Credits to:
https://www.youtube.com/@thenextlevelincomeshow
How to Raise Private Money with Jay Conner
In a recent engaging episode of the Raising Private Money podcast, renowned real estate expert Jay Conner shared invaluable insights into the world of private lending and real estate investments.
Host Chris Larsen facilitated a deep dive into how seasoned investors like Jay Conner are revolutionizing funding strategies, particularly through private money lending, self-directed IRAs, and more.
Private Lending Unveiled
Jay Conner discussed the pivotal role that private lending plays in real estate investment. Instead of traditional bank loans, private lending allows investors to secure funding through individual investors, offering them higher returns in the process. This approach not only accelerates financial growth but also avoids the cumbersome red tape associated with traditional financing. Jay’s strategy focuses on educating potential lenders about the benefits and security of investing in real estate deals, thus raising capital without direct solicitation.
The Role of Self-Directed IRAs
A significant portion of the podcast was dedicated to self-directed IRAs—a powerful tool for diversifying retirement portfolios with real estate investments. Chris Larsen and Jay Conner elaborated on the flexibility of self-directed IRAs, which permit investors to expand beyond conventional stocks and bonds. Jay highlighted how these IRAs are instrumental in connecting investors with lucrative real estate opportunities, emphasizing the need for ethical practices and ensuring that investments are adequately protected and legally compliant.
Overcoming Financial Adversity
Chris Larsen shared a compelling personal story about facing financial hurdles when his lines of credit were unexpectedly cut. Similarly, Jay recounted his own experience during the 2009 financial crisis when he was compelled to shift from traditional banking to private money. These narratives underscore the significance of resilience and adaptability in achieving financial independence. Both speakers emphasized the formula E (event) + R (response) = O (outcome), advocating that one’s reaction to challenges critically shapes their success.
Conclusion: A Gateway to Financial Freedom
The episode not only delivered powerful financial strategies but also served as an inspiration for personal and professional growth. Jay Conner’s journey from relying on bank loans to mastering private money lending serves as a testament to what is achievable with the right mindset and tactics. For those looking to delve deeper into the realms of real estate investing, exploring Jay Conner’s methods and taking action on the call to download his free guide on private money at www.JayConner.com/Moneyguide might just be the perfect first step toward financial liberty.
Resilience in the Face of Adversity:
“I got 100% choice as to how I want to respond to whatever happens. Therefore, it’s your response that determines the outcome.” – Jay Conner
10 Lessons Covered in this Episode:
- Raising Private Funds: Efficient strategies for securing private investments without traditional banks.
- Understanding Self-Directed IRAs: Navigating investments in real estate using IRAs effectively.
- Property Evaluation Techniques: Assessing the potential of properties to maximize investment returns.
- Lender-Borrower Relations: Building trust and clear communication lines for successful deals.
- Real Estate Rehab Essentials: Budgeting and planning for property improvements for high return.
- Finding Private Investors: Techniques to connect and engage with potential private lenders.
- Handling Legal Formalities: Learning about necessary legal standards for private lending and real estate.
- Profitable Exit Strategies: Ensuring maximum profit through well-planned property exits.
- Networking for Growth: Using networking to find opportunities and enhance investment possibilities.
- Success Mindset in Investing: Developing the right attitude for overcoming challenges and achieving goals.
Fun facts that were revealed in the episode:
- Jay Conner transitioned from mobile home sales to flipping single-family homes after the decline in financing for mobile homes.
- During the global financial crisis in 2009, Jay’s credit line was suddenly shut down, leading him to discover and utilize private lending, raising $2,150,000 in just 90 days.
Timestamps:
00:01 – Raising Private Money Without Asking For It
04:56 – Credit shutdown amid crisis.
07:53 – Great credit, high equity, taking proactive action.
10:37 – Debt fund borrows money, and earns from loans.
15:47 – Self-directed IRA allows flexible investment choices.
18:26 – Inquire about self-directed IRA via email.
21:51 – Distressed properties with $50,000 rehab cost.
24:24 – Lender protects with a conservative loan to value.
27:54 – Step-by-step guide to raising $2,000,000.
29:45 – Ensuring comprehensive access to book, podcast, 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
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Twitter:
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https://www.pinterest.com/JConner_PrivateMoneyAuthority
Achieving Financial Independence Through Real Estate with Jay Conner’s Strategies
Jay Conner [00:00:00]:
We name our private lenders on the insurance policy as a mortgagee, just like a bank. And we name them on the title policy as an assured, again, how they protected that conservative loan to value. And we’re not borrowing unsecured money. They’re gonna get their own promissory note, their own trust of collateralizing that note.
Chris Larsen [00:00:24]:
Welcome to the Next Level Income show where it’s our goal to take your income, your investments, and your life to the next level. I’m your host, Chris Larson. If you haven’t yet, get a copy of our book for free at our website, next levelincome.com. That’s www.nextlevelincome.com. Just click on the book link, and I’ll even send you a copy if you put your address in. On today’s show, we have Jay Conner. Jay has been buying and selling houses since 2003 in a town of only 40,000 people with profits now averaging $78,000 per deal. His passion is motivating and teaching other real estate investors how to raise Private Money without ever asking for that money.
Chris Larsen [00:00:58]:
And as a result, Jay has consulted 1 on 1 with over 2,000 real estate investors. In addition, Jay is a 2-time national best-selling author and a past president of Business Networking International. He and his wife, Carol Joy, reside in Morehead City, North Carolina, just on the other side of the state from me. And whether you are looking to raise Private Money for your own deals or just wanna understand the questions and the process that goes on behind this, you’re gonna wanna listen to this show. Jay, welcome to the Next Level Income Show.
Jay Conner [00:01:27]:
I’m so excited to be here because, after all, what I’m so passionate about is Private Money because Private Money has made more of an impact in my and my wife’s real estate investing business than anything else that we’ve done.
Chris Larsen [00:01:43]:
Yeah. Well, I’m excited to talk about it. And shoot, we’re we’re practically neighbors in the grand scheme of things. You’re you’re on the other side of, North Carolina here. I’m up in the mountains, and you’re at the beach. So this will be, here we are connecting via technology, but this will be this will be a lot of fun here for anybody that’s, around the world but also in North Carolina as well.
Jay Conner [00:02:02]:
I love it. I love it.
Chris Larsen [00:02:03]:
Yeah. So, Jay, I shared a little bit about your background with the audience in the intro, but I’d love for you to share a little bit about, share little more with the audience about how you got into real estate, and some of your background even before that.
Jay Conner [00:02:16]:
Sure. Well, I was actually raised by in the mobile home business or manufactured housing business. My dad, Wallace Conner, who, by the way, just turned 90 years old, had a big old birthday party for him down here at Orange City Atlantic Beach. Anyway, he was in the mobile home manufactured housing business. In fact, at one time, he was his comp was the largest retailer of manufactured homes in the nation. And so I grew up being around helping people or watching my other and his company help people own a home in the affordable housing space. Well, in 2000 the early 2000s, Wall Street fell out of favor with that industry, and all the financing pretty much went away for that product. And so if you don’t have financing for the product, obviously, you’re pretty much out
Chris Larsen [00:03:07]:
of business. Yeah.
Jay Conner [00:03:08]:
So I knew if I ever got out of mobile homes and single-family houses, I wanted to get into single-family homes. I wanted to be a flipper. I wanted to be a flipper before, HGTV even had the flipping shows, and before it was, like, all sexy and stuff. So in 1,003, my wife and I, did our first deal, right here in Morehead City, North Carolina. We only did 3 houses that year. You know, we bought these properties, fixed them up really, really nice, and then sold them for retail. Well, something happened, Chris. Something happened.
Jay Conner [00:03:44]:
And it’s been experienced that the growth takes place in the valley. Right? The big turnarounds take place, not when you’re on top of the mountain.
Chris Larsen [00:03:53]:
Yeah. Love that. So
Jay Conner [00:03:54]:
I remember like yesterday, Chris. In fact, you know, you may find it hard to believe, Chris, but we still have handsets and cords here.
Chris Larsen [00:04:01]:
What is that? My son would say, what is that?
Jay Conner [00:04:04]:
Exactly. Anyway, from 2003 to 2009, I relied on the local bank to fund my deals. That’s all I knew.
Chris Larsen [00:04:15]:
Yeah. Easy to get money then too. It was very easy.
Jay Conner [00:04:17]:
Oh, my lads. Are you kidding? In 2003 when we started, I had a $250,000 unsecured, unsecured line of credit, at the local bank here. So I mean, I’d never heard of hard money lending. I’d never heard of that way to get deals funded. I mean, after all, I’m sort of living underneath a rock, you know, here in eastern North Carolina. But I picked up my phone in January 2009. Now, I have been doing this business for 6 years, doing business with the same banker, the same bank. And so I picked up my phone and I called my banker.
Jay Conner [00:04:56]:
His name was Steve. And I told him about these 2 houses that I had under contract, you know, to purchase. Yeah. And Steve and I had had this conversation, Chris, many, many, many times. Well, I learned like that in that conversation that my credit had been shut down with no notice. And I said, Steve, what do you mean my line of credit is shut down? It’d been nice to know that before I got these houses under contract. And he says, Jay, don’t you know there’s a global financial crisis going on right now? I said, no. But now you just gave me a financial Yeah.
Jay Conner [00:05:31]:
Because I don’t have any way to fund these deals. So I hung up the phone, and then I thought to myself, Chris, for a minute, who here’s a rider downer. When you problem, here’s the here’s the question to ask yourself. Who do I know to help me with my problem? And by the way, these people are going around saying was an opportunity. I wanna throw up. I didn’t have an opportunity. I had a problem at the time. So I picked up the phone and called my buddy, Jeff, who lived in Greensboro, North at the time.
Jay Conner [00:06:00]:
He was investing in single-family houses. I told him what had happened. He says, well, welcome to the club, Jay. I said, what club? He said the club of losing your line of credit. They cut me off last week. I said, well, how are you gonna get your deals funded? He says, well, you ever heard of Private Money? I said, no. He said, you ever heard of self-drived IRAs? And I said, no. Well, I studied that very, very quickly, and I raised $2,150,000 in less than 90 days.
Jay Conner [00:06:29]:
So guess what? My banker did me a favor
Chris Larsen [00:06:33]:
Yeah.
Jay Conner [00:06:33]:
Right, by cutting me off because then I had to find a better and quicker way to get funding for my deals. So any time that you’ve got a challenge. And the formula is E+R=0. The E is the event, r is your response to that event, and the o is the outcome that you experience.
Chris Larsen [00:06:57]:
Love that.
Jay Conner [00:06:58]:
Unfortunately, Chris, most people walking around will live under a different formula. They live with e equals o. Whatever the event is that happens dictates and determines your outcome. But guess what? You may not have anything to do with the event that happened in your life. I didn’t have anything to do with, you know, being cut off from the from the bank. I mean, that was not me. Right? But I’ve got 100% choice as to how I want to respond to whatever happens. Therefore, it’s your response that the term is the outcome.
Jay Conner [00:07:34]:
And what a big business in disguise.
Chris Larsen [00:07:36]:
So I love that.
Jay Conner [00:07:38]:
That’s how I started.
Chris Larsen [00:07:39]:
Yeah. That’s a is a great story. And, look, I was part of that club too. You know, all our lines of credit, secured lines of credit on our properties went away. Bank said, sorry, no more. Sorry. No more. So it’s like, wait, we’ve always paid on time.
Chris Larsen [00:07:53]:
We have terrific credit. We have more equity than we’ve ever had. It was it was crazy. So it’s like, what do you, you know, what do you do? I remember going back and thinking, like, what is going on here? This is, you know, I’ve never seen anything like it, obviously, because I had not been through other real estate cycles. You know, now I’ve studied history and seen these things, and you can go back in time and say, oh, this is, you know, this isn’t the first time this has happened, nor will it be the last time. But I love that. You know, if if you’re listening to this show, chances are you’re not the type of person that Jay talked about where you let events occur and you let that outcome determine your fate. You’re you’re a person that has a response, that takes action to determine your fate.
Chris Larsen [00:08:32]:
You know, we had a similar story. Jay, my wife, and I were building spec homes. So we bought a piece of property in 2012, you know, go to a bank. Bank says, nope. We don’t we don’t do spec homes. So we made a list of every bank in the region. My wife called 3 dozen banks. And I forget it was I think it was 34 exactly.
Chris Larsen [00:08:53]:
And what was was wild is there was one bank left. And she called that bank it was called Integra at the time. Now they’re, you know, a couple of acquisitions later, they’re part of First Citizens Bank. And she called that last bank on the list, and they said, we just started lending on spec homes last month. So, you know, again but that took that massive action. She didn’t say, oh, we can’t do it. My wife’s a persistent some would say, stubborn person. I might be the one that says that.
Chris Larsen [00:09:18]:
But those things can really help out with that. But let’s let’s back up a little bit, Jay. So, I wanna define some things for the audience. So first off, what is let’s talk about hard money hard money lending. Like, what is that for those that haven’t heard that before?
Jay Conner [00:09:33]:
Sure. Well, most of the time, and I’m glad you asked this question, Chris, because a lot of times, Private Money and hard money are, like, interchangeable. But the way I do the business, they’re not interchangeable. By the way, I say establish as many relationships with as many lenders and people as you can.
Chris Larsen [00:09:52]:
Yep.
Jay Conner [00:09:53]:
Money lenders, most of the time, a brokers of money. And what a hard money lender will do, and I’ve got a lot of friends that are hard money lenders, they establish a fund and they will raise money from individuals, private lenders, to invest in their fund. And then the hard money lender or broker will then lend that money out to the real estate investor, entrepreneur, the borrower of real estate.
Chris Larsen [00:10:24]:
And, you know, some hard money lenders really make the most
Jay Conner [00:10:27]:
of their money off of the origination fees. Some hard money lenders will borrow at a lower amount from the private lender and charge a higher interest rate. So, yeah, there’s all
Chris Larsen [00:10:37]:
That’s actually exactly what we do with our debt fund. We, you know, we quote-unquote borrow money from our investors and, you know, we pay them a, not a guaranteed, but a steady return. And then we originate the loans. We go out and look for lender or, borrowers that wanna do that. They pay us an origination fee. They pay us a little bit of spread on top of that. And, you know, we make our money on the origination fee in that spread that we make, by taking the, well, taking the risk and the operations as well.
Chris Larsen [00:11:09]:
So this is what you’re doing is actually slightly different than that.
Jay Conner [00:11:12]:
Yes. So what I’m doing is going directly to the individuals that would invest in a hard money fund.
Chris Larsen [00:11:23]:
Yep. And
Jay Conner [00:11:24]:
I’m doing this so that there’s no middle person involved. Right? Yep. Hard Money Broke is sort of like a middle person. And what I’m doing is I’m raising money directly from individuals. Right now, I’ve got 47 individuals that are loaning us money on our deals. And by the way, if you’re interested in raising your own money of course, I guess we should talk about the differences. But Yeah. If you’re interested in raising, your own money, then here’s the thing.
Jay Conner [00:11:54]:
When I was borrowing money from the bank, a whole it was a whole different, type of relationship. And what I mean by that is, you know, I’d go to the bank for 6 years and get on my hands and knees and put my hands underneath my chin and say, please fund my deal. Please fund my deal. And, you know, have to show returns and verification of income and Oh, yeah.
Chris Larsen [00:12:20]:
Everything. Credit score. Bend over. Turn a flashlight on. It’s crazy. Right? So, you know, the traditional way to borrow money is you ask. Right? You apply.
Jay Conner [00:12:33]:
Yeah. The way I do it, there is no asking. There is no application. You’re already approved. So people people ask me all this. I say, Jay, come on. Give me a break. How in the world have you got $8 a half $1,000,000 that you on, you know, house to house, project to project, and you don’t ask for money?
Jay Conner [00:12:51]:
Well, here’s the secret. Instead of asking for a mortgage, I put on my private lender teacher hat. I just started teaching people that I have connections with, and my team about my private lending program as to how they can earn high rates of return safely and securely. So that’s what I did that first night when I lost my line of credit back in 2009, first of all, I put my program together. Right? Which, by the way, I got the whole program in my book that we’ll talk about. But
Chris Larsen [00:13:26]:
Yeah. We’re gonna have, we will have a link in the show note for that too. So if you’re if you’re listening, stay tuned.
Jay Conner [00:13:32]:
Yeah. So I just started to tell people, well, here’s how you can earn high rates of returns safely and securely if you’re not happy with what your investments are doing for you now. Right? And so what’s my interest rate that I’m gonna pay? So, for example, I’ve been paying the same interest rate, since 2009, and I pay them I pay every lender the same thing. So teaching the interest rate, the the length of the note, how they can get their money back in case of an emergency, and etcetera. Once they say, well, I like, you know, I like that program. I don’t have to ask them. Remember, I’m teaching. I’m teaching.
Jay Conner [00:14:10]:
I’m just sharing I’m just sharing what I do. And if they’re into it, that’s fantastic. If they’ve got retirement funds, I’ll introduce them to the self-directed IRA company that I recommend. And, so then I give them a when it’s time for I’ve never pitched a deal, Chris. I’ve never pitched a deal in my life since 2009. I said, Jay, well, how are you getting in if you’re not pitching your deal? Well, listen. We separate the conversation between you’re interested in the program Mhmm. And now I’ve got a deal for you to fund.
Jay Conner [00:14:43]:
So when I’ve got a deal from the fund, they’ve already told me how much they got. They’re ready to go. So I call them with the good news phone call. I call them up. I got great news. I can now put your money to work. I got a house in Newport with an after-repaired value of $200,000. The funding required for the deal is 50.
Jay Conner [00:15:01]:
I know they got a 150. They already tell me. And closing is next Wednesday. You need to have your funds wired to my real estate attorney by next Tuesday. I don’t ask wanna do the deal. That’s the most stupid question in the world I gotta ask them. Of course, they want to do the deal because they’re waiting on the phone call. And then I’ll make this point and turn it back to you, Chris.
Jay Conner [00:15:20]:
If you have shared with someone how someone can make high rates of return safely and securely, and you’ve told them about self-directed IRAs, and they have moved a portion or all of their retirement funds over to the self-directed IRA company that, I recommended. I’m ethically bound to put their money to work because they’re not making any money.
Chris Larsen [00:15:44]:
They’re just sitting there in the account.
Jay Conner [00:15:46]:
Yeah. They’re just sitting there.
Chris Larsen [00:15:47]:
Yeah. So some people may be surprised to hear this. I know we’ve talked about this multiple times on the show over the years. But a self-directed IRA and you can jump in here, Jay, is when you take your money, you put it with a custodian who then allows you to direct those funds as you see fit, to invest those as you want. You can you could buy precious metals with those funds. You can invest in real estate deals like syndications, but you can also lend your money out. Now you can’t self-deal. Right? Is that right, Jay? Are you a high-income business owner or professional earning 2, 300,000 or even more a year, but still feel like you’re living paycheck to paycheck? Are you comfortable working till you’re 65 or 70 to retire? Or do you wanna achieve financial independence and live life on your own terms? You could join me and Matt Foehr and learn how we both became financially independent in our early thirties.
Chris Larsen [00:16:41]:
We’ll teach you how to make, keep, and grow your money, teaching you strategies to maximize your earnings, keep the income that you’ve earned through tax strategy and legal structures, and ultimately teach you how to grow it by determining your personal investing strategy as well as teach you how to analyze investments so you can grow your passive income to the point to live life on your own terms. Our coaching clients reliably do this in 7 years or less. To learn more, check out our coaching program at nextlevelincome.com forward slash coaching. That’s www.NextLevelIncome.com .
Jay Conner [00:17:17]:
Yeah. That you cannot self-deal or self-direct. In other words, you can’t borrow. Now you’re when you move your retirement funds to a self-directed company, you can take that money and you can go buy a house or invest in, you know, Chris’s fund or whatever, but you cannot borrow from your, self-directed IRA account for the deal that you’re gonna get. For
Chris Larsen [00:17:41]:
your own deal. Yeah. Your own deal or, or a deal with somebody that you’re you’re directly related to.
Jay Conner [00:17:49]:
So it’s vertical. Again. It’s vertical and then it’s parallel. You can’t loan money, to a vertical relationship. You can’t loan money to a parent, or a grandparent. You can’t loan money to yourself. You can’t loan money to your children.
Jay Conner [00:18:04]:
You can’t loan money to your grandchildren. But you can loan money to brothers, sisters, cousins, aunts, and uncles.
Chris Larsen [00:18:12]:
Yeah. Yeah. I love that. Step like, I got a stepfather. We’re not we’re not related, you know, legally do that as well. So, yeah, there’s a lot of flexibility with So it’s it’s really cool. So if you’re looking for money, you’re like, I like this idea. I don’t have a bunch of cash sitting around.
Chris Larsen [00:18:26]:
Look into a self-directed IRA. If you need custodians, reach out. Send us an email at podcast@nextlevelincome.com, and just say I’m looking for some self-directed custodian options, and we can share some with you out there. So, Jay, if people I know can they can check out your course and they’re gonna share a little bit more about that. But if I’m gonna lend money, if I’m gonna become a private lender, you let’s talk about some of the projects that you do. You kind of alluded to what they are. And then I’d like to know what some of the questions that a lender should be asking.
Jay Conner [00:19:01]:
Absolutely. So first of all, the overall question is, I tell you about some of your deals that have gone sideways.
Chris Larsen [00:19:12]:
Great question.
Jay Conner [00:19:13]:
And you and have not and have not turned out the way you intended. Yeah. And then if your prospective borrower cannot tell you a horror story, they’re lying.
Chris Larsen [00:19:28]:
Or they’re just getting started.
Jay Conner [00:19:29]:
Or they’re just getting started. I mean, I want to hear about I mean, shoot. I’ve rehabbed over 500 houses. Over 500 houses, and not one of them has ever come in on budget. Not one has come in on budget. I’ve had them come in close. I’ve had them come in under. Most of the time, they come in over.
Jay Conner [00:19:49]:
Well, for that reason,
Chris Larsen [00:19:50]:
that’s why to say the pro form A is always wrong.
Jay Conner [00:19:53]:
Exactly. You know? And so it’s like, that’s why we don’t borrow more than 75%. 75%. The repaired value. So the question is another question that you’d wanna ask the operator, the real estate entrepreneur, that would be the borrower, is, well, what’s the maximum loan to value? How much equity cushion are you gonna are you gonna give me in this deal?
Chris Larsen [00:20:17]:
Okay. So let’s before we go through that because this is I think, you know, you said after repair value, some people I was actually at the gym this morning and, one of my fellow real estate investors that goes there, she said ARV. So ARV. Alright. So yeah. ARV. So okay. So let’s say, we have a home that if it was, you know, in in perfect condition and goes out on the retail market, let’s say, it may be worth $400,000.
Chris Larsen [00:20:46]:
Okay? When you go and you find a home, Jay, and you put it under contract, let’s say it’s gonna sell for $400,000. What are you typically paying for a home like that?
Jay Conner [00:20:57]:
Well, I’ll give you a perfect example. I just closed on a house last week.
Chris Larsen [00:21:02]:
K.
Jay Conner [00:21:03]:
The ARV, the after repaired by the way, here’s the definition of after-repaired value in my world. Everything looks and smells brand new. Perfect. Yep. The ARV in my world is this house could be in Southern Living Magazine. Alright?
Chris Larsen [00:21:21]:
Love it.
Jay Conner [00:21:21]:
Yeah. All exterior, and interior. Anyway, so I closed on this house, right here on Arundel Street in Morehead City last week. The after repaired value is $550,000.
Chris Larsen [00:21:36]:
Perfect. 550.
Jay Conner [00:21:38]:
I bought it for 325.
Chris Larsen [00:21:40]:
Okay.
Jay Conner [00:21:41]:
So the first question we may ask is, how do you buy an after-repaired value house at 550 for $325,000? Well, first of all
Chris Larsen [00:21:51]:
Yeah.
Jay Conner [00:21:51]:
All these properties are distressed to some degree. Right? And and and and need at least some fix-ups. Secondly, this was an inherited property, and the person who inherited the property lives 3 hours away and has no personal emotional connection to this property at all. So they just want to cash out and be done. Yeah. And so the actual rehab on this property is right at $50,000 So this is not a big, huge, you know, rehab. So I could have borrowed more money than I intended. I mean, then I did, but bought it for 3.25.
Jay Conner [00:22:37]:
So we’re looking at 50. It always costs more. Right? And we got closing costs and all that stuff. So I only borrowed $400,000 from my private lender. And so there if I rehab this house, then there’s gonna be I mean, that’s a big equity right there between what you borrowed at 400, and you’re gonna sell it for 5.50.
Chris Larsen [00:22:59]:
Now So you’re yeah. So you’re borrowing under under 75%. So between 70 and 75 percent of the after-repaired value.
Jay Conner [00:23:08]:
That’s right. Now, if you are a private lender, you better know your borrower very well. I mean, there’s a 5 letter word in this in this relationship that starts with a t, and that’s called trust. So, you know, if you’re lending the money, you wanna be passive. You know? You don’t wanna oversee deals. You don’t wanna negotiate deals. You just wanna sit back and collect your checks. Right?
Chris Larsen [00:23:35]:
But you should you be active in understanding who you’re lending to and what type of deals they are. Right?
Jay Conner [00:23:40]:
Absolutely. Absolutely. And so when I bought this house for $325,000, well, I came home with a $75,000 check. That’s called excess cash to close. Right? Well, this private lender now let’s say I lost my mind and I went to the Caribbean. Right? And I didn’t do the do the do the deed in lieu, you know, foreclosure. And suddenly my lender has got to foreclose on me because I’ve, like, skipped town or whatever. Well, look look at so, of course, they don’t wanna mess with it.
Jay Conner [00:24:15]:
Look how they’re protected. Because one question that comes to mind is, look, what if you skip town and take that $75,000 and you don’t rehab the house?
Chris Larsen [00:24:23]:
Yeah. Yeah.
Jay Conner [00:24:24]:
Good question. So how is the lender protected? That’s why we do the conservative loan to value. This lender would get a property that they loan $400,000 on and the after-repair value is 550,000. There’s still a $150,000 spread. And they wanted to I mean, they could sell the house as is and not even touch it. I mean, good for goodness sake, you put that house on the market at $400,000 in the multiple listeners, it just flew off the shelf because, you know, there’s a 150 spread between what was ballooned and, you know, what it would be worth if it was fixed up with the 50, 50,000 in rehab. So that’s the question. How am I protected as a lender as a private lender? Will we name our I’m just naming our private lenders on the more on the insurance policy as a mortgagee, just like a bank?
Jay Conner [00:25:19]:
And we name them on the title policy as an assured. Again, how they protected that conservative loan to value. And we’re not borrowing unsecured money. They’re gonna get their own promissory note, their own trust, of collateralizing that note.
Chris Larsen [00:25:34]:
Yep. Love that. Yeah. So, again, even when you find somebody that has experience in this business, you still need to understand how you can protect yourself and do that. And what like, Jay, typically, how long are lenders lending their money out between that period and getting it back? About how long or you know, what’s the, you know, what’s the typical loan duration you say?
Jay Conner [00:25:59]:
The length is 2 years. Even 2 years. Probably not I’m probably not gonna use it for 2 years. So we do the notes for 2 years. And what I have with my 47 private lenders, when I go to cash out, which typically in this market, I may buy like, this house that I bought, the house may sit there for 2 or 3 months before one of my contractors can get to it. Right?
Chris Larsen [00:26:24]:
Gotcha.
Jay Conner [00:26:24]:
Yeah. Rehab may take 3 months once the rehab starts. So now we’re already into it for 6 months. You put it on the market, maybe it’s another 45 days. So typically, we’re going in that maybe 9-month period.
Jay Conner [00:26:44]:
So that’s that’s what that’s what the length is.
Chris Larsen [00:26:46]:
Yeah. I like that. Yeah. So you’re you’re but you’re baking in. So on both sides, you’re baking in for the lender. They’re getting equity baked in. They got they have their protections, but you’re also baking in additional time. So if your contractor can’t get to it, if it sits on the market for a little bit longer period of time, if it takes longer to sell, for instance, and you still have that time and that leeway.
Chris Larsen [00:27:07]:
So if, yeah, if you wanna get into this, you should certainly understand all these things. Jay, I wanna get in. You have you have a terrific website. I was checking it out before, you know, before, we we booked you on the show. And, you’re also a 2-time national bestseller. So you got a few things for the audience, you know, whether you wanna learn about this, whether you wanna dive in a little deeper, share a little bit about the resources that our listeners can find on your website.
Jay Conner [00:27:32]:
Sure. So I’ve got 3, for your audience, Chris. First of all is my book, which is called Where to Get the Money Now. Where to Get the Money Now. And, do you know the US Postal Service is actually still in business? You can’t download this book. We’re actually gonna priority mail it to y’all, and autograph it. This book is an easy read.
Jay Conner [00:27:54]:
I walk you through step by step exactly how I raised that $2,000,000 in less than 90 days and how I am still now with no chasing, begging, selling, or persuading. It’s all about sharing. Also in the book, if you don’t have a large network, Chris, I think most of your audience does have a large network. But if you don’t have a large network, I actually teach, other real estate investors how to grow your network very quickly. Well, you can get this book. We’ll ship it to you at www.JayConner.com/Book. That’s www.JayConner.com/Book.
Chris Larsen [00:28:40]:
And we’ll have that right here in the show notes if you’re listening. Also, you can check out, your podcast show notes as well if you’re not watching here on YouTube.
Jay Conner [00:28:50]:
Absolutely. Yeah. Raising Private Money is the name of my, podcast. Easy to find. And then thirdly, I got a $3,000 gift for your audience as well, Chris. Oh. I put on what’s called the Private Money Academy conference, a live event 3 times a year right here in Atlantic Bay, North Carolina.
Jay Conner [00:29:13]:
And, during February, June, and October. And, this is a $3,000 event for 2 people. For your audience, Chris, only a $97 registration fee. And here you can check out the website and see what we do at this event. Obviously, we do about Private Money. But that website, where you can get the small registration fee is www. Jaysliveev.com.jaysliveevent.com.jaysliveevent.com.
Chris Larsen [00:29:45]:
Outstanding. And we are gonna make sure that we have all these the the book link, the podcast link, and the special offer that you just offered here, Jay, for the live event all down here in the show notes. I got it all recorded here. So I know you’ve already said it, but what’s the best way for people to get in touch with you and learn more? Is it going to your website, www.jayconner.com?
Jay Conner [00:30:05]:
You just go to www.JayConner.com. And right there on the home page, I’ve got a free master class that’s 45 minutes and summarizes, the steps of raising the Private Money.
Chris Larsen [00:30:20]:
I love it, Jay. Listeners of the show know that we are passionate about helping you achieve financial independence, and we are passionate about bringing people like you, Jay, onto the show to share, you know, their knowledge, their resources. And you’ve been very generous with those today. So thank you so much for sharing not only your story but also all these resources with the audience today.
Jay Conner [00:30:39]:
Chris, thank you so much for having me on. God bless you.
Chris Larsen [00:30:43]:
God bless you as well, and hopefully, we get to connect next time you’re up here in beautiful Asheville.
Jay Conner [00:30:47]:
I’m looking forward to it.
Narrator [00:30:49]:
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.