able to do that, you’re still gonna pay them six months’ worth of whatever the interest was gonna be.
Jay Conner [00:26:25]:
That’s right. That’s right.
Keith Borie [00:26:27]:
Now that’s great.
Jay Conner [00:26:28]:
An incentive. Now, however, of course, you know, the private lenders, they don’t want their money back. I mean, if we pay them off, they get their money back. What are they gonna do with the money? Right? Right. They wanna keep that money invested. But we also have what’s called loan modifications or substitutions of collateral. So we’ve got, like, a smaller note, like, 30,000, 40 thousand, or $50,000, maybe in second position or whatever, then we can use that for rehab money. You know? So we’ve got another property that we can move that money to.
Jay Conner [00:27:03]:
Then, in that case, we will do just a simple substitution of collateral and keep that note open so that the private owner can keep getting their interest.
Keith Borie [00:27:14]:
Okay. Okay. Now that’s neat. And I like the option, you know, even though, as you mentioned, the majority of lenders are not gonna want their money to not be at work. But the fact that you do have that ninety-day option, to call the note, I think just kinda gets you know, it seems like it would get the defenses down a little bit as far as, hey. Look. My money’s not gonna be necessarily tied up if I’m not a % sure I want it to be for two years or five years, whatever the term ends up being. So, that’s kind of a neat, neat spin on it.
Keith Borie [00:27:52]:
Hadn’t had not heard, you know, that as being an option.
Jay Conner [00:27:56]:
Sure. And, again, that just keeps it simple, keeps it easy because we want our private lenders to know we’re very, very flexible to work with.
Keith Borie [00:28:05]:
Yeah. For sure. As far as I know, you work with quite a few real estate investors. What are some of the misconceptions when it comes to private funds and how to get them, that you’ve seen just in your consulting with various real estate investors?
Jay Conner [00:28:24]:
That’s a great question, Keith, because my lands I can sure answer that question, because it’s it’s very common. I mean, the the so first of all, when a real estate entrepreneur investor has never raised private funds, we’ve you know, people ask me all the time. I say, Jay, how do you start? How do you even start raising private money? I can tell you where you start. You gotta get your head straight. I tell people all the time, you can’t own real estate until you own the real estate between your ears. So we gotta get the mindset right. We gotta get the mindset right. So what does that mean? First of all, the common myth is rejection.
Jay Conner [00:29:06]:
So, new real estate investors or seasoned real estate investors starting to raise money have this fear of rejection. Well, let me ask a question. How can you be rejected if you’re not asking for anything? You see, this is all about leading with a servant’s heart. You see, we have over the years, we have received thank you notes in the mail, telephone calls, etc., from our private lenders, particularly our elderly private lenders, to whom we have been a part of changing their retirement years. You see, I mean, one misconception is that private lenders are sophisticated financial people. And that’s true in the world of institutional money. But we’re not talking institutional money here. We’re talking relationship money here is what we’re talking about.
Jay Conner [00:30:01]:
And so, as I said, all 47 of our private lenders, none of them had ever heard of private money, private lending, self-directed IRAs until, as I said, I put on my teacher hat and I started teaching them what it is. So one myth is, who is going to give me money? Who’s gonna loan me money? And I’ve never borrowed money before, nor have I ever done a real estate deal. Who’s gonna loan me money? If that’s the case. Well, here’s the answer, another right or downer. If you don’t pay the private lender, the property does. If you don’t pay the private lender, the property does. What do I mean by that? Well, if you don’t pay them, that means they get the property. And we borrow at conservative loan-to-value ratios.
Jay Conner [00:30:51]:
We don’t borrow more than 75% of the after-repaired value. I didn’t say 75% of the purchase price. That’s at 75% of the after-repaired value. That’s why we typically bring home a check at closing when we buy a property, because we always borrow more than we need to buy it, particularly if there’s gonna be a renovation. And so the deal is, here’s a nice little double-checking balance. When you’re paying all cash and you’re paying with private money, if you can’t bring home a check at closing from your title company or real estate attorney, you shouldn’t do the deal, or you didn’t buy it at enough of a discount. But back to the myths. Fear of rejection, well, remember, you’re leading with a servant’s heart.
Jay Conner [00:31:38]:
You’re looking to show people how they can get high rates of return safely and securely in a way that they had never seen before, and you’re gonna look out for them, and you share the program with them. You know, the worst time to be raising private money is when you need it for a deal. So that’s why we separate teaching. If they’re interested, and they’re gonna be interested, they’re gonna tell you how much they got to work with. If they’ve got retirement funds, you’re gonna introduce them to your rep at QuestTrust or whoever you’re recommending that they do business with. And then, as I said, you’re gonna call them up with the good news phone call, put their money to work. So, again, the misconceptions are, well, how do I get approved? Well, guess what? You’re already approved. There’s no application to fill out.
Jay Conner [00:32:31]:
And they say, well, how do you know a private lender has approved your deal? Well, there first of all, there’s no applying. Did you know, Keith, since 02/2009, since I’ve been in this world of private money, I’ve never pitched a deal in my life. If I ask them if they wanna fund this deal, that’s the most stupid question in the world I gotta ask them. Of course, they want to fund the deal because they’ve been waiting for the phone call. So it’s all about creating win-win scenarios, teaching, being a servant, looking after your private lender, and showing them a way that they have never heard of.
Keith Borie [00:33:06]:
Now that’s, that’s great. And then tell me, maybe a little bit about, when it comes to so once they’ve, once the lender has borrowed the money from you, are they getting any kind of an update on how things are going? Or I guess, I’m sure they’re seeing, do you guys do, some type of a payout on a monthly basis, quarterly basis? What does that look like?
Jay Conner [00:33:33]:
Sure. So, as far as the frequency of payments goes, we pay our private lenders either monthly, quarterly, or semiannually. I used to do annual interest-only payments, but I got tired of those big checks. So I either wanna do monthly, quarterly, or semiannually. Now you can structure your deals if you’re doing a flip, and you’re gonna buy it, renovate it, put it in the multiple listing service, and you’re gonna be in and out in six or nine months. You can let the interest accrue, and you don’t make any monthly payments. But here’s the bottom line. I let the private lender decide how often they want the payments, and here’s why.
Jay Conner [00:34:14]:
Different private lenders have different needs and objectives. Some of our private lenders are elderly. They’re investing their investment capital, and their living or our returns that we’re paying them are helping subsidize their income. They don’t want to touch their principal amount, but they need that monthly to live off of. If I’m borrowing the money from a private lender and they’ve used their retirement funds and they’ve moved it over to Quest Trust, then I don’t pay monthly. I’ll pay quarterly. I’ll pay semiannually. I let them decide.
Jay Conner [00:34:50]:
I don’t care. They’re earning the same amount of money. It’s just a a it’s just a matter of how often we write the check because we pay or accrue interest only. We don’t pay principal and interest, particularly if we’re gonna be doing a flip, because that’s a win for the private lender. If they have all their money invested, they’re gonna make more money, and interest-only payments help our cash flow. But, again, back to your question, Keith, how often do you pay? It comes down to the private lender’s objectives.
Keith Borie [00:35:21]:
Yeah. No. That makes, makes perfect sense. And you’re right. If they’re doing a retire doing it through their retirement plan, they’re not gonna be pulling, not gonna be utilizing the funds that you’re paying them anyway, other than to continue to grow that account. So, that makes sense. And so outside of that, tell me a little bit about how you’re educating people. You mentioned, obviously, your sphere of influence, different places that you’re going, and you’re talking with people.
Keith Borie [00:35:52]:
Do you have a program that you put together, you know, on how to become a lender? And I don’t know if Quest does this, but I know a lot of the self-directed companies are more than happy to kinda help, help out with any of those conversations as well. But, yeah. If you could tell us a little bit about how you’re educating the public.
Jay Conner [00:36:14]:
Sure. So, how do you get the word out? Well, there are multiple ways. So when I first started teaching people in my network what private money is and private lending is, one of the first things I did was I put on a private lender luncheon over at the Dunes Club in Atlantic Beach. So I teach other real estate investors how to do this. You wanna have it at the nicest place that, you know, your budget will allow. You’re gonna be buying people lunch. I’ve got the whole scripting put together as to how you invite people to a private lender luncheon. It doesn’t have to be a luncheon.
Jay Conner [00:36:50]:
It could be a, it could be an, an afternoon or an early evening event. If you’ve already been doing rehabs, you could invite them out to one of your properties. But I like the luncheons. And the way it works is you’re gonna teach them what the you’re gonna you’re gonna buy their lunch. You’re gonna pay for their lunch. And you’re gonna do about a twenty-minute presentation, which I’ve got a PowerPoint presentation already put together that works beautifully. And at these luncheons, I have raised as much as $969,000 at just one luncheon. And I wasn’t pitching any deals, no deals that I’m pitching at the luncheon.
Jay Conner [00:37:28]:
I’m simply teaching. I got my teacher hat on, and I’m teaching about the program. And, of course, at the end of my presentation during that luncheon, I’ve got an interest form. They can let me know if they’re interested or have any other people they wanna refer to me. But nowhere in the presentation am I asking. Right? Even in the follow-up, when we make the follow-up phone calls, we aren’t we’re not asking for any money. What I’m doing in the follow-up phone call is thanking you for taking your time to come to my luncheon, and please give me some feedback on how I could have made the presentation better. They give me some feedback, and if they’re interested, they’re telling me.
Jay Conner [00:38:07]:
If they’re not, they’re they’re telling me why without me even asking. Remember, this is no chasing, no begging, no selling, no persuading, simply sharing. So that’s one way. And, of course, what you wanna understand is how your program works. What interest rate do you pay? And I say just duplicate my program, which I’ll mail you my book if you want it. For those of you who are listening, I got the whole program laid out in the book. You just duplicate mine. It seems to work pretty well.
Jay Conner [00:38:36]:
But, I mean, you can be down at Starbucks. I went down to Starbucks a few weeks ago. One of my current private lenders invited two other people to Starbucks for me to tell them about my program. Well, I just sat there and drank my coffee, and we just had a conversation about what a private lender is, how you can use investment capital, and how you can use retirement funds. So, just simple conversations. But, you know, Keith, your question triggers something else I wanna share, and that is, where do you find these people? Where are these people? Who who who can be a, you know, a private lender for you? Well, there are three primary categories as to where you find these private lenders. The first category is what I’ve been talking about, your network. And, of course, there’s a direct correlation between how strong your network is and your net worth.
Jay Conner [00:39:29]:
So I just started sharing with people in business networking, international, rotary club, and people I go to church with. That’s that category. The second category is what I call your expanded network. So I coach other real estate investors on how to grow their network very, very quickly. The third category of private lenders is what we call existing private lenders. So, existing private lenders are individuals who are already loaning money out from their personal investment capital or their retirement funds to other real estate investors. Well, where do you find those people? I can tell you where you can find them. You find them at self-directed IRA companies.
Jay Conner [00:40:10]:
Did you know, like Quest Trust, for example, over 70%, maybe more than that now, but over 70% of their account holders want to loan real estate investors money out of their retirement account. Well, the fourth Wednesday of every month at 7 PM Central Time, Quest has a Zoom networking event that’s free for their account holders and anybody else who wants to show up. And they put you in breakout rooms, and you get to meet with each other and network and talk about deals you’re doing, and they talk about how much money they got to lend out. But here’s the difference. Don’t miss this. When you’re networking with an existing private lender, you are not putting on your teacher hat because they already know what it is. They already know what private money is. They already know what private lending is.
Jay Conner [00:41:11]:
They already know what a self-directed IRA is because, for goodness’s sake, they’re already account holder. So now you’re not teaching. Now you’re negotiating. And I don’t like to I don’t like to negotiate. I like to teach.
Keith Borie [00:41:28]:
Right. Right. But yeah. No. That’s great. I didn’t realize that Quest does that. That’s pretty cool. And it’s neat that how many companies are utilizing the breakout rooms and stuff within Zoom and some of those.
Keith Borie [00:41:42]:
So Exactly. Alright. And then, well, Jay, I guess, is there anything about private lending that I haven’t brought up, but that you think is important for the audience to know?
Jay Conner [00:41:58]:
Yeah. Who wants to know the hardest thing about raising private money? Here’s the answer. Getting started. How do you get started? First of all, know your program. Know what it is you’re teaching. Like, when I say your program, what interest rate are you offering people on your deals? How can they get their money back or early? You know, what’s the length of the note? So you wanna be confident in your conversation. Right? And because who’s gonna invest with you if you’re not in con, if you’re not confident in and of yourself. So, know your program and have a relationship with a self-directed company that you can refer new potential private lenders to that have retirement funds.
Jay Conner [00:42:43]:
And then, really, the hardest part after that, after those two things, is just starting to flap your lip.
Keith Borie [00:42:53]:
I love it. That’s cool. Alright. And, Jay, why don’t we tell everybody where they can find out more about you? I still have a couple of other questions. I wanna ask you a little bit about he development of the shopping centers and the condominiums. So I don’t necessarily want wanna go completely down that rabbit hole, but I’m just curious for myself. But before we get there, maybe we can tell them about how they can get the book and how they can find out more about you.
Jay Conner [00:43:20]:
Sure. Well, I would love to give you, if you’re listening to this show, ‘d love to give you for free my book. It’s called where we get the money now. Where to get the money now? Subtitle: How and where to get money for your real estate deals without relying on traditional lenders. And this you can’t get in an ebook. It’s not even available as an ebook. I will mail this to you.
Jay Conner [00:43:46]:
I’ll mail it to you via three-day priority mail. Believe it or not, Keith, the United States Postal Service is still in business. Can you believe that? So I’ll ship it out. Three-day priority. I’ll autograph it for you. All I ask you to do is just cover the stage. And here’s where you can get the book at www.JayConner.com/Book. So I’m an e r, not a o r.
Jay Conner [00:44:15]:
That’s www.JayConner.com/Book, and we’ll rush it right out to you.
Keith Borie [00:44:23]:
Awesome. Fantastic. This has been an eye-opener for Foself, and I know it has been for the audience as well. And so certainly take Jay up on that offer for the book. That’s kind of the step one, right, of getting started. So and then, Jade, maybe, if you don’t mind, I know, you know, I know you’re only thinking about the private money, but I’m just curious as far as his commercial development and that kind of thing. Can you maybe tell us a little bit about what you’re doing in those arenas?
Jay Conner [00:44:51]:
Sure. Well, I’m doing nothing in those arenas today. Okay. But but I have but I have been in those arenas. And so when it comes to commercial, of course, commercial is a much longer play much longer play. When I say much longer, you know, even if you’re buying an existing apartment complex and you’re gonna do a value add and you’re gonna, you know, upgrade it, you’re gonna raise rents. You know, at a bare minimum, you’re talking a three-year to five-year term, before you’re seeing that payout on the back end. A lot of private money is raised for those types of commercial projects, but here’s the difference.
Jay Conner [00:45:35]:
In the world of single-family houses, which is what we’ve been talking about, and in the world of commercial, here’s the difference in raising money. Everything we do with single-family houses is what we call one-offs. One-offs. Everything that we do in the world of commercial is what we call syndication. So let’s talk for a second about the difference. With single-family houses, we’re not raising money for a fund. It’s a one-off. You’ve got a private lender or a couple of private lenders that are funding that single-family house.
Jay Conner [00:46:10]:
They’re getting their mortgage, their own or deed of trust, and that’s how their investment or their loan is being secured. When you’re wishing money for a commercial, you do what’s called syndication. You’ll typically have one way to do it is you’ll have an SEC attorney develop and write what’s called a private placement memorandum. And so that will be the fund that your private lenders will invest in. So they’ll invest in that fund. A lot of times, here’s equity share on the back ends of those projects. So it’s a longer-term lay. So I have developed and built a shopping center from the ground up, from breaking ground years ago.
Jay Conner [00:46:53]:
Still own that shopping center today free and clear. So one beautiful thing about a commercial development is because of that one development, I print now $40,000 per month with me doing nothing. Nothing. Right? $40,000 a month is coming in with me doing nothing. How do I do nothing? Well, the property management company is doing all the management, and I have the check come to my checkbook. So, of course, the advantage to commercial is long term rentals or long-term rentals. The advantage there is you’re building long-term health. Now, I am not very excited about the world of commercial right now, and so I’m not playing in that right now.
Jay Conner [00:47:40]:
And I’ve got some friends that, unfortunately, I think are going to experience a bloodbath in the world of apartments that they got into within the past two years. Because, coming up to two years ago, you didn’t have to have a brain cell in your head to make money in commercials. Well, you had to raise money, but as far as the values of properties going up was insane, unless your commercial property was office. If your commercial property were an office, God bless you because of COVID. All those things now are trying to be converted into condominiums and, you know, other repurposes and whatever. But, again, commercial is going to pay you very, very well if the market doesn’t turn against you, for the long term. I had a bloodbath, bloodbath in a new condominium development that we started back in 02/2007, ‘2 thousand ‘7. And, you know, we sold reservations to investors to invest in the deal.
Jay Conner [00:48:40]:
And because the market turned within seven months, it was a bloodbath for seven years following that. So, the market and what the market’s doing is even more important in the world of commercial than what the market is doing with single-family homes. In single-family houses, you can get in, you can get out. And if you’re buying it for the long term, who cares what the market does? Who cares what the market does, you know, because you’re holding it for the long term. But commercial is a bigger payday, longer-term, but comes with higher risk.
Keith Borie [00:49:20]:
Yeah. Yeah. No. That’s great. That’s great. Well, I was just curious about that piece of it. Just, couldn’t couldn’t go without asking you about those two. And, yes, I would not have wanted to be doing a condominium, community deal in 02/2007.
Keith Borie [00:49:37]:
I was a full-time real estate broker at that time. And for me, it was like somebody just shut my income off. It was a tough period of time for sure.
Jay Conner [00:49:46]:
Absolutely. I know what it’s like to feel, feel the spigot get turned off overnight. But in this world of private money, it chases you. I’ve got more private money chasing me because people don’t know what to do with their investment capital, their retirement funds, and they’re looking for a safe place to do it. And, of course, that’s why we’ve got the ethical responsibility to relieve them of their problem.
Keith Borie [00:50:12]:
There you go. There you go. I love it. Thank you, Jay. I appreciate it. I’ve got two more questions for you, which ask every guest, and one of them would be what advice you would give somebody who’s maybe just starting on their investment journey.
Jay Conner [00:50:28]:
Well, that’s an easy question with a very important answer. Do not do it the way I did. Yeah. Do not start in this business the way I did. I went for my first six years with no mentor and no coach. Reading books, out here trying to do it on my own, and I’ve bled hundreds of thousands of dollars trying to figure this out. Get yourself somebody good that knows what they’re doing,ike Keith, that you got here, the host on the show. If not K, either, somebody locally in your area.
Jay Conner [00:51:00]:
You know? Join him with somebody that will who can be your mentor and walk you through this journey. Do not start this journey alone, and don’t stay in this journey alone. My wife and I are in three different mastermind groups in addition to the mastermind group that we run. It’s so important to stay around like-minded people who can help you and you can help them, and don’t be out there on an island by yourself.
Keith Borie [00:51:32]:
That’s great advice. I love it. And then, one other question is just what book, if any, besides the one we just talked about, what book, if any, have you read recently that has been impactful? It doesn’t necessarily have to be real estate or investment related, ut, but it certainly can be.
Jay Conner [00:51:53]:
Yeah. So my favorite book of recent times is The Go Giver. Keith, you’ve probably heard of that book, The Go Giver. I had the author on my podcast last year. Fantastic interview. It’s a short read, but it’s all about having a servant’s heart and leading first with service. And, also, if you’d like to follow me on my podcast and talk more about private money, you can follow me on my podcast on any platform you’re listening to. The name of my show is Raising Private Money.
Jay Conner [00:52:30]:
Imagine that. Raising Private Money with Jay Connor. I’m on Spotify, iTunes, all the other hundred that you could think of. Come join me on the show. We do a new show and release one every Monday morning and Thursday morning. We’re in our seventh year of raising private money. And, I interview amazing guests. So who knows? You might hear Keith very, very soon on my show as well.
Keith Borie [00:52:55]:
That would be great. That would be great. Alright, Jay. Well, I think we will call it a show. I appreciate you being on.
Jay Conner [00:53:02]:
Awesome. Keith, so, thank you so much for having me. God bless you.
Keith Borie [00:53:06]:
Yeah. God bless you as well.
Narrator [00:53:08]:
Being that you’re still here, I trust and found value in this episode. I wish I had known these guests and strategies when I started my wealth creation journey. Go to WealthFlow. Capital to subscribe to our newsletter. And as a free gift, we will send you our quarterly market report and the top 10 things to look for in an investment opportunity. Take a minute to give our show a rating and review. Help us reach a million professionals by subscribing and sharing this episode with someone you know who could also find value in it.
Narrator [00:53:51]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.