***Guest Appearance
Credits to:
https://www.youtube.com/@investorfuel
“5 Steps to Raising Private Money”
https://www.youtube.com/watch?v=ksdxraEyryo
Real estate can be a daunting world to break into, but thanks to trailblazers like Jay Conner and Mike Hambright, aspiring investors can sidestep common pitfalls and accelerate their learning curve. In the enlightening episode, Jay joins Mike to dive deep into the keys behind his success and the lessons every real estate investor, seasoned or novice, needs to hear.
From Banker to Real Estate Maverick
Jay Conner didn’t start his career in real estate. As he shares with Mike, Jay’s journey began in the world of banking—a background that gave him an insider’s view of how lending institutions make decisions. When Jay ventured into real estate investing full-time back in 2003, he brought this financial acumen with him. Early on, his competitive edge was actually in understanding how to secure funding—a lesson that remains critical for investors today.
Jay recalls how, like many, he initially relied on traditional, institutional lenders. But that all changed in 2008, when banks started shutting their doors in the wake of the financial crisis. “All our lines of credit were frozen overnight,” he recounts. Instead of calling it quits, Jay pivoted—discovering the world of “private money.”
The Power of Private Money
Jay’s perspective on funding is refreshingly straightforward: if you’re not controlling your funding, you’re limiting your business. Traditional lenders are plagued by delays, red tape, and shifting lending standards. That’s where private money shines.
Private money—loans from individuals rather than banks—allowed Jay to swiftly acquire, renovate, and turn properties without cumbersome loan approvals or rejections. He points out that private lenders are seeking good returns and safe investments, making real estate the ideal match. For Jay, mastering the art of private money raised the ceiling on how much he could grow.
Scaling with Relationships and Reputation
Mike Hambright, a seasoned investor himself, steers the conversation toward how relationships have been key to Jay’s ongoing success. In real estate, says Jay, your reputation is your most valuable asset. By delivering consistently and treating lenders and partners ethically, Jay built a network eager to work with him.
He also underscores the importance of transparency. Jay openly communicates about project risks and rewards, which only enhances trust. “Private lenders want to know their money’s safe, and that you’re someone who can be trusted with that responsibility,” he explains.
Mindset: The Ultimate Game-Changer
One of the most inspiring moments in the podcast comes when Jay and Mike discuss the mindset required for sustained success. Jay admits he wasn’t always comfortable pitching opportunities to others—a common block for many entrepreneurs. “It’s not about asking for money,” Jay says. “It’s about offering an opportunity—letting someone else participate in your success.”
Mike echoes this sentiment, highlighting that shifting from a scarcity to an abundance mindset changes everything. Real estate is ultimately about solving problems for sellers, buyers, and lenders alike; making offers and networking isn’t self-serving, but rather a win-win for everyone involved.
Timeless Takeaways for Any Investor
The episode wraps up with Jay’s advice for anyone looking to break new ground or scale their investing business:
- Embrace Rejection: Not every deal or lender will say yes, and that’s okay.
- Invest in Relationships: Treat every partner like your most important client—they might just become it.
- Never Stop Learning: The market is always shifting; stay adaptable and educate yourself continually.
With these insights, Jay Conner and Mike Hambright empower listeners to take bold steps in their real estate journey. If you’re ready to take control of your own funding and growth, take a page from their playbook—and remember, the right mindset and the right relationships can take you further than you ever imagined.
10 Discussion Questions from this Episode:
- Jay emphasizes the difference between private money and hard money throughout the episode. How does his approach to private money challenge the traditional way of securing funding for real estate deals?
- Jay shares his story about losing access to bank financing in 2009. How did this “problem” ultimately create an opportunity for him, and what lessons can other investors learn from his experience?
- According to Jay, most private lenders are regular individuals who have never even heard of private lending or self-directed IRAs. What strategies does he use to educate and attract these potential lenders?
- Jay discusses the importance of separating the “opportunity conversation” from the “deal conversation” with private lenders. Why do you think this is so crucial, and how might it impact a new investor’s success in raising funds?
- What are the advantages Jay outlines for real estate investors who raise private money instead of relying on institutional lending sources?
- Jay describes both ‘direct’ and ‘indirect’ methods of starting conversations about private money. Which method do you find more appealing or practical, and why?
- He talks about a concept called “the good news phone call” when it comes time to fund a deal. How does this approach differ from traditional pitching, and why does it seem effective for Jay?
- Jay mentions the “freedom number exercise” as a way to determine exactly how much private money you really need. Why is it important for investors to calculate this, rather than continuously seeking more and more capital?
- Jay explains that you don’t need a large number of private lenders to be successful and that many people might already be in your personal network. How can investors expand their network to find more private lenders if they run out of immediate contacts?
- Reflecting on the episode, what are the biggest mindset shifts an investor needs to make to successfully raise private money, according to Jay and Mike?
Fun facts that were revealed in the episode:
- Jay Conner’s Unique Start: Jay shared how he transitioned into real estate investing after a different career path, proving that you can start in this field no matter your background.
- Creative Financing Insights: In the conversation, Jay revealed some innovative strategies for securing funding on deals—often without using any of his own cash or credit.
- Mike’s Podcast Milestone: During the episode, it’s mentioned that this RPM episode is one in a long-running series, highlighting how Mike Hambright has built a valuable resource for real estate investors through consistent content.
Timestamps:
00:01 Tax-Free Earnings: Roth & Self-Directed IRA
04:21 Bank Dependency to Financial Independence
07:18 Discovering Private Money Funding
11:57 Private Money: Lead with Servant’s Heart
12:53 Funding Deals Without Pitching
16:51 Indirect Method for Conversations
22:09 Discussing Tax-Free Investment Growth
25:26 Managing Excess Private Investment Funds
29:06 Expanding Your Real Estate Network
32:57 Raising Private Money Podcast
35:16 Investor Fuel Membership Benefits
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
Elevate Your Investing: Jay Conner’s Steps to Raising Unlimited Tax-Free Capital
Jay Conner [00:00:00]:
Of course, what I’m leading up to is how people can have a Roth IRA and a self-directed IRA account. That’s all after tax money, and whatever money they earn from that money is tax-free. So, of course, they don’t know the answer to that question. By the way, Mike, did you know there’s a way people can earn unlimited money per year tax-free? Of course, they’re going to say no. You’re going to say no. I never heard of that. Then my follow-up question to that is, well, have you ever heard of self-directed IRA companies? And of course, they never heard of that either. So now we have a conversation about self-directed IRA companies and what they are, which now leads into private money.
Narrator:
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.
Mike Hambright [00:00:40]:
Welcome to the Investor Fuel Real Estate Investing show, where I interview the nation’s top real estate entrepreneurs, industry leaders, and other amazing entrepreneurs to help educate and inspire you to take your business and your life to the next level. My goal is to add tremendous value to you during every single episode of this show.
Mike Hambright [00:01:25]:
If you get value, I’d love it if you subscribe to your favorite podcast player, subscribe on YouTube, and, my very favorite, please share this with your community so we can impact even more entrepreneurs. Let’s start today’s show. Hey everybody, welcome back to the show. I’m here with the one and only Jay Conner. Today, we’re going to be talking about how to raise private money. Like right now, what’s working in this market? So, Jay, welcome to the show.
Jay Conner [00:01:51]:
Oh my lands. Mike, thank you so much for inviting me to come along and talk about private money because this is the subject I’m so passionate about. And the reason for that is private money has had more of an impact on mine and Carol Joy’s real estate investing business than any other strategy that we’ve employed. I tell you, it’s because of that. I’ve never missed out on a deal that I wanted to do for not having the funding, ever since February 200,9 when I started raising private money.
Mike Hambright [00:02:23]:
Yeah, that’s fantastic. So I know there’s a lot of great. We’re going to talk about the differences between private money and hard money. Because a lot of folks intermingle those things. And I would say the truth is, having flipped hundreds of houses, I’ve mostly used private money, friend and family money, friends of friends, and things like that. And it’s great once you kind of get those relationships locked in because they. They don’t want you to pay it back. Like, they want to keep their money busy.
Mike Hambright [00:02:48]:
Right. And so. And they don’t have as well, I don’t say they don’t have as much emotion, but the banks are the. Your relationship with the banks might not have all the control. Right. If you’re working with hard money lenders or even local banks, they have mandates sometimes that are passed down, that they can’t really control where things are going. So excited to talk about this. Jay, before we jump into the meat and potatoes here, tell us a little bit about yourself and your background.
Jay Conner [00:03:13]:
Sure. Well, my wife, Carol, Joy, and I live here in a very, very small town, a small market in eastern North Carolina. It’s called Morehead City, Atlantic Beach. We only invest in two counties, and our total target market is only 40,000 people. And so there’s a big argument to be made to be a big fish in a small pond. I’ve been full-time here investing in single-family houses primarily since 2003. We do two to three deals a month. Not a big volume.
Jay Conner [00:03:46]:
However, the average profits for the last 12 months are $86,000 per transaction per deal. I don’t share that $86,000 figure to brag in any kind of way. It’s just to make a point. And that is if you are the dominating force and you’ve got consistent marketing in a small market, then you can dominate that market, and you don’t have to deal with all that competition that’s in the, you know, bigger cities. So I was raised in the mobile home business. Manufactured housing. They used to call them trailers and wobbly boxes. But the financing for that product, by and large, went away in 2003.
Jay Conner [00:04:21]:
I knew I wanted to get into single-family houses ever since that time, you know, when I started in 2003. And you know what’s interesting, Mike, is that a big part of my story is from 2003 until January 2009, the only thing that I knew to do to get my deals funded was go to the local bank or mortgage company, get on my hands and knees, and put my hands underneath my chin and say, ” Please fund my deal. And, you know, the bank would make me pull up my skirt and show all my personal assets. And I had to get my credit score pulled and show my financial statement and all that. And, you know, Mike, that worked out okay for the first six years from 2003 to 2009. But in January 2009, everything changed. Mike, everything changed. In January 2009, I was sitting here at this very desk, and.
Jay Conner [00:05:17]:
And I picked up my telephone. Now, we still have handsets and cords in North Carolina. You know, a lot of people haven’t even seen that in a while. But I pulled up, I picked up the phone, and I called my banker. His name was Steve. Now, this was January 2009. And I called up Steve. Steve had funded a ton of deals for me for six years here in our local market.
Jay Conner [00:05:38]:
And I told him about these two houses that we had under contract to buy. And, Mike, I learned like that over the telephone that my line of credit had been shut down with no notice. I said, Steve, what in the world are you telling me that my line of credit is closed? We’ve got a great relationship. We’ve been doing business for six years. I got a great credit score, and I never missed payments. Why is my credit line shut down? He said, Jay, don’t you know there’s a global financial crisis going on right now? I said no, but you just gave me a financial crisis. I don’t have a way to fund my deal since you’ve cut me off. He says, Well, we’re not loaning money out to real estate investors anymore.
Jay Conner [00:06:18]:
So I put my phone on the handset and, Mike, I sat here and I sat here for a moment, and I asked myself a very important question, and I want to share this question with you and your audience. This question that I asked myself will help fix any problem anybody’s got going on in their life. I don’t care if it’s financial, health, career, or relationships; it doesn’t matter. Help fix their problem. By the way, these people running around saying, every problem is an opportunity. I want to be like the Kool-Aid guy and run into the brick wall. That’s the most stupid thing. I didn’t have an opportunity.
Jay Conner [00:06:49]:
I had a problem. Let’s face the facts right now. That problem became an opportunity, but at the moment, it’s a problem. So here’s the question I asked myself. I said, Jay, who do you know that can help fix your problem? I’m not having any more funding for your deals. And I immediately, you know, the powers in question. I immediately thought of my good friend Jeff Blankenship, who lived in Greensboro, North Carolina. At the time, he was investing in single-family houses.
Jay Conner [00:07:18]:
I picked up the phone, I called Jeff, and I told him what happened. He said, Jayy, welcome to the club. I said, What club is that? He said, the club of having the bank shut down your line of credit. I said, Well, Jeff, how are you going to fund your deals? He said, Well, have you ever heard of private money? I said, No. ” He said, Have you ever heard of self-directed IRAs and how people can take their current retirement funds and transfer them over to a self-directed IRA company and invest that money and loan it out to us, and we pay them interest, and they earn either tax-free or tax-deferred income. I said, Jeff, what in the world are you talking about? I don’t know what you’re talking about. I said, What is private money? He said, Well, there’s this gentleman down in Jacksonville, Florida, by the name of Ron LeGrand that says he can teach us how to get private money. I said, Well, what is it? He said, I don’t know.
Jay Conner [00:08:11]:
But Ron says we can get a lot of it. So that’s why I went to my first real estate investing seminar after being in this business for six years to learn about private money. So I went to Ron LeGrand’s seminar, learned about private money. I came back home, Mike, and you know what I did? I put on my teacher hat, and I just went about teaching people. My teacher hat says private money teacher. And I just went about teaching people, first of all, that I go to church with or in my cell phone, my own connections. I started teaching people what private money is. And my program that I put together, I decided what interest rate I was going to pay, how they could get their money back in case of an emergency, maximum loan to value, and all that.
Jay Conner [00:08:55]:
And I just started teaching people in my own network what private money is and how they can get high rates of return safely and securely. As a result, I was able to raise a couple of million dollars in less than 90 days by just teaching the opportunity. So instead of going to the local bank and asking for a mortgage, in this world of private money, we’re offering a mortgage or offering an opportunity.
Mike Hambright [00:09:20]:
That’s great. Yeah. And there are a lot of people, and I know, I think I know what you’re going to say here, but there are a lot of people that you probably work with that are not. They don’t have business cards, and they don’t think of themselves as a lender. They didn’t. They’re not a lending company. They’re just maybe wealthy individuals. Or maybe not all that wealthy, but they’ve got some money to put to work, and they’re afraid of the stock market, or they want something a little more tangible, or they want to put it with somebody that they know and trust, or whatever.
Mike Hambright [00:09:47]:
Right. So maybe tell us a little more about what it was like to have private money? How does that compare to others? How do you compare it to, you know, hard money or local banks or whatever? Like, what’s the definition of private money in your world?
Jay Conner [00:09:59]:
Yeah, well, what you just said is a very, very important point. And that is, these are just private lenders who are just regular people. These are individuals, human beings, who are looking or would love to have a way to get a higher rate of return safely and securely. Maybe they got their money in the local bank and a certificate of deposit. And you know, when I say I put on my teacher hat and started sharing this with just people in my own network. I’ve got 47 private lenders right now, Mike, that are funding our deals, loaning money out on our real estate deals, 47 individuals. Here’s what’s interesting. And by the way, if you’re listening to this show, you don’t need 47 private lenders, you need.
Jay Conner [00:10:37]:
Just need one or two to get started. But what’s interesting is, Mike, not one of these 47 people ever heard of private money, private lending, self-directed IRAs. None of them heard about it. Yeah, until I told them about it. Right. And so what makes private money and hard money so different? And when I say hard money, I’m talking typically institutional money, hard money lenders, hard money brokers. Is that when you’re borrowing institutional money, whether it’s a bank, mortgage company, hard money, whatever, they make the rules. They make the rules.
Jay Conner [00:11:16]:
I mean, that’s the traditional way of thinking as to how to borrow money. The traditional way of thinking of how to borrow money is whoever’s got the money makes the rules. That’s the traditional way. But now let’s switch that 180 degrees. In my world of private money, guess what? We make the rules. The borrower makes the rules. We set the interest rate, we set the length of the note, we set the frequency of payments, the whole nine yards, to where. And the reason this works is because if I’m borrowing money from an existing private lender that’s already been doing this, then they already know this world.
Jay Conner [00:11:57]:
That’s a negotiation conversation. But in my world, as to how I do private money and my community members, the way we do private Money is we lead first with a servant’s heart by teaching the opportunity, and then we separate conversations between the opportunity, and then have an actual deal to fund. Yeah, so you know and I know you can relate to this, Mike. I mean, you’ve raised millions in private money. If you’re talking to a new potential private lender in your own network and you talk about a deal in the initial conversation, you already sound desperate without even trying to sound desperate. And so here’s a rider downer. Desperation has got a smell to it, right? Desperation’s got a smell to it. The worst time to be raising private money is when you need it for a deal.
Jay Conner [00:12:53]:
So, Mike, let me take a moment and share, and then I’ll get over to more of those differentiations between private money and hard money. Let me take a moment to share how I get my deals funded without ever asking for money and never pitching a deal. So, as I said, we want to separate the conversations between a new potential private lender. People that you already have an association with, you go to Rotary Club with them, you go to church, you play golf, whatever, you teach the opportunity first, to the program with no deal attached to it. And then when you have a deal to fund and they’ve told you how much money they have to work with, I call them up with what I call the good news phone call. Well, what in the world is the good news phone call? Well, Mike, let’s do a little quick role play right here. Let’s pretend that, Mike, that you and I have known each other for a while, which of course we have. But, you know, let’s say we’ve known each other for a while, and you didn’t know anything about private money.
Jay Conner [00:13:49]:
Maybe we go to church together or whatever, and I’ve told you about private money, nd it comes to find, I come to find out that you’ve got $150,000 in a former 401k at a former employer, and you’re not happy with what that’s doing in the stock market. I’ve introduced you to the self-directed IRA company that I recommend. You’ve moved that $150,000 over to the self-directed IRA company I recommended, and I’ve told you I’ll put your money to work for you just as soon as possible. So you moved it over, and now you’re waiting for my phone call. So a week or two goes by, and I call you up, Mike. I want to share with you right now the exact script, the exact script that I say over the phone to get my deal funded without ever asking for money without pitching a deal. So here’s the script. I call you up, you answer the phone, we have a little chat, and then I say, Mike, I have got great news for you. I can now put your money to work.
Jay Conner [00:14:54]:
I’ve got a house under contract here in Newport, North Carolina, with an after-repair value of $200,000. Now the funding required for the deal is 150,000, which matches up to what you’ve got at your self-directed IRA. Closing is going to be next Tuesday, so I’ll need you to wire your funds to my real estate attorney’s trust account by next Monday. I’m going to have my attorney email you the wiring instructions. That’s the end of the conversation. The most stupid thing I could ask is, Mike, do you want to fund the deal? Of course, you want to fund the deal. And the reason you want to fund the deal is for three reasons. Number one, you trusted my recommendation, you moved your money over to the self-directed IRA company because I recommended it.
Jay Conner [00:15:43]:
So you already did that. Number two, you know I’m not going to bring a deal for you to fund unless it matches the criteria of the program that I already taught you. I’m not going to max out 75% of the after-repaired value, etc. So you know the deal is going to match the program I already taught you. And thirdly, you’re ecstatic to fund my deal because you’re not making any money until I put your money to work. And so I’m ethically obligated to invest your money. So that’s why it’s just that natural flow of teaching. And then the good news, phone call back to your question.
Jay Conner [00:16:21]:
Sorry, I digressed.
Mike Hambright [00:16:23]:
This is great. So, when you talk about how to start that conversation with potential future lenders? Like, how do you bring that up? And I guess, and you know, you might be a little bit different than some of the students you have or people that are listening to this right now. Like, what are some common ways that people can kind of start those conversations? Planting those seeds. Whether it’s at church or through a friend of a friend, or at a wedding, or on social media, even.
Jay Conner [00:16:51]:
It’s funny you bring up the wedding. A few years ago I was at a wedding and I was at the reception at an eight-top table, eating mints and cake and drinking punch. And I got to meet this lady whose husband had just retired from being a dentist, and he had a problem having $700,000 that he didn’t know what to do with, so he became a private lender. Anyway, I love. How do you start conversations? Well, there’s the direct method and there’s the indirect method. So let me start with a short story of how you start a conversation. Using what I call the indirect method. My very first $500,000, which I raised after being cut off from the bank, I used the indirect method.
Jay Conner [00:17:36]:
I didn’t know that’s what it was called. I later named it that. But here’s what I did. I came home, and I had my private lending program put together as to what I was going to offer for the interest rate. By the way, I’ve been paying 8% ever since February 2009 with no points. Same thing. February 2009, summer 2025, same thing, 8%, no points. Anyway, so I went.
Jay Conner [00:18:02]:
So I had my program put together. So, the indirect method. It was a Wednesday night at 7:30, Carol Jo and I went to Bible study as we always do on Barber Road at the Morehead City Church of Christ. And I walked into the foyer. I was looking for a gentleman named Wayne. Now Wayne and I had known each other for a while, and I walked up to Wayne and I said, Wayne, I’d like to visit with you confidentially for a few minutes after Bible study. You gonna have a few minutes? He said, Sure. So we got together, went down to the nursery, shut the door after Bible study there in the church building.
Jay Conner [00:18:33]:
And here’s exactly what I said to Wayne using the indirect method. I said, Wayne, you know everybody in this town. And he did. He was the original Zenith Television dealer in Morehead City, North Carolina. Now, for those of you who are listening and have never heard of the Zenith Television dealer, that means that you are too young to remember life before Walmart came to town. Anyway, Wayne had sold televisions to everybody in town. He’d put them in the hospital. And actually, with the Zenith Television dealer, you bought your TV from him, he’d finance your TV, and he’d repair your TV.
Jay Conner [00:19:13]:
Anyway, Wayne knew everybody. So, back to my script. I said, Waynee, you know everybody in this town. I said, you’re all connected with the Rotary Club, you know everybody. I said, Wayne, I need your help. Right there’s the writer downer. That’s the indirect method. I said, Waynee, I need your help.
Jay Conner [00:19:34]:
I said, you see, I’ve now opened up my real estate investing business by referral only to people that I know and trust. And here’s how I need your help. When you run across somebody who’s complaining about low interest rates in the local bank and certificate of deposit, or the volatility of the stock market. Would you refer them to me? Because I’m now paying insane high rates of return in my private lending program to my investors. If you would refer them to me, that’d be great. What do you think? Wayne said? Wayne said, Well, now, brother Jay, what you got going on there? I said, Well, Wayne, are you saying that you might be interested? He said, Well, I might be interested. I said, Well, why is that? He said, Well, we’re not earning much money in the local bank, and we’re losing money in the stock market. He said, What kind of rate of return are you paying? I said, well, that sort of depends on the deal.
Jay Conner [00:20:28]:
I said, What sounds high to you? He says, well, we’re earning 3% in the local bank, and that’s what it was in a CD in 2009. It’s already back to that now. He says, we’re losing money in the stock market. He says, I don’t know, maybe 5 or 6%. I said, Wayne, I can’t pay you 5 or 6%. I said, But I can pay you 8%. He said, Put me down for $250,000. And so the next afternoon, Thursday afternoon, I went to Wayne’s home and I sat down with him and his wife.
Jay Conner [00:21:00]:
And what did I do? I had all my teacher hats right. All I’m doing is teaching the opportunity. And remember, we make the rules. So I’m teaching the interest rate that I’ll pay on his investments, 8%. And I’m teaching them how they can get their money back in case of an emergency, and what the maximum loan-to-value is. And I let them tell me the frequency of payments. I really don’t care. And so after two cups of coffee on Thursday afternoon, that 250,000 became $500,000.
Jay Conner [00:21:32]:
At the end of that conversation, remember the magic that was no deal attached to it. We’re just talking about the program. And then, of course, a week goes by, and I give Wayne and his wife the good news phone call. And here we go to putting their money to work. So the indirect method is just asking people to spread the word about the opportunity that you have. And by the way, Wayne did refer me to I don’t know how many new potential private lenders to us that still fund our deals today. That’s the indirect method. How do you start conversations with the direct method? Well, I call that the magic question.
Jay Conner [00:22:09]:
And the magic question is, quote unquote, do you have investment capital or retirement funds not giving you a high rate of return safely and securely? Now, obviously, you’re not going to start a conversation with the magic question, right? You’re just going to be in a conversation. I love bringing up the topic with, by the way, lead-ins. So here’s a lead-in to bringing up the topic. Let’s say, Mike, you and I are having coffee or we’re having breakfast or whatever, we’re at the ice cream church social, whatever. So we’re hanging out and we’re visiting and I say, Mike, by the way, did you know there’s a way people can earn unlimited money per year, tax-free? They’re not going to know the answer to that question. Of course, what I’m leading up to is how people can have a Roth IRA in a self-directed IRA account. That’s all after tax money, and whatever money they earn from that money is tax-free.
Jay Conner [00:23:10]:
So, of course, they don’t know the answer to that question. By the way, Mike, did you know there’s a way people can earn unlimited money per year, tax-free? Of course, they’re going to say no. You’re going to say no. I never heard of that. Then my follow-up question to that is, well, have you ever heard of self-directed IRA companies? And of course, they never heard of that either. So now we have a conversation about self-directed IRA companies and what they are, which now leads into private money. And then, well, do you have investment capital or retirement funds not giving you a high rate of return? So you see, I start out educating, right? That’s the whole secret. I start out conversations educating people as to what this is coming and leading from a servant’s heart and not from a vantage point of need or want.
Jay Conner [00:23:59]:
And leading with value, lead with value as to how you can serve them.
Mike Hambright [00:24:04]:
What’s interesting is that a lot of folks, if they step back and think about a lot of real estate investors, if you step back and think about it, are dealing with, I guess I’ll say like smart people, but unsophisticated money. Like they don’t. And they don’t have overhead. They don’t have a lending department; they don’t have all the stuff that you think of with a traditional lender. They don’t think of points they don’t think of. They’re comparing it to their next best alternative, which is a CD, the stock market, or something more traditional. I think also a lot of these folks, you probably would agree with this, correct me if I’m wrong, a lot of them have an interest in being a real estate investor. And you’re saying, well, here’s a way to get involved without having to do any of the hard work.
Mike Hambright [00:24:46]:
You’re just the banker, which everybody wants to be anyway, am I right?
Jay Conner [00:24:51]:
They love the passive part of it. They don’t have to find deals, they don’t have to negotiate deals, they don’t have to oversee rehab projects. All they do is wire money that they’ve got, either investment capital or retirement funds. Over half of our 47 private lenders are using their retirement funds that they already have in place. I’ve got retired teachers and every walk of life that you can think of. But yeah, they love the passive part. All they have to do is just sit back and collect checks or watch their account grow.
Mike Hambright [00:25:26]:
Yep. And Jay, I think for a lot of folks, I’m curious what your thoughts are on this. For a lot of folks that start raising private money, you go from you don’t know what to do to it’s real quick to get to, I have more than I need. Right. Because the word spreads, or, you know, in the same way you’re asking here. So what do you do to keep folks’ money busy? I know some people become hard money lenders too, and they sublend it out, and they do some different things to keep it busy, or you have to ramp up your business to keep it busy. But what are some things you can do to keep, you know, you kind of have some level of obligation now that somebody’s pledged some money towards you, and you’ve got to keep it busy. So what are some tips and tricks for that?
Jay Conner [00:26:05]:
Yeah, well, that’s a great question because for years with me, it was a juggling act. It was a juggling act. I got too much money. I’m looking for deals to put the money to work. And then, and that’s, that’s primarily been the problem. It’s been a long time since I had deals and no money, and the same thing for my community. So what I developed is what’s called the freedom number exercise. And the freedom number Exercise takes about 15 minutes to go through.
Jay Conner [00:26:36]:
And the freedom number exercise actually drills down and calculates exactly how much private money you need at your disposal. And that’s based on your business. That’s based on, you know, what’s the average after-repair value, the median price in your area. And how many deals are you doing a year, or do you realistically anticipate doing a year? That’s going to tell you exactly how much private money you need.
Mike Hambright [00:27:06]:
Sure.
Jay Conner [00:27:07]:
I have a problem today. It’s a good problem. I’ve got about $1.2 million, which I call sitting on the shelf. So these are private lenders’ money, principal investment amount that I’ve paid off. They’re waiting for me to put the money back to work. And so, you know, stop talking about it when you’ve got too much because they’re going to keep referring it to you anyway. You know, I mean, it’s been years, it’s been years since I even brought up the topic to anybody in conversation. I mean, I could provide that money for my Mastermind community members, but I want them to raise their own, you know, I don’t want to match up money with people that need money.
Jay Conner [00:27:52]:
I did that. That did not go so well years ago. Yeah, you know, people should be raising their own private money. And of course, that’s what I teach real estate investors. What to do, how to raise your own very quickly without ever having to chase, beg, you know, persuade or sell or talk anybody into anything. I mean, very quickly, you got a bunch of people chasing you instead of you chasing them.
Mike Hambright [00:28:17]:
Yep. And Jay, a lot of folks don’t know, but a lot of times this money’s right under their nose. Right. Like, where do they, the average real estate investor, go to find these people? Because it’s not some far-off land, right?
Jay Conner [00:28:29]:
No. There are three categories of where private lenders exist. Private lenders are first of all in your own warm market, your own connections. And they don’t even know what private money is. They don’t even know what private; they don’t even know what a self-directed IRA is, you know, until you teach them about it. So that’s your own warm market, your own connections. Then you know you’re going to, if you really want to scale your business, you’re going to run out of your own connections, your current connections. And of course, we all know there’s a direct correlation between your network and your net worth.
Jay Conner [00:29:06]:
Obviously, by the way, if you are a seasoned real estate investor, you need to be an investor, fuel away, and connect with all those other like-minded people that are investing in real estate. My most valuable assets are my fellow mastermind members. But anyway, the second category is what I call your expanded warm market. What in the world is that? Well, as I said, if you want to scale your business, you’re going to run out of your own Connections and your own money if you really want to scale it. So, how can you expand your warm market? Well, I teach that all the time. But I can tell you one big tip. I’ve gotten millions of dollars in private money funding by becoming active in my local BNI business Networking International. And you know, even in Morehead City, North Carolina, population 8,000 people.
Jay Conner [00:29:59]:
We started up a BNI in 2007 with 22 of us. And your local BNI chapter members refer prospects to you for whatever business you’re in.
Mike Hambright [00:30:11]:
Yeah.
Jay Conner [00:30:11]:
And so an expanded market. And then the third category of private lenders is existing private lenders. These are individuals who are already loaning money out to real estate investors. Well, where do you find them? Well, one place to find them is at Self-Directed IRA networking events. Here’s what’s interesting. Over 70% of account holders at Self-Directed IRA companies want to loan you money. They want to invest in your deals. They want to be passive real estate investors with their retirement funds.
Jay Conner [00:30:50]:
That’s a great place to network with them. However, that’s my least favorite source, and I’ll tell you why. If I’m having a conversation with an existing private lender, they already know the game. They’re already spoiled at 12%. So now this is a negotiation conversation. I would much rather be a teacher than in my warm market or my expanding war market. And they are ecstatic with 8% and no points.
Mike Hambright [00:31:21]:
Yeah, yeah. Once they have in their mind or think of themselves as a lender, then they’ve kind of institutionalized themselves, right?
Jay Conner [00:31:32]:
Yes. Yes.
Mike Hambright [00:31:33]:
Yeah. Well, Jay, we could talk about this for hours, probably. If folks want to learn more. I know you’ve got a book that you’re willing to give out to listeners of our show. For free, I believe. Tell us about where they can learn more, and where they can, you know, learn more about you.
Jay Conner [00:31:48]:
Thank you, Mike. Well, I’m so excited about my most recent book. It’s a national bestseller. It’s called where to get the money now. And the subtitle is where and how to get all the money you’d want for your real estate deals without ever relying on institutional or hard money lenders. And the book is 20 bucks at Amazon. But don’t spend 20 bucks. Let me give you this book for free.
Jay Conner [00:32:11]:
Just cover shipping, and you can pick it up at www.JayConner.com/Book. Now, I’m an ER, not an OR, which stands for extra revenue, www.JayConner.com/Book. I’ll autograph it. I’ll rush it out to you. A priority mail. I’m also going to include two free tickets to the Private Money Conference, which is my live event that I do three times a year. It’s an amazing conference. I bring private money lenders to the event for you to network with, and it’s a great event.
Jay Conner [00:32:57]:
I do it three times a year. Two free tickets are included with the bicycle, with the book www.JayConner.com/Book, in addition to that. If you’ve enjoyed this show, and I know you have, because Mike is an amazing host. If you’ve enjoyed this show and you want to learn more about private money in addition to the book, come check out my podcast. I’m in my eighth year of podcasting, 700 and some episodes. The name of the podcast is Raising Private Money with Jay Conner. And I’m always interviewing other people who have raised private money, and how they go about raising private money for their real estate deals. Mike doesn’t know it, but he’s soon to be a guest on my show as well.
Mike Hambright [00:33:35]:
Oh, there we go.
Jay Conner [00:33:36]:
Raised a lot of private money, and I can’t wait to interview Mike and turn the tables on him.
Mike Hambright [00:33:41]:
That sounds great. Sounds great. Well, Jay, good stuff. We’ll add the links down below in the show notes for anybody who wants to, but wasn’t able to write that down. But Jay, thanks so much for sharing your knowledge with us today. And the truth is, iou can never have enough money. And, you know, there are a lot of folks who in that last downturn had their lines pulled from them. I have lots of friends who have had their lines pulled from them.
Mike Hambright [00:34:02]:
And so you might think you have enough money, but you know, the rug might get pulled out from under you. And you know, at the end of the day, we gotta make as much money as we can in this market. And one of the ways to do it is to find cheaper access to capital and capital that’s a little more friendly and fast. Right? I mean, we didn’t talk about it much, but with private lenders here, you know, it doesn’t take you three or four weeks to get it closed. This is like as soon as the title is clear type, type money because those folks want to keep their money busy.
Jay Conner [00:34:30]:
That’s one of my 20 reasons I love private money is closing fast. We close our deals and we offer to close our deals in as quickly as seven days, which gets more offers accepted.
Mike Hambright [00:34:42]:
Yep. Yep. Awesome. Well, Jay, thanks again for sharing some insights with us today on raising Private money.
Jay Conner [00:34:47]:
Thank you, Mike, for having me so much. God bless you.
Mike Hambright [00:34:50]:
Always good to see you and everybody. Hope you have some good insights from today. There are lots of ways to skin this cat. Private money is one of the best sources of money because it’s cost-effective, fast, and friendly. So appreciate you guys a bunch. We’ll see you on the next show. Thanks for joining us. For today’s show, you can learn more about the amazing benefits of the Investor Fuel Mastermind community, including surrounding yourself with hundreds of other rock stars, 100% financing on your deals, and members-only discounts from vendors.
Mike Hambright [00:35:16]:
You’re likely already using that as a member of Investor Fuel, which will save you more than the cost of your membership. Visit investorfuel.com to learn more. You can also check out the show’s notes for access to free resources, how to get access to world-class lead generation, and even how to work with me directly on one. Don’t forget to subscribe so you never miss another episode. See you on the next show.
Narrator:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to jconnner.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.