***Guest Appearance
Credits to:
https://www.youtube.com/@therealestatejam6159
“Episode 207: How to Raise Private Money w/ Jay Conner”
https://www.youtube.com/watch?v=QE1NqIsAgpY
If you’ve ever wondered how seasoned real estate investors scale their businesses, survive economic downturns, or manage to snap up deals other investors miss out on, the answer is often simpler (and more within your grasp) than you might think: private money.
In this episode of the Raising Private Money podcast, Jay Conner, the Private Money Authority, recently joined JD and Melissa invited and shared his journey and blueprint for raising and leveraging private funds for real estate investing.
The Journey from Traditional Lending to Private Money
Jay’s story began just like many aspiring investors: relying on traditional banks to fund his real estate deals. For the first six years, banks defined all the rules—from interest rates to the types of projects they could undertake. However, everything changed in January 2009, when Jay’s banker abruptly shut down his line of credit in the midst of a global financial crisis. With deals under contract and profits on the line, Jay faced a challenge: how can you continue investing without the backing of traditional lenders?
The turning point came when Jay reached out to a friend who introduced him to the concept of private money—raising capital directly from individuals who are looking for secured, high-return investments, often leveraging self-directed IRAs. Within just 90 days, Jay raised over $2 million, tripling his business and freeing himself from the constraints of traditional financing forever.
The Mindset Shift: From Begging for Money to Offering Opportunity
One of Jay’s core messages is the importance of approaching private money with the right mindset. “You’re not asking for money or begging for favors. You’re providing an opportunity for people to put their money to work, with great returns and security.” In the podcast, Jay explains that desperation has a smell. Instead of asking for a favor, you educate potential private lenders about your program, show them how it benefits them, and let them make the choice. This “teacher hat” approach shifts the conversation from a sales pitch to a value proposition.
Jay outlines a simple “great news” script: when you have a deal and a lender ready, you simply inform them you can now put their money to work, outline the property and terms, and provide wiring instructions. The key is separation—teach the private lending program first, get them interested, and only later present the specific deal. This builds anticipation and trust, ensuring both parties are aligned.
Who Can Be a Private Lender?
A common misconception among new investors is that you need wealthy, well-connected friends or family. Jay disagrees: your future lenders are everywhere—your social circles, business groups, and even acquaintances of acquaintances. He encourages investors to make a list of everyone they know, and then expand through business networking organizations such as BNI (Business Networking International) or real estate meetup groups. Additionally, existing private lenders (who often frequent self-directed IRA companies’ networking events) are looking for new investment opportunities.
Securing Win-Win Deals
Trust and security are the bedrock of private money. Jay emphasizes the importance of always securing your loans with real estate (never unsecured), naming lenders on insurance and title policies, and never borrowing more than 75% of the after-repaired value (ARV). If something goes wrong, the lender’s money is protected by the property’s value, not just the borrower’s promise.
Communication and integrity are vital. If a project faces issues, keeping lenders informed and working transparently builds lasting relationships. And no matter how experienced you are, Jay advocates ongoing education and mentorship to avoid costly mistakes and boost your confidence.
Getting Started Today
Jay’s final advice is simple: Start building relationships before you need the money. Don’t wait for the perfect deal—cultivate your private money network now so you’re always ready to move quickly when opportunity knocks.
Interested in learning more? Jay offers his book, “Where to Get the Money Now,” and free tickets to his private money conference, loaded with actionable tips to supercharge your real estate journey. Whether you’re brand new or a seasoned pro, private money could be the missing piece to unlocking your next level.
Ready to take charge of your real estate investing? Begin by reimagining your network, focusing on service, and never underestimating the power of private money. Your next deal—and your future—may depend on it.
10 Discussion Questions from this Episode:
- Jay Conner described experiencing a “global financial crisis” when his bank suddenly cut off his line of credit in 2009. How did this challenge shape his approach to funding deals afterward?
- How does Jay’s “teacher hat” approach to raising private money differ from traditional fundraising or loan requests, and why does he think it’s so successful?
- Jay emphasizes never borrowing or lending unsecured funds, even with family. Why do you think this principle is so critical in real estate investing?
- Jay discussed three main categories for finding private lenders: your own network, expanded networks (like BNI), and existing private lenders. Which of these seems most accessible for new investors, and why?
- In the episode, JD and Melissa bring up the fear and mindset challenges of asking for private money, especially for new investors. What advice or mindset shifts did Jay suggest to overcome these challenges?
- Jay mentioned that the worst time to raise private money is when you need it. How does building relationships with private lenders ahead of time create advantages for investors?
- There was a discussion around the dangers of ‘Ponzi scheme’ behavior in private lending. What due diligence steps should both borrowers and lenders take to protect themselves?
- Jay’s process for securing funds includes detailed communication and legal safeguards (like deeds of trust and insurance). How can clear communication between borrower and lender help prevent misunderstandings or problems down the line?
- How does Jay’s philosophy of leading ‘with a servant’s heart’ impact his approach to real estate deals and relationships with lenders?
- What are some practical steps for growing your network of potential private lenders, according to Jay, and how might you apply these strategies in your investing journey?
Fun facts that were revealed in the episode:
- Jay Conner Didn’t Start with Private Money—He Discovered It by Accident!
Jay spent his first six years in real estate relying on traditional banks, not even knowing private money was an option. It wasn’t until 2009, after his bank suddenly cut off his line of credit, that he stumbled into the world of private money, which ended up tripling his business in just 90 days! - You Don’t Need to Know Millionaires to Raise Private Money
Jay insists that your future private lenders aren’t only rich tycoons or family members with deep pockets. Most of his 47 private lenders are regular folks he met through local networking groups, church, Facebook, or friends-of-friends—proving that opportunity is all around you if you know where to look! - Jay Never “Asks” People for Money—He Makes Them Wait for the “Great News” Call
One of Jay’s signature moves is to teach potential lenders about the process before ever bringing them a deal. Once they’re ready, he gives them an exciting “great news” call to let them know he can put their money to work, meaning people are waiting by the phone, eager for the opportunity to become his lender!
Timestamps:
00:01 Raising Private Money Without Asking For It
03:14 Small-Town Real Estate Success
07:13 Private Lending Program Insights
10:41 Real Estate Investment Opportunity
16:20 Finding Private Lenders: Tips
18:05 Self-Directed IRA Networking Events
22:45 Securing Funding for Real Estate
24:41 Leverage Mentors for Business Success
26:52 Private Lending: Avoiding Ponzi Schemes
29:56 Lesson Learned: Secure Your Funds
34:40 Free Tickets and Book Offer
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
Overcoming Financing Challenges: Real Estate Investment Solutions Using Private Money
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. They don’t want what we know out there. How can a person go from almost nothing to becoming a millionaire by owning rental property?
Narrator [00:00:37]:
He would always buy these slip houses, and I just remember thinking, this guy is crazy. Why would he buy that house?
Narrator [00:00:42]:
In the past decade, there’s been a huge surge in the peer
Narrator [00:00:45]:
to peer short-term rental market. Become an insider, so you have to know the rules before you get into the game. Every second counts, so make every second count.
Narrator [00:00:58]:
Welcome to the Real Estate Jam. Whether you’re just beginning or the best of the best, we’re glad you’re here. We will share successes, failures, and strategies for the action-taking real estate investor. And now to your hosts, JD and Melissa.
JD and Melissa [00:01:17]:
Hi, guys. Welcome to the Real Estate Jam podcast. I’m JD with my wonderful cohost, Melissa. I’m not talented anymore. Well, you are talented, but you’re also talented. You’re oh, I gotta change it up every once in a while.
JD and Melissa [00:01:30]:
Got it. I got
JD and Melissa [00:01:31]:
The AC is cranking in here, so
JD and Melissa [00:01:32]:
I
JD and Melissa [00:01:32]:
Just had to go get a blanket before we started the podcast. AD freezes me out. Yeah. Well, so one of the things that that we get asked all the time and when we first started, we were asking all the time because I think this this topic is super hard to understand and grasp, especially if you come from an environment where you’re not given all your money from your mom and dad and you don’t have a lot of these resources, or you haven’t been exposed to the resourcefulness. And that topic’s private money. We get tons of questions. We talk about it all the time. So we thought it would be a great idea to bring in Jay Connor.
JD and Melissa [00:02:13]:
He’s known as the Private Money Authority. He has a podcast that you guys can find on raising private money. Hey, Jay. Thank you so much for coming on. I can’t wait to hear all the ins and outs of private money.
Jay Conner [00:02:26]:
JD and Melissa, thank you so much for inviting me to come along and talk about the subject I’m the most passionate about, that being private money, because private money has had more of an impact on mine and Carol Joy’s real estate investing business than any other strategy that we have implemented in our business ever since 02/2003.
JD and Melissa [00:02:49]:
Yeah. Well, one, thank you again for coming on, but can you kinda give us just, like, the highlights of your career? So you started in 02/2003, went through the crash, and show what’s led you to this point? And then I really wanna deep dive private money, getting private money, not being afraid of private money, all of those things that pop up all the time.
Jay Conner [00:03:14]:
Sure. Well, my wife, Carol Joy, and I we’re here in Eastern North Carolina in a little teeny tiny town called Morehead City, North Carolina. Population: 8,000 people. We started investing in single-family houses in 02/2003, and our total target market is only 40,000 people. We do about three deals a month now. Average profits now are $82,000 per transaction, and I don’t share those numbers to brag. I share those numbers to make a point, and that is you don’t have to be in a big market to make significant income as long as you know how to find those off-market deals before other real estate investors know about them, and as long as you have the funding available. Well, the first six years that we were in business, from 02/2003 until January 2009, I relied on the local bank to fund my deals.
Jay Conner [00:04:07]:
That’s all I knew to do. I didn’t know anything about buying creatively, subject to the existing note. I didn’t know anything about private money. I didn’t know anything about self-directed IRAs. I just thought you had to go to the bank and get on your hands and knees and put your hands underneath your chin and say, Please fund my deal and raise your skirt so the banker could look at your assets and your financial statement and show everything you’ve got. And, they made the rules. They made all the rules. They set the interest rate.
Jay Conner [00:04:38]:
They set everything to the length of the note. That’s all I knew to do. Well, didn’t things change dramatically for me? In January 2009, I was sitting right here at this desk, and I picked up my phone. You all may find it hard to believe, Melissa, but we still have handsets and cords actually here in Eastern North Carolina. But I picked up my phone and I called my banker. His name was Steve, and I’d been doing business with Steve for these first six years. I had two houses under contract to buy, and I called up Steve. I told him about the deals, and I learned on the phone that my line of credit had been shut down with no notice whatsoever.
Jay Conner [00:05:22]:
I said, Steve, what do you mean my line of credit is shut down? We’ve got a great relationship. I’ve been making payments to you for six years. Steve said, Jay, don’t you know there’s a global financial crisis going on? I said, no. But now you just gave me a global financial crisis because I can’t fund these two deals that represented over a hundred thousand dollars in profit. So, I hung up the phone. I sat here for a moment, and I’m gonna share a question that I asked myself, and I promise you this question will fix any problem your audience has. Personal, financial, career, health, business, relationships, it doesn’t matter. Here’s the question I asked myself when I hung up the phone from my banker.
Jay Conner [00:06:08]:
I said, Jay, who do you know? Who do you know that can help you with your problem? And by the way, these people running around saying every problem is an opportunity. I want to throw up. I didn’t have any opportunity. I had a problem. I couldn’t find my deals. Right? So when I asked myself who could help me with my problem, I immediately thought of Jeff Blankenship, a good friend of ours, who lived in Greensboro, North Carolina, at the time. I called him up. I said, Jeff, I’veI got a problem.
Jay Conner [00:06:41]:
And I told him what happened. He said, Well, Jay, welcome to the club. I said, What club? He said, The club of having your line of credit shut down by the bank. My bank shut me down last week. I said, Well, how are you going to fund your deals, Jeff? He said, Well, have you heard about private money? I said, no. He said, Have you heard about self-directed IRAs and how people can take retirement funds and be a private lender? I said, No, I never heard of any of that stuff. So, he told me about it. I shut down the phone, I put it on the receiver, and I immediately studied it.
Jay Conner [00:07:13]:
And here’s what it is, I put my pro my private lending program together that I was going to teach people that I had a connection with as to how they could earn high rates of returns safely and securely, and be a passive investor. You know, the traditional way of borrowing money at the bank or hard money lenders is that you’re making applications. You’re applying for a loan. But, in this world, we’re not asking for money. You know, here’s what’s interesting, Melissa and JD. Since that time, I’ve never asked anybody for money. They say, Jay, how in the world have you got 8 and a half million dollars in private money that you use from project to project? And, right here is the secret sauce and the secret answer. I put on my private money teacher hat, and I teach people what private money is, how they can use investment capital, and retirement funds to get high-risk returns safely and securely.
Jay Conner [00:08:12]:
And so, I went about doing that. The first ninety days, I was cut off. And here’s the other secret to not having to ask for money, and then I’ll turn it back to you all. So, I was able to raise $2,150,000 in the first ninety days of being cut off from the banks in 02/2009. It was a blessing in disguise. We tripled our business because I had all this private money available. And, you know, all those foreclosures were coming along, and the banks weren’t lending money. So, if you had the cash or private money, you could pick and choose.
Jay Conner [00:08:47]:
Well, here’s the secret as to how you get your private lender to fund your deals. We see, desperation’s got a smell to it. Right? And, you know, if you’re talking about a deal that you need funding and you’re talking about your private lending program in the same conversation, you are sounding desperate even if you don’t mean to. So, we separate the conversation into here’s the private lending program, here’s the interest rate we pay on deals, here’s how you can get your money back in case of an emergency, and here’s how you’re protected without talking about any deals. And so, we teach them how they can be a private lender. I got 47 private lenders today. Not one of them ever heard of private money or private lending until I put on my teacher hat. None of them knew what self-directed IRAs were.
Jay Conner [00:09:38]:
Over half of them are using their retirement funds. So, here is the script. I’m gonna give it away right now. Here’s the script of exactly what to say when you call your private lender and you’ve got a deal for them to fund. You’re not gonna pitch a deal. I’ve never pitched a deal in my life. So, they’ve already told me how much money they have to invest. They love the pro the program, the opportunity.
Jay Conner [00:10:02]:
If they’ve got retirement funds, they’ve already moved them over to the self-directed IRA company that I recommended. And until I put their money to work, they’re not making any money. So they’re sitting by the phone waiting for the phone call. So, Melissa, let’s say you’re one of my new private lenders. Let’s say you’ve told me you’ve got a hundred and $50,000 that you want to invest and you’re waiting for my phone call. And so, a week or two goes by after you find out about my program, and then I call up Melissa, my new private lender, with what I call the great news phone call. Here’s the great news phone call, and here’s the script. I dial up.
Jay Conner [00:10:41]:
Melissa answers the phone. I say, Hey, Melissa. I’ve got great news for you. I can now put your money to work. I’ve got a house under contract in Newport with an after repaired value of $200,000 The funding required for that property is a hundred $50,000 Closing is going to be next Wednesday, so you’ll need to have your funds wired to my real estate attorney’s trust account, my closing agent, by next Monday. I’m going to have my attorney email you the wiring instructions. That is the end of the conversation. Notice, I did not ask Melissa does she wants to fund the deal? Of course, she wants to fund the deal because she’s been waiting for the phone call that I promised I’d put her money to work.
Jay Conner [00:11:31]:
And particularly, if she’s moved that hundred and $50,000 over to the self-directed IRA company. She’s not making any money. I’m ethically bound to put her money to work. That essentially is how I now have 8 and a half million dollars of private money without ever asking anybody for money.
JD and Melissa [00:11:51]:
Yeah. One, that is phenomenal, a process. It’s it it it is very much the way that we close regular deals. We’re not asking them to go into agreement with us. We’re saying, hey. Here’s the solution. Either you want the solution or you don’t, we’re not forcing a solution on anybody. And that’s very similar to the process.
Jay Conner [00:12:18]:
That you just described. Absolutely. You know, raising private money, just like you negotiating with sellers, we ain’t begging, chasing, selling, or persuading. When I’m having conversations, I’ve always got one foot out the door, so I’m getting ready to back out and go. Because, quite frankly, there’s a lot more private money available than there are deals, to tell you the truth, at least in my experience and in this market. So, yeah, I couldn’t agree with you more. You know, we’re not, you know, whenever I feel like I’m trying to sell somebody on something instead of leading with a servant’s heart and offering them, as you say, a solution. I mean, these people don’t know what to do with their money.
Jay Conner [00:13:00]:
And by the way, these private lenders are individuals just like you and me. I mean, they’re just like, you know, regular people. People you go to church with, people in your cell phone, people on your Facebook, people on your email list, people you play golf with. Right? Just your regular old people.
JD and Melissa [00:13:18]:
Well, yeah. And that brings up a good question, I think, because one of the common complaints that we have, you know, we run our real estate monthly real estate meetup, and a lot of the new people come in. And one of the first things they say when they’re introducing themselves is they’re they’re looking for money, and they don’t know anybody. I don’t know anybody rich. I don’t have a rich grandma. I don’t know. At least four. In my family.
JD and Melissa [00:13:45]:
And, and I, you know, I don’t have it as good as you. I don’t have the network that you have. What do you tell these people?
Jay Conner [00:13:54]:
I hear it all the time. First of all, I don’t believe them because they actually haven’t sat down and gone through the process of step number one, which is making your list of connections you have. There are three categories of private lenders as to where these people are? Where are they? So, the first category I just alluded to is people in your network. People, you’ve got some kind of association with. The second category of private lenders is what I call your expanded network. So, I teach brand new real estate investors, seasoned real estate investors, and my land. I had Stu and Harriet Baldwin from Elvira, New York, come to me a couple of years ago. They already had a hundred houses in their portfolio and wanted to raise private money.
Jay Conner [00:14:46]:
They’d already raised a million dollars in private money, but they wanted to raise more. So, I helped them get about $3,000,000 more in private money. So, I helped seasoned real estate investors and brand-new real estate investors. Here’s the point: the second category of private lenders is your expanded network. What do I mean by that? Your expanded network simply means, and by the way, I know you all agree, there’s a direct correlation between your network, the value and quality of your network, and your net worth, of course. Old cliche. So, how do you expand your network? I teach it all the time. Let me tell you one of the quickest ways to explode your network overnight.
Jay Conner [00:15:32]:
Here it is, BNI, Business Networking International. Melissa, with you being with eXp, you’ve got to know BNI Business Network. I’ve attracted millions of dollars from just a local BNI, Business Networking International, as a group here in Morehead City, North Carolina. So, what is BNI? It’s very different from Rotary Club, civic groups, etc. BNI was founded decades ago by Ivan Meisner. There’s a chapter in every little town in the United States, pretty much. Just go to Business Networking International. You can find your local chapter, and the purpose of being in that group is to promote each other’s business and give each other leads for business.
Jay Conner [00:16:20]:
So, I joined BNI years and years ago as a real estate investor who shows other people how to get high rates of return safely and securely. So, I had 20 other people sending me leads of people who wanted to be passive investors and make high rates of return. That’s one way of many that I can share. The third category of where you find private lenders is existing private lenders. These are individuals, just like us, who are loaning money out from their investment capital and or their retirement funds to other real estate investors. So, how do you find them people? Well, I’ll tell you a freeway and then I’ll tell you a quick way. I’ll tell you two free ways. As a matter of fact, I started out looking for existing private lenders here in my own local market.
Jay Conner [00:17:15]:
I hired my real estate attorney’s paralegal to search public records for individuals at the courthouse on public record who were loaning money out, collateralized by mortgages or deeds of trust. We’re looking for LLCs and company names, but you know, Joe Smith has got a mortgage or a deed of trust at the courthouse. Well, in ninety days, we only found two people. I said, there’s got to be a better and quicker way. So, we started the private lender data feed. That’s a software tool that I have that the members of my community have access to. We get every new private lender loan that’s closed in the nation every month, with their contact information, with the interest rate they’re getting. Let me give you another free resource.
Jay Conner [00:18:05]:
Did you know that over 70% of account holders at self directed IRAs, third party custodians that are approved by the IRS, over 70% of those account holders want to loan real estate investors money. They want to loan them money from their retirement account. They want to be a passive investor. Well, guess what? I know of a particular self-directed IRA company, and there are others that do it, that host, once a month, a free networking event virtually on Zoom where they bring their account holders together with other people, such as us, looking to borrow money. And, they put you in breakout rooms, and you get a network with each other. So, get connected to a self-directed IRA company that’s in your local area, so that you can go to their networking events, because those people there want to loan you money. Here’s the difference, with them people you’re not putting on your teacher hat with them people. That’s a negotiation process because they already know what private money is.
Jay Conner [00:19:16]:
They already know what interest rate they are accustomed to getting. So, that’s a negotiation conversation instead of a teaching opportunity. When you teach people in your warm market, you make the rules. You set the interest rate. You set the maximum loan-to-value, etc. But, when you’re borrowing from hard money lenders, existing private lenders, then it’s a go, it’s about it’s about go back and go-back-and-forth negotiation process. But those are the three categories, generally speaking, where you find private lenders.
JD and Melissa [00:19:47]:
Mhmm. Yeah. That yeah. I mean, that’s great. Yeah. I think reaching out and taking the time to evaluate your network and seeing not just who you know, but who the people in your network know, too. Just because the opportunity isn’t good for your friend, your friend’s parents might be the ones who have money that they need to put to work. So don’t exclude your network, and so many people write it off.
JD and Melissa [00:20:20]:
A lot of times too, I think that people are afraid because if you hadn’t been doing real estate very long and you have all of these people in your network who know you as the short order cook at the local fast food restaurant, are they going to be willing to, give you a hundred thousand dollars? And that whole mindset is different. It needs to change. And the way that you approach it is so, obviously, you need to have integrity, and they need to trust you, and trust that you’re gonna do what you say you’re going to do. But do you have any tips for the investors to make that mindset switch or that mindset flip from I’m begging for money to providing an opportunity? How do you get people to see that? Or is it something that just happens over time?
Jay Conner [00:21:15]:
Well, it’s a great question. So, I’m glad you asked for this reason. People ask me all the time, Jay, how do I get started? Like, what’s the first thing I do? How do I start raising or attracting private money? And the answer is in the question that you just asked me. How you get started is you realize that it’s going to be very hard to own real estate until you own the real estate in between your ears. Right? So, we’ve got to get our mindset right. Here’s the deal: it’s a win-win scenario between you and private lenders, so everybody’s winning. But more importantly, you must have a mindset that you are leading with a servant’s heart, and you’re offering them a solution to their problem, and you’re not thinking about any deals. You know the worst time to raise private money.
JD and Melissa [00:22:07]:
Is when you need it.
Jay Conner [00:22:08]:
Is when you need it. Right? That’s the worst time to be trying to attract private money. By the way, Melissa and Jada, you know what drives me stupid crazy? I mean, stupid crazy. And I know I’m getting ready to say something. I know you all have heard it. For God’s sakes, I hope you don’t preach it. But I have heard this hundreds of times, and I wanna throw up every time I hear it. Gurus will get on the platform in front of an audience.
Jay Conner [00:22:35]:
You know what they say? Oh, just get the deal under contract. The money will show up. Have you ever heard that?
JD and Melissa [00:22:44]:
Oh, sure. Lots of times.
Jay Conner [00:22:45]:
You reckon? Yeah, a lot. And I want to say, where is the money gonna show up? Is he just gonna like rain out of clouds or something, you know? No. The money ain’t gonna show up unless you’ve already got a relationship with private lenders or you’ve got a relationship with a hard money lender, or you gotta have, you know, you gotta have your relationships in place. I mean, I just don’t want to be out there making offers on properties, and I don’t have a clue where the money’s gonna come from. Right? So, I practice and preach, and get the money lined up first. But, back to your new real estate investor. Yeah, I hear this question all the time. Who’s gonna loan me money, and I’ve never done a deal? Who’s going to loan me money, and I’ve never borrowed private money? That’s a great question.
Jay Conner [00:23:36]:
Well, here’s one of the answers, and here’s a rider downer. If you don’t pay the private lender, the property does. For goodness’ sake, you’re not borrowing unsecured funds. You can legally, but for goodness’ sake, don’t. We want to secure that loan, collateralize it with a mortgage or a deed of trust. Right? And so, we’re going to secure the note. We’re going to look after our private lenders. How are they protected? Well, it’s collateralized.
Jay Conner [00:24:05]:
We’re not going to borrow more than 75% of the after-repaired value. I didn’t say 75% of the purchase price, big difference. 75% of the after-repaired value. We’re going to name them on the insurance policy as a mortgagee, which gives them another labor protection. We’re going to name them on the title policies, an additional insured. And so, we’re gonna protect our private lenders. In addition to that, if you do not have the confidence. I mean, for one thing, you’d better know what you’re doing when it comes to making an offer on a property, and what the most you should offer on a property is.
Jay Conner [00:24:41]:
And, if you don’t have the confidence to do this business and talk with other potential private lenders, then here’s what you’ve got to do. You must, if you’re smart, leverage a relationship with a mentor such as JD and Melissa or somebody who knows what they’re doing. Right? I mean, don’t start this business out the way I did, for goodness’ sake. I started here on an island by myself, read a few books, relied on my experience in the mobile home and manufactured housing business, And, when I earned this thing, I have got no idea how many hundreds of thousands of dollars I lost and could have saved if I had gotten the coaching and the mentoring. So, how can you do this and you’ve never done it before? Leverage the relationship that you have with somebody. Right? Like, you know, if you’re leveraging your relationship with JD and Melissa or whoever, you can say, well, my business partner, like myself, my business partner has done over 500 renovations and rehabs of single-family houses in North Carolina. Let me introduce you to my business partner. You bring the people to the phone, let your business partner get the private lender signed up.
Jay Conner [00:26:03]:
You don’t have to go that route. You know, I didn’t start that way. Right? But that’s another way that you can boost your confidence by, you know, joint mentoring with a mentor or a coach.
JD and Melissa [00:26:15]:
Yeah. Good advice. Yeah. Yeah. Definitely. Well, you know, so we’ve been doing this for a little while, and we’re part of a bunch of different masterminds. But we’ve seen multiple people who seem to be upstanding individuals, people that we had been acquaintances with over the years, who come on, teach private money, and teach other people how to invest in real estate. Now we’re looking back, and there are two specifically that I’m thinking of.
JD and Melissa [00:26:52]:
I won’t name names, but we see that what ended up happening is they started first, and everything was legitimate. They’re taking private money, securing it to the real estate, then maybe they’re they stop securing it. They’re putting it into some sort of fund or or they’re they’re just receiving this money, and then they get into this trap where it’s not secured to a specific project, and they’re using the money they raise to pay for the payouts of these other guys. And we’ve had two people that are in the network that we were a part of over the last six years or seven years that are are have gotten in a lot of trouble for essentially stealing people’s money. And that hurts us because now those people who got their money stolen aren’t gonna be private money lenders to legitimate people. And in those, people that they taught, us included, you know, look and say like, hey. These guys knew what they were doing was wrong and chose to do it anyway. When you’re a private money lender or somebody who is borrowing money, how do you know which people to stay away from? How do you how how can I know that when somebody is is or when I’m lending my money to somebody else, that I’m not one that they’re not one of these sharks that are just running a giant Ponzi scheme looking to steal our money?
Jay Conner [00:28:17]:
Yeah. Well, in your explanation or your sharing of the story lies the answer. And that is, you said, the borrower, the real estate entrepreneur that was raising capital and borrowing the money, moved from security, deeds of trust, and mortgage, to unsecured. There’s your answer. Don’t ever loan money unsecured. I don’t care if it’s your mama. Yeah. Right? My mother is one of our private lenders, and my mother gets everything that our other 46 private lenders get.
Jay Conner [00:28:57]:
Promissory note, deed of trust, name on the insurance, title policy, maximum loan-to-value, all that. So, I don’t care what kind of relationship you have with a private lender or with you as a private lender. I don’t care how much you trust anybody else. The only thing that matters in real estate, at the end of the day, is what’s in writing and what’s recorded on public record. That’s the only thing that matters when it comes to you getting paid. So don’t loan money unsecured.
JD and Melissa [00:29:35]:
Yeah. I think that’s great advice. I learned that the hard way. No. But I got lucky because I lent out 40 or $60,000. It was the first time I’d ever done it. And the payments came in at first right away, and then they slowed up. And then I had to threaten legal recourse.
JD and Melissa [00:29:56]:
Luckily, I did end up getting my money back. It was a nightmare, though, and I learned the hard way that, and not as hard as other people, that you must secure your funds to to to something worth it. That’s why banks make you, you know, put a down payment. There is some collateral there that ties it to you, but I wish that I had had discussions like that before, lending my money out. But it ended up working out in the end, but it is scary. And, being a lender to a situation that went bad, one of the things that I learned when especially when we’re borrowing now, is that communication between you as the person borrowing money and your lender is key. Now they don’t need to know every single detail of what’s going on. But if you know there’s a problem and you’ve borrowed somebody’s money, they put trust and faith into you, the best thing you can do is let them know early and communicate often.
JD and Melissa [00:31:06]:
Don’t just not make a payment and tell them, Oh, sorry. I’ll get you next time. And don’t do that explanation because that causes a lot of anxiety in the person who just lent you a hundred thousand dollars. But what we’ve also found is that most people are reasonable and they understand that some things come up. And if there is a problem and you’re communicating, then it’s something you can work through. The other thing is a % of the time, you need to pay back your investors. If you’re taking the loan as just that, well, they can foreclose on it, then that’s probably not the way to do business.
Jay Conner [00:31:45]:
Yeah. Well, and you know, in this business, there are a lot of ways to mitigate the risk. There’s risk in every in anything you do. I mean, you go out there and get in your car. You just took a risk. So, how do you mitigate? How do you mitigate that risk? And so, first of all, the way I mitigate the risk is, of course, I renovate a lot of houses, my team does. And we’ve renovated over 500 here in our local area of only 40,000 people, every year. And the protection in mitigating the risk is in the offer, Mhmm.
Jay Conner [00:32:24]:
And not in estimating repairs perfectly. I mean, for goodness’ sake, I never had a rehab budget come in on budget. Or, on average. Never. Never. I mean, they’d always call me Murphy, who shows up with the unexpected. Sometimes Murphy’s cousins and aunts and uncles and brothers and sisters show up as well, even if you got a great home inspection. So, getting repairs exactly right is not the secret sauce.
Jay Conner [00:32:50]:
The offer and what you’re buying the property for, at a deeply discounted amount, is what’s mitigating that risk. Right? And, you know, as a result of that, I mean, have I ever had a projected budget come in on budget? No. But at the same time, because of how we buy, all these private lender loans that we’ve done, hundreds and hundreds of them, every one of the private lenders got every penny that was coming to them that was in that promissory note. And the reason that happened was because of how we made the offer. Yeah.
JD and Melissa [00:33:32]:
Yeah. That’s great. Well, Jay, if our listeners got any value out of this conversation, if they wanna find out more about you, more about your podcast, more about what you guys are doing over there, how to raise money, where can we send them?
Jay Conner [00:33:49]:
Absolutely. So I finally finished writing my book. I’m so excited about it. It’s called Where to 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 Hard Money Lenders or any kind of traditional lenders. This is not an ebook; this is an ebook. I will three day priority mail it to you, ship it in the mail.
Jay Conner [00:34:14]:
It’s $20 on Amazon, but don’t spend $20 on Amazon. I’m gonna give you the URL right now. You can get it for free. Just cover shipping. And here is the URL. Www.jayconner, j a y c 0 n n e r, Com forward / book. I’m an e r, not an o r. So that’s jayc0nner.com/book.
Jay Conner [00:34:40]:
Now, in addition to the book that I’m gonna email you, which holds your hand step by step as to how you can easily raise private money. I’m also including two free tickets valued at $3,000 for my upcoming private money conference. A private money conference that we hold right here in Eastern North Carolina. These tickets are valued at $3,000. I’m including two free tickets with a book. You’ll get that in the mail. And then, finally, you can come follow me on my podcast. We’re on all the platforms, Spotify, iTunes, you name it, Buzzsprout, we’re there.
Jay Conner [00:35:18]:
Follow me as I raise private money with Jay Conner. Just type in raising private money, and we’ll pop up. Always have amazing guests. I interviewed them on how they’ve raised private money. And guess what? Melissa and JD are upcoming guests as well on raising private money, and I’ll be picking their brains as to how they’ve raised private money, because we can all learn from each other.
JD and Melissa [00:35:43]:
Absolutely. Awesome. Well, Jay, we appreciate you coming on the show. There’s a ton of value there. You guys make sure you get over there and check out Raising Private Money, their the podcast over there, and we’ll we’ll see you on that side. Thanks, Jay.
Jay Conner [00:35:59]:
Thank you, Melissa. Thank you, JD. God bless you.
JD and Melissa [00:36:02]:
Thank you. Thank you for listening to the Real Estate Jam. We hope you enjoyed today’s episode. For mail.com. See you next episode.
Narrator [00:36:34]:
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.