***Guest Appearance
Credits to:
https://www.youtube.com/@calebdavid807
“Why You’ll Always Be Broke Using Bank Financing”
https://www.youtube.com/watch?v=PWdvSFwBrC8
If you’ve ever found yourself excited about a promising real estate deal, only to hit a brick wall when it comes to funding, you’re not alone. On this episode of the Raising Private Money Podcast, Caleb David sits down with renowned real estate investor and Private Money Authority Jay Conner to demystify the world of private lending and share actionable strategies for investors who want to break free from traditional financing limits.
The Breaking Point: Why Private Money?
For many, the journey into private money doesn’t begin with curiosity—it starts with necessity. Jay Conner recounts his own tipping point, when his trusted bank suddenly closed his line of credit without warning. Six years into his investing career and faced with two lucrative deals under contract, he found himself out of options. This experience—a byproduct of the 2009 global financial crisis—forced him to ask, “Who do I know who can fix this problem?” That pivotal question eventually led him to private money, changing the course of his career forever.
What’s the Difference? Hard Money vs. Private Money
A lot of confusion swirls around the terms “hard money” and “private money.” As Jay Conner carefully explains, hard money is institutional and often brokered through intermediaries who pool funds from multiple investors. In contrast, private money is a direct, one-on-one relationship with an individual lender—often someone within your own network- funding deals either with their investment capital or retirement funds. The absence of middlemen also means no origination fees and more flexibility—key advantages for investors seeking speed and creative deal structures.
The Power of Mindset and Education
Securing private capital isn’t about pitching desperate, high-pressure deals. In fact, Jay Conner stresses that desperation has a “smell”—and people run from it. Instead, the secret is to educate, not sell. By putting on the “teacher hat” and holding informational sessions (over coffee, luncheons, or networking events), Jay positions himself as a resource. His primary goal? To leave every potential lender more knowledgeable than when the conversation started. When people understand the opportunity—earning 8% interest, secured by real estate, with more flexibility than traditional products—they often ask to get involved.
Structuring Private Money for Different Deals
Private money isn’t limited to single-family flips. As Jay Conner describes, it serves any asset class—commercial, self-storage, land, and more. The structuring changes: for single-family homes, it’s usually a simple deed of trust or mortgage; for larger commercial projects, you may need to set up a fund with a formal Private Placement Memorandum, subject to SEC regulation.
Where Do You Find Private Lenders?
Jay Conner breaks down sourcing private lenders into three categories:
- Existing Connections: Friends, family, colleagues—anyone already in your professional or personal circle. These are often the easiest to approach.
- Expanded Network: Organizations like Business Networking International (BNI) offer a powerful way to quickly gain warm introductions to new connections and their networks.
- Existing Private Lenders: These are individuals already loaning money on deals. You’ll find them through self-directed IRA custodians or public records, but be prepared—they usually expect higher rates, knowing the business well.
How Do You Start the Conversation?
Bringing up private lending can feel awkward if done poorly. Jay suggests two main methods:
- Direct Approach: For those you know and trust, simply ask if they have idle investment capital or retirement funds earning low returns.
- Indirect Approach: Use “I need your help”—ask if they know anyone unhappy with the bank or stock market, then explain your opportunity. Frequently, the person you ask realizes they themselves are a candidate, as in Jay’s story about his friend Wayne.
The Good News Phone Call
Once a potential lender is educated and interested, Jay never pitches a deal in a desperate moment. Instead, when a matching opportunity arises, he simply calls to share the good news: “I can now put your money to work for you on a specific property, closing next week.” The groundwork has already been laid, making the transition seamless and professional.
Conclusion: Scaling and Freedom
Private money unlocks the door to scale. Traditional financing is finite, but private capital has no hard limits—enabling investors to grow portfolios at their desired pace. Approached with education, service, and the right structures, it’s a win-win for both investor and lender.
Ready to expand your funding sources and scale your real estate business? Start by educating yourself and your network—the opportunities are closer than you think. And if you want to dig even deeper, check out Jay Conner’s podcast and resources for scripts and methods that can jumpstart your journey into private money.
10 Discussion Questions from this Episode
- What are the main differences between private money and hard money, as explained by Jay Conner?
- How did the global financial crisis impact Jay Conner’s approach to real estate investing and lead him toward using private money?
- Why does Jay Conner emphasize the importance of a “teacher hat” mindset when approaching potential private lenders?
- How does Jay Conner structure deals with private lenders to ensure their security, especially in comparison to traditional banks?
- What are the three main categories where Jay Conner suggests finding private lenders, and which strategies did he find most effective?
- Why does Jay Conner advocate for never pitching a deal out of desperation and for separating the opportunity from the deal itself?
- What are the “direct” and “indirect” methods of approaching potential private lenders, and how do they differ in practice according to Jay Conner?
- According to Jay Conner, in what scenarios is private money the optimal funding source for real estate deals?
- How does private money allow an investor to scale their business in ways that traditional bank loans do not, as discussed by Jay Conner?
- What is the significance of self-directed IRA companies in the world of private lending, and how can investors leverage them to fund their deals?
Fun facts that were revealed in the episode:
- No More Missed Deals
Jay Conner hasn’t missed out on a real estate deal due to a lack of funding since 2009, after transitioning from traditional bank financing to using private money. - Private Money—Not Hard Money
Many people confuse “hard money” with “private money,” but as explained by Jay Conner, hard money typically involves a broker or institutional fund, while private money is a direct transaction between a real estate investor and an individual lender, with no middleman or origination fees. - Teaching, Not Pitching
Jay Conner built a network of 47 private lenders without ever pitching a single deal—instead, he focused on educating people about private lending opportunities, often organizing luncheons to provide value and knowledge first.
Timestamps:
00:00 Passion for private real estate funding
03:31 Understanding hard money vs. private money
07:34 Discovering private money options
09:20 Raising funds with a mindset
13:44 Securing funds for real estate deals
16:21 Creative financing and private money
20:13 Joining a BNI chapter
24:22 Introducing self-directed IRAs
28:06 Asking for investment referrals
30:03 Getting investors on board
34:07 Curiosity Opener and gifts
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
From Banks to Private Capital: Jay Conner’s Journey and Tips for Real Estate Growth
Jay Conner [00:00:00]:
The only thing I want to accomplish when I’m visiting with a person or shoot, I put on private lender luncheons and have 20 people feed them lunch and teach them about private money. The only thing I’m looking to accomplish is to give them value and leave them more knowledgeable than when we started the conversation.
Narrator [00:00:18]:
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. Foreign.
Caleb David [00:00:57]:
Welcome back to the Commercial Real Estate Unfiltered podcast. And today we’re going to be talking about private money, hard lending, and things that a lot of people don’t talk about. So today I’ve got a special guest with us, Jay Conner. He’s nationally renowned as a real estate investor, author, and host of the Raising Private Money show. Frustrated by the constraints of traditional bank financing, Jay has developed his signature Where to get money now system, securing substantial private funding in record time, which propelled his success in real estate investing. He has since rehabilitated over 400 homes, often achieving average profits of around $60,000 per deal, making him a trusted authority in creative financing techniques. Beyond his investing accomplishments, Jay is also a celebrated mentor and educator, guiding investors across North America to build businesses that function like an automatic transmission machine through private lending and strategic systems.
Jay Conner [00:01:51]:
Wow.
Caleb David [00:01:52]:
That’s a lot. Jay, I’m so happy to have you here on the show.
Jay Conner [00:01:55]:
Caleb, thank you so much for inviting me to come along and talk about my favorite topic that I’m so passionate about. That is private money, private lending for real estate. And the reason I’m so excited about it and so passionate about it is that this strategy, this tool of using private money for your funding, has had more of an impact on our real estate investing business. We’ve been investing in real estate since 2003 full-time, and I started using private money in 2009, six years after I was in the business, and since 2009. Caleb, I have never missed out on a real estate deal that I wanted to do for lack of funding. Never missed out. And you may have some listeners here who are tuning in who know what it feels like to miss out on a real estate deal because they don’t have the funding or they can’t move fast with private money. I can close a deal in less than seven days from the time we negotiate on it.
Jay Conner [00:02:57]:
So it’s just, there’s only, there are over 20 benefits to using private money for your funding versus traditional financing.
Caleb David [00:03:06]:
Yeah, and I think this is a topic that not many people talk about because I feel taboo, at least in my experience. People are afraid to talk about it because they hear the horror stories about hard money lending, private funds, and things not working out. And I’m excited to dive into it. What were some of the challenges you saw with traditional lending and banking that kind of pushed you with some of those pain points that pushed you into the private lending sector?
Jay Conner [00:03:31]:
I’m glad you brought up the phrase hard money because a lot of people, real estate investors,s are confused, and they think hard money is synonymous with private money. And it’s not, right? Private money and hard money are two completely different things. Hard money is typically a source of money. The hard money lender is typically a broker of money that raises money from individuals, private lenders, and private investors. And those private lenders invest in the hard money lender fund, and then the hard money lender then, in turn, it’s institutional money, then in turn, loans it out to real estate investors, obviously charging a higher rate of interest than they pay their investors. And so a private lender, just to be clear, is a human being, an individual who lends money to us real estate investors either from their investment capital or their retirement funds. I got a lot of private lenders using their 401ks and money in the stock market, these retirement funds. And it’s a one-on-one transaction between you, the borrower, and the lender.
Jay Conner [00:04:47]:
There’s no broker in the middle. That’s why there are no origination fees, because there’s no originator, there’s no broker. So I just want to be clear for everyone to understand. What are we talking about when we’re talking about private money? We’re not talking hard money in this world. So what was it that drove me over to using private money versus banks and mortgage companies? The best way I can answer that is through a short story about what drove me to find private money. As I said, for the first six years, I relied on local banks and mortgage companies, which were all I knew, to do traditional lending for my real estate deals. And so in January of 2009, I was sitting here at my desk, and I had two houses under contract to purchase for investment properties. And I had been using the same banker, the same line of credit for those first six years, and had done a lot of deals. His name was Steve.
Jay Conner [00:05:44]:
He was. We had a great business relationship. So I called him up. Caleb, I thought I still had a line of credit at the bank when I put those two houses under contract. So I called up Steve, and I told him about my two deals. And I learned very quickly, right over the phone, that my line of credit had been closed with no notice to me.
Caleb David [00:06:07]:
Wow.
Jay Conner [00:06:08]:
And I said, Steve, what in the world are you telling me? My line of credit’s closed. We’ve done a ton of deals. I got a great credit score. I’ve never been late on my payments. I said, ” What’s going on? And Steve said, ” Jay, don’t you know there’s a global financial crisis going on right now? I said, No, Steve, but you just gave me a financial crisis. Yeah. I don’t have a way to fund these two deals. And so I hung up the phone, and I sat here at my desk.
Jay Conner [00:06:34]:
Caleb, I asked myself a very important question. And you know the power of asking the right questions. You can’t get the right answers or solutions unless you ask the right questions.
Caleb David [00:06:44]:
Agreed.
Jay Conner [00:06:44]:
I asked myself this question. And by the way, this question will help fix any problem anybody’s got going on. I don’t. Career, relationships, health, money, don’t matter. And so here’s the question I asked myself. I said, Jay. Who? There’s the key right there. Not how, but who.
Jay Conner [00:07:04]:
Who do you know who can help fix your problem? Yeah. When I asked myself that question, I immediately thought of Jeff Blankenship. Now, Jeff’s a good friend. We know him through acapella gospel singing events and have known him and his wife for years. And Jeff, at that time, in 2009, was investing in single-family houses up in Greensboro, North Carolina. So I thought to myself, maybe Jeff has got some alternative ideas on financing that I don’t know about. Yeah. I called up Jeff.
Jay Conner [00:07:34]:
I told him what had just happened. And Jeff says, ” Jay, welcome to the club. I said, I’m not sure I want to be a member of your club, but what club are you talking about? He said, ” My bank cut me off last week. I lost my line of credit. Wow. I said, Jeff, how are you going to fund your deals? He said, ” Have you ever heard of private money? I said no. He said, ” Have you ever heard of self-directed IRA companies or third-party custodians that the IRS has approved that allow people to take their current retirement funds, move them over to the self-directed IRA company with no tax effects, no penalties, and then they can loan that money out to us. We’ll pay them a high rate of return safely and securely, and the interest we pay them will be either tax-free or tax-deferred.
Jay Conner [00:08:19]:
I said, Jeff, you’re talking Greek to me. I have no idea what you are talking about. I said, ” What is private money? Yeah. He said, I’m not exactly sure. He says, but there’s this guy down in Jacksonville, Florida, by the name of Ron Legrand. I said, Who’s Ron LeGrand? He said, ” Well, not so sure about that either. He says, but Ron says, we can get a lot of private money really fast for our real estate deals. I said, o” Okay.
Jay Conner [00:08:47]:
So Jeff and I went to that seminar to learn about private money, and oh boy, Caleb, did I learn about private money. I came back home and, using what I had learned, the first thing I did was I put together my opportunity that I was going to offer. First of all, through my own network, my own connections, people I go to church with, people in the Rotary club, et cetera. And I didn’t ask for any money. Didn’t ask for any money. I didn’t pitch any deals. I’ve yet to pitch a deal. I got 47 private lenders.
Jay Conner [00:09:20]:
I’ve never pitched a deal. And I get all my deals funded in less than seven days. I’ll explain how that works as we get into it, but I was able to raise and attract, without asking for any money, $2,150,000 in new funding available without asking, begging, chasing, persuading,g or whatever. And people say, Jay, how do you get all that money, and you didn’t ask for money? And here’s the secret. It’s called the mindset. What did I do? I put on my teacher hat. My teacher hat says private money, teacher. And what I went about doing is just sharing with people what private money is, how they can earn high rates of return safely and securely, and the interest rate that I pay on these deals,d etc.
Jay Conner [00:10:07]:
And a big part of the secret sauce is that desperation has a smell to it. And the worst time to be raising private money is when you need it for a deal. Yeah, people can sense that, which makes them run away. So all that. So that’s a really important mindset. Separate the conversations by offering the opportunity. What interest rate are you going to pay, how are they protected, how can they get their money back in case of an emergency, etc? And you’re just sharing that opportunity.
Jay Conner [00:10:38]:
They tell you how much they want to invest. Is it liquid? Is it investment capital? Is it all the above? And then I tell them, I’ll put your Money to work for you as soon as I can. And then in the show here, I’ll share with you and your audience what I call the script for the good news phone call.
Caleb David [00:10:53]:
Okay.
Jay Conner [00:10:54]:
I get 100% of my deals funded without ever pitching a deal. And so that separation of not being desperate and sharing the opportunity and then having a deal for them to fund in a week or two weeks or a month or whatever, that’s critical because I got 47 private lenders. None of them had ever heard of private money. They’d never heard of private money, private lending. They’d never heard of how to use self-directed IRAs with their retirement funds. So this was all new. So, see, you’re positioning yourself as an expert.
Caleb David [00:11:27]:
Yeah.
Jay Conner [00:11:28]:
And you know my intent. The only thing I want to accomplish when I’m visiting with a person or shoot, I put on private lender luncheons and have 20 people feed them lunch and teach them about private money. The only thing I’m looking to accomplish is to give them value and leave them more knowledgeable than when we started the conversation. And if it’s a fit for them, it’s a fit for them. It’s not a fit for them. It’s not a fit for them. Because, you know, there are 8 billion people on the planet and there’s more money than there are deals. Yeah, there’s more money than there are deals.
Jay Conner [00:12:00]:
So that mindset and having a servant’s heart and just sharing with people how they can earn high rates of return, safely and securely, in a way they have never heard of. Yeah, that’s pretty cool.
Caleb David [00:12:12]:
That’s a value add, a nd I think that’s what we’re here to do. And I like that mindset of service, that it’s not about the money, it’s not about the deal. And so,o beyond setting up this opportunity and communicating that opportunity, what are some ways that investors can attract and structure private capital more effectively?
Jay Conner [00:12:31]:
Sure, there. It depends on how you’re going to use private money. So private money can serve you as the borrower in any asset class of real estate, single-family houses, commercial, as your podcast is about commercial lending, self-storage, and multifamily land. The difference is in how you structure the deal. That’s the difference. Yeah. So, my focus is on commercial projects, and I’ve built condominium developments from the ground up. Shopping center from the ground up. But my focus since 2003 has been on single-family houses.
Jay Conner [00:13:11]:
Now single. So let me give the distinction of how to use private money for single-family houses. Versus commercial deals. So on single-family houses, everything we do is what’s called a one-off. So what’s a one-off? You have a private lender, maybe two or three private lenders, that are funding a residential, a single-family house, and they’re going to get a mortgage or a deed of trust. Here in North Carolina, it’s a deed of trust. Texas, it’s a deed of trust. Most states call it a mortgage.
Jay Conner [00:13:44]:
And so we’re not borrowing money unsecured. In the world of single-family houses, they’re going to get the same protection as a mortgage company or a bank that would be loaning money on a single-family house. Yeah. They’re going to be named on the insurance policies; the mortgagee title policy is an additional insured, et cetera. And so that’s the single-family world. Now you come over to the commercial, which are bigger deals, and more money is needed. So, in a commercial, typically what’s going to happen is you, as the developer, the operator, the sponsor, whatever you want to call yourself, you’re going to have a real estate attorney draw up a PPM, which stands for a private placement memorandum. That’s going to cost, depending on the attorney, 15, $20,000 to draw up that legal document.
Jay Conner [00:14:34]:
So then you will go out, and you will raise money from multiple people,e and they’re going to invest in your fund. Yeah. You’re going to create a fund for investors to invest in. So they’re. And the SEC regulates that, right? Yeah, 5o the different types of funds that you can put together. So you’ll raise money for that fund, they invest in the fund, and then you, as the operator, use the money in that fund to then go do your commercial deal. Yeah.With single-family houses.
Jay Conner [00:15:06]:
The SEC is not regulating raising money for single-family houses. When you’re doing it the way I described, where. Because that’s called an asset-backed debt. Yeah, asset-backed debt. So the SEC is not regulating that. They’re getting the same protection as a bank. Yeah. The SEC regulates raising money for a fund and those larger commercial projects.
Jay Conner [00:15:33]:
Yeah.
Caleb David [00:15:34]:
Yeah. So when do you think? When do you? Or how do you decide? It would be my question, actually,y when private money is the right funding source.
Jay Conner [00:15:42]:
Oh, that’s a great question and an easy answer. Anytime the seller of a property requires all the cash. Yeah. Now the reason I say that is because there are different ways you can buy properties for order. Single-family houses: you can buy them subject to the existing note, which means the owner of a single-family house is willing to leave the mortgage in their name, and then you, as the investor, agree to make their payments and take title to the property, but the mortgage remains in the seller’s name. Now that’s not an assumption. An assumption loan means the lender’s going to approve it.
Narrator [00:16:21]:
Right.
Jay Conner [00:16:21]:
In a buying subject, the lender’s got nothing to do with that transaction. In fact, it’s already on line 204 on the HUD settlement statement. Your attorney doesn’t have to make anything up. And you say who would agree to sell their house subject to the existing note? A seller who wants debt relief fast. But you don’t need private money to buy a house subject to the existing note. If a seller is going to sell creatively and be the bank and give you the investor owner financing, and they take back a note, and you’re going to pay them monthly payments, you don’t need private money for that. Caleb and I know that in the real world, in the majority of all the deals, the seller requires all the cash. So when you need all cash, private money is your answer.
Caleb David [00:17:08]:
Yeah, that’s a great way to put it. And, distinct put a distinction between when you need that and how you think that private money can accelerate growth and scalability? Because I know a lot of people are new to it. Right. Then maybe you’ve never done this before, but if they can see this as a path forward to scalability, how do you see that unfolding?
Jay Conner [00:17:27]:
Oh yeah. Private money allows you to scale for one big reason. When I was borrowing money from the bank, I had a limit on my line of credit. I had a limit on the amount of money that the bank would loan me. In this world of private money, there is no limit to the amount of money that you can use. There’s no limit to the number of private lenders that you can have. And so that’s one big reason why I’ve never missed out on a real estate deal since 2009, which is that there’s more money. I’ve got more money than I can use.
Jay Conner [00:18:00]:
Yeah. And so it allows you to scale it to whatever level you want.
Caleb David [00:18:06]:
Yeah. So, on a practical level, if, say, one of our listeners is looking to get into real estate investing, or they already have and have only been using traditional lending, how do they connect with private lenders? Is that something that you do, or do you connect them? How does that work? Because I know, obviously, people can look at their own circle. However, like you said earlier, a lot of people aren’t familiar with private money. And how it works.
Jay Conner [00:18:32]:
That’s right. None of my private lenders from my circle, my own network, had ever heard about it until I put on my teacher hat and shared it. There are three. In answer to your question, Caleb, there are three categories where you find private lenders. Three categories. What are those three categories? The first category is where I have raised most of my money. And that is your existence. The first two categories are where I’ve raised my private money.
Jay Conner [00:18:59]:
The first category is your existing connections, right? Yeah. Who’s in your cell phone, who’s in your professional circle, and who are your current connections? And I promise you, if you’re listening to this show, you know a lot more people than you think about, and then you know about and remember. And I have a very simple process for how you identify your top potential private lenders that are in your cell phone. So there are your existing people. The second category of where you find private lenders is what I call your expanded network. Your expanded network. So how do you grow? You’re going to run out of your own connections sooner or later, right? Depending on how large your network is.
Jay Conner [00:19:43]:
So that will be exhausted sooner or later. And if you want to scale your business beyond that, then how do you expand your network very quickly? I got a long list of how to do that, but I’ll give you a big one right now. It’s called Business Networking International. I’ve gotten millions of dollars in private money by being active in Business Networking International. It’s referred to as BNI. And BNI was founded by Ivan Meisner back in the 1980s. It’s now worldwide. It’s huge.
Jay Conner [00:20:13]:
And even though Morehead City, North Carolina, where I live, has a population of 8,000 people, we started a BNI all the way back in the 19 or the 2000s, I should say. And the way BNI works, it’s not a civic organization. The way BNI works is that you join your local chapter. And if you’re in any kind of size city, you’ll have multiple chapters to choose from. The purpose is to give your fellow members leads for business, and your fellow members give you leads for business. Business. So that is a very quick way to blow up your network because you’re not joining BNI for the purpose of only perhaps doing business or getting private money from your fellow members. Who you want to know is who they know.
Caleb David [00:20:58]:
Right.
Jay Conner [00:20:59]:
And they introduce you to their network. So, you know, here in Morris City, BNI has got 23 members. Yeah. That’s 23 revolving doors of 23 other networks that you have access to. And there are many other ways to expand and blow up your network as well. The third category of where you find private lenders is what is called existing private lenders. These are individuals who are already loaning money out to real estate investors. How do you find them? Yeah, do it the way I started out doing it all the way back in 2009.
Jay Conner [00:21:35]:
I hired my real estate attorney, actually his paralegal, to search local public records at the courthouse, looking for deeds of trust or mortgages that had individual names, not institutional names, that had lent money out on real estate. We only found a couple there within 90 days. I said, ” There’s got to be an easier way. There are many easier and faster ways to get that information, one of which is Self-Directed IRA companies. Did you know over 60, 70% of account holders at Self-Directed IRA companies, over 70% of them are private lenders? They want to lend money out. Yeah. But you know what? And they have networking events where you can network and meet these individuals.
Jay Conner [00:22:22]:
But here’s a big distinction. When you meet existing private lenders, you’re not putting on your teacher hat.
Caleb David [00:22:29]:
Right.
Jay Conner [00:22:30]:
They already know what private money is, and they’re already spoiled. They want 12%, they want 11%. I’ve been paying all my private lenders since 2009, 8%, and with no origination fees. And they love it. They love it. Yeah. Compared to what you can get in a 12-month certificate of deposit at the local bank.
Caleb David [00:22:48]:
Yeah.
Jay Conner [00:22:49]:
So they haven’t been spoiled. And you come along and offer 8%, they’re going, ” Wow. Compared to less than 3% in the local bank now. But yeah, those are the three categories where you find private lenders. So that begs the next question. And that is how you start sharing? How do conversations even start?
Caleb David [00:23:10]:
Yeah.
Jay Conner [00:23:11]:
How do you bring that up? And it depends on. It depends on what you’ve got going on. If you and I are having a cup of coffee, Caleb, that conversation is going to be different. Yeah. Then, if I invite you to lunch with 20 other people. Yeah. And have my realtor there, my real estate attorney there, and my CPA there, and I feed you lunch, and then I do a PowerPoint presentation, and I teach you about private money. But most conversations are going to be one-on-one.
Jay Conner [00:23:39]:
So there are two different scripts, if you will. There are two different approaches that I practice and teach my coaching clients how to start conversations. One’s called the direct method. The other is called, of course, you guessed, the indirect method, and the direct method utilizes what I call the magic question. The magic question is, quote unquote, do you have investment capital, or are you in retirement funds not giving you a high rate of return safely and securely? Now I’m only going to ask that question to somebody with whom I have a strong relationship. We trust each other, and we like each other. If I ask that question to somebody I don’t have that with, they’re going to say, ” That’s none of your business. Right, right.
Jay Conner [00:24:22]:
So that’s only going to be. And obviously, I’m not starting a conversation like that’s going to be. In the midst of the conversation. I love to bring up the topic with what I call Did you know Questions. I’d be talking with you, you and I are having coffee or whatever. And I’ll say something like, by the way, Kalen, did you know there’s a way that investors can earn unlimited money per year tax-free? In all likelihood, you’re not going to have the answer to that question, right? Well, how can I earn unlimited money tax-free? And I say, What are you talking about? My follow-up question that would be is, well, have you by chance heard of self-directed IRA companies? In all likelihood, if you’re the average person, you’ve never heard of that either. So now that opens up the door for me to teach and share with self-worth IRA companies. And then obviously in that conversation I’m going to say, What are you investing in these days and ” Are you happy with what you’re doing? You see, that conversation has only got one.
Jay Conner [00:25:18]:
I’ve only got one purpose, I’ve only got one goal, and that is to diagnose. Do you have a problem? Yeah, that’s the only thing that conversation is about. And if you tell me, yeah, I’ve got my investments over here in X, Y, Z, and last year I earned 15%. I just diagnosed that you don’t have a problem. Right. So I’m gonna say, tell me about that investment. Cause I sure ain’t getting 15%. Right? Yeah, yeah. But if I’m diagnosing if they have a problem, and they say, Yeah, I’m getting 2.75% in a CD at the local bank.
Jay Conner [00:25:55]:
I’m going to say, ” Oh my word, that’s horrible.
Caleb David [00:25:57]:
Yeah.
Jay Conner [00:25:58]:
I’m going to say, would you like to hear how you can earn 8%?
Caleb David [00:26:01]:
Yeah.
Jay Conner [00:26:02]:
Instead of 2.75. Now you’ve just been diagnosed, they’ve got a problem. Yeah. And here you come along with a possible solution. So there’s no selling. Yeah, there’s no selling, there’s no begging. I’m diagnosing. Do you have a problem? Now that’s the direct method.
Jay Conner [00:26:18]:
That’s the direct method. The end. Isn’t this interesting, Caleb? I love talking about this. So then there’s the indirect method. The indirect method utilizes a very powerful three-word phrase. And here it is. I need your help. Now, how do we lead up to that powerful three-word phrase, I need your help? The best way I can answer that is in the short story.
Jay Conner [00:26:46]:
So right after I learned about private money, I put my program together, my opportunity together, as to what I was going to share with people and offer them. And it was on a Wednesday night at church, at Bible study. Carol, Joy, my wife, and I got to Bible study on Wednesday night, walked into the foyer, and I was looking for a gentleman named Wayne. We, Wayne and I, had known each other for years, and I walked up to Wayne, and I said, Wayne, I’d like to visit with you for a few minutes confidentially after Bible study, if you have a few minutes. He said, Sure, so we got together after Bible study down in the nursery. I shut the door, and here’s exactly what: this is the indirect method. Here’s exactly what I said to Wayne.
Jay Conner [00:27:28]:
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, if you have never heard of the Zenith television dealer, that means you’re too young to remember life before Walmart came to town. You went to the Zenith theater, you bought your TV, and he financed your TV. He actually would come to your house and repair your TV instead of you throwing it in the trash and going back to Walmart and buying a new one for $279. So Wayne had put a TV in everybody’s house in this area. I said, Wayne, you know everybody in this town.
Jay Conner [00:28:06]:
And I said, Wayne, I need your help. I said, Wayne, I’ve now opened up my real estate investing business by referral only, and I’m now paying insane high rates of returns to my investors. When you run across somebody who’s complaining about the stock market, the volatility of the stock market, nor ot getting any money in the local bank, would you refer them to me, and I’ll tell them about my opportunity?. What do you think? Wayne said? Wayne looked at me. He says, Now, brother Jay, what you got going on there? Yeah, I said, ” What do you mean, Wayne? He says, you say you’re paying insane rates, returns. What kind of returns are you paying? I said that it depends on the deal. But I’m. But are you saying you might be Interested, Wayne? He said, I might be, yeah.
Jay Conner [00:28:53]:
I said, ” Why is that? He said, ” We’re losing money in the stock market, and we’re earning less than 3%. And that’s what it was like, and it is today in 2009 in the local bank. He said, “What kind of rate are you paying? And I said again, that depends on the deal. I said, What sounds high to you? He said, We’re only earning less than 3%. He said, I don’t know, maybe 5% sounds pretty good to me. I said, Wayne, I can’t pay you 5%, but I can pay you 8%. He said, Put me down for $250,000. And so that next afternoon, on Thursday afternoon, I went to Wayne and his wife’s home right here on Country Club Road in Morehead City.
Jay Conner [00:29:35]:
And I got there Thursday afternoon, and I brought my complete program and opportunity and went over with them the checkpoints, the interest rate I pay, how your money’s protected, I’m not borrowing unsecured funds, how you can get your money back early in case of an emergency, what’s the paperwork do you get when we have a deal? And remember, don’t forget this very important point. I didn’t talk about a deal.
Caleb David [00:29:59]:
Right.
Jay Conner [00:29:59]:
I didn’t talk about a deal. I just talked about the opportunity.
Caleb David [00:30:03]:
Yeah.
Jay Conner [00:30:03]:
And by the end of that conversation, Caleb, that 250,000 became $500,000 that they wanted to invest. And I said, I’ll put your money to work for you just as soon as possible. So a couple of weeks went by, and Caleb, I’m now going to share the good news phone call script. I get my deals funded 100% of the time without pitching a deal. Caleb, let’s say that you and I are friends, ha e known each other for a while, and let’s say that you were hypothetically that you were working for a company that you left, and you still have an old $150,000 401k over there in that retirement plan. You still got it there, you’re not happy with it,t and you’re looking for something else. So let’s assume I have already taught you, I’ve already shared with you the opportunity. Let’s also assume I’ve introduced you to the self-directed IRA company that I recommend.
Jay Conner [00:31:01]:
And let’s assume you’ve moved that $150,000 over to the self-directed IRA company and you’re waiting for the good news phone call. Yeah. So I call you up, you answer the phone, we have a little chit chat, and here’s exactly what I say. I say, Caleb, I’ve got great news for you. I can now put your money to work. I’ve got a house under contract with an after-repair value of $200,000, and the funding required matches up to what you’ve got at the self-directed IRA company. The funding required for that deal is 150,000, and closing is going to be next Thursday. You’ll need to wire your funds to my real estate attorney’s trust account.
Jay Conner [00:31:39]:
Next Wednesday,y I’m going to have my real estate attorney’s paralegal email you the wiring instructions. That’s the end of the conversation. The stupidest thing I could say is Do you want to fund the deal? Of course, you want to fund the deal. There are three big reasons why Caleb here wants to fund my deal in this scenario. The first reason is, for goodness ‘ sake, Caleb trusted me to move his money over to the self-directed IRA company, and so he’s already done that.
Caleb David [00:32:10]:
Yeah.
Jay Conner [00:32:11]:
The second reason Caleb here in this story wants to fund my deal is that he knows I’m not going to bring a deal for him to fund that doesn’t match the criteria that I’ve already taught him. Like one thing I’m going to teach my private lender, Caleb, in this sto, whether I’m not going to borrow more than 75% of the after-repaired value. I didn’t say 75% of the purchase price. Right. I always bring him a big check when I buy. Who wants to get paid to buy properties? Yeah, but did you hear that scenario? The after-repair value in that story was $200,000. I’m using small numbers.
Caleb David [00:32:42]:
Sure.
Jay Conner [00:32:43]:
Easy figure. Yeah. And I’m not going to borrow more than 150,000. That’s 75% of the after-repaired value. Now, in that scenario, I’ll buy that house for $100,000 because it needs rehab, ab and I’ll bring home a $50,000 check when I buy. That’s called excess cash to close. The third big reason Caleb wants to fund my deal is that he’s not making any money. Yeah.
Jay Conner [00:33:06]:
On that money until he gets it loaned out and invested. Yeah. So that’s the good news. Phone call script.
Caleb David [00:33:13]:
That’s awesome. This has been such an eye-opening conversation. A lot more detail that I think is going to be very helpful for our listeners. But as we wind down, people need to follow you on your podcast. But where else can people find you, and how can people reach out and get involved with what you do?
Jay Conner [00:33:29]:
Sure. Three ways. One, you just mentioned my podcast, so I’m now in my eighth year, have had over 800 guests, and the name of the podcast is Raising Private Money. It’s on all the platforms. Wherever you love to listen to your podcast, come on over and check that out. I’ve got two gifts to give your listeners, Caleb. One gift is a downloadable PDF, and it’s called and I’ve put together an entire private money script collection, different private money scripts for different scenarios. And I want to give away the first script in that collection.
Jay Conner [00:34:07]:
It’s called the Curiosity Opener. Back to what we were talking about. How do you start conversations with potential private lenders? It’s called the Curiosity Opener, and you can download it for free at www.JayConner.com/Scripts; that’s plural. J Conner.com scripts download that PDF, and then my other gift I’d like to offer your audience is my national best-selling book, which is called ” Where to Get the Money Now. Where to get the Money Now. And the subtitle is how and where to get money for your real estate deals without relying on traditional or hard money lenders. And it also comes with two tickets valued at $3,000 to the in-person private money conference that I put on three times a year, and it’s 20 bucks on Amazon. But don’t give Amazon 20 bucks.
Jay Conner [00:35:03]:
The book’s free. Just cover shipping, and I’ll autograph the book for you. I’ll send it out to you via express mail, and you can get the book at www.JayConner.com/Book, and I’ll rush it right out to you.
Caleb David [00:35:19]:
Awesome. Thank you so much for that generosity. I know that’s going to be a great help to so many people. Appreciate your time, and thanks for being
Jay Conner [00:35:26]:
On the show, Caleb. Thank you so much for having me. God bless you.
Caleb David [00:35:29]:
You too. Everyone,y stay tuned for our next episode.
Narrator [00:35:33]:
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.