Credits to:
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Private Money Mastery: Proven Tactics from a Leading Lending Expert
Private Money Mastery: Proven Tactics from a Leading Lending Expert
In the latest episode of the Raising Private Money podcast, Jay Conner joins Dave Wolcott on his Wealth Strategy Secrets of the Ultra Wealthy podcast and shares invaluable insights into wealth-building through private money lending. Jay’s journey from facing financial constraints to securing over $2,000,000 in private funds is both inspiring and instructional for anyone looking to thrive in the volatile world of real estate investments.
The Two Key Mistakes in Real Estate:
Jay Conner’s successful real estate career wasn’t built overnight; it was forged through hard lessons and strategic pivots. He begins by discussing two major mistakes he made early in his real estate journey:
- Lack of Proper Guidance:
Jay Conner emphasizes the importance of having a mentor or guide when starting out in real estate. Without proper advice, he found himself making costly decisions that could have been avoided with the right guidance.
- Overlooking Carrying Costs:
Another crucial mistake was not adequately calculating the carrying costs on rental properties. Overlooking these costs can drain resources and diminish profits, underlining the necessity of detailed financial planning.
Leveraging Tax Strategies and Self-Directed IRAs
Jay delves into sophisticated tax strategies related to self-directed IRAs, which enable private lending while offering substantial tax advantages. Both borrowers and lenders benefit: borrowers get quick, flexible funding, while lenders enjoy significant tax relief. This win-win strategy highlights the innovative ways investors can minimize tax liabilities while accelerating wealth growth.
The Power of Private Money Over Traditional Lending
One of the pivotal moments in Jay’s career came when he lost his bank credit in 2009. This forced him to explore alternative funding options, which led him to the world of private money lending. Jay contrasts private money with traditional bank loans, emphasizing several advantages:
Control and Flexibility:
Unlike banks, private money lending allows you to set your own terms, avoiding rigid requirements.
No Down Payment Deals:
Private money deals often do not require down payments, making it easier to secure properties.
Quick Closings:
Speed is crucial in real estate, and private lenders can close deals much faster than traditional financial institutions.
No Origination Fees:
Banks often charge hefty fees, which are absent in private deals.
Productive Habits that Drive Success
The Rule of 5:
Prioritize five key activities that align with your goals, ensuring you stay focused daily.
Scheduling Success:
Jay advocates for scheduling critical tasks and activities, making sure they are non-negotiable aspects of your calendar.
Success Nuggets and Strategies
Secure Deals with Private Money:
Jay’s method involves securing properties using private money and providing significant protections to lenders, such as collateralizing the notes and naming them as mortgagees on insurance policies.
Diverse Uses of Private Money:
Funds can be utilized for purchases, refinancing, and renovations, providing a versatile financial tool.
No Limits on Borrowing:
There’s no cap on the amount of private money you can borrow or the number of lenders you can work with, allowing infinite potential for scaling your business.
Thriving in Smaller Markets:
Jay’s success in Carteret County and Craven County suggests that smaller markets can yield high returns without the intense competition of larger cities.
Learning from Two Decades of Real Estate Experience
Jay’s two-decade-long journey offers multiple lessons:
Networking:
Building a robust network of private lenders is foundational to securing consistent funding.
Adaptability:
Be prepared to pivot and find alternative solutions when traditional methods fail.
Mentorship and Education:
Continuous learning and guidance from seasoned mentors are invaluable.
Conclusion
Jay Conner’s experience and expertise in private money lending reveal that even setbacks can open doors to groundbreaking opportunities. His pragmatic advice—from learning from mistakes, leveraging tax strategies, adopting productive habits, and offering valuable resources—provides a comprehensive roadmap for thriving in real estate investments. Whether you’re a novice or a seasoned investor, integrating Jay’s strategies can propel you toward financial freedom and success in the real estate market.
No More Desperate Pitching:
“What do I do? Well, I put on my teacher hat. I teach people how they could earn high rates of returns safely and securely without pitching any kind of a deal.” – Jay Conner
10 Questions Answered in this Episode:
- Initial Challenges and Lessons:
Jay Conner mentions his lack of proper guidance and failure to calculate carrying costs as key mistakes. How can new real estate investors avoid these pitfalls?
- Tax Strategies:
How do self-directed IRAs provide tax advantages for both private lenders and borrowers in real estate transactions?
- Advantages of Private Money:
What are the main benefits of using private money over traditional lending methods as demonstrated by Jay Conner?
- Productivity Hacks:
Jay Conner advocates for the rule of 5 and scheduling successes. How can these productivity strategies be applied outside of real estate investing?
- Educational Resources:
What are the key takeaways from Jay Conner’s book “Where to Get the Money Now,” and how can it help real estate investors?
- Pivoting During Financial Crisis:
How did Jay Conner’s experiences during the 2009 financial crisis shape his approach to securing funds for real estate deals?
- Building a Network:
Why is networking considered crucial in private money lending and real estate investing, according to Jay Conner?
- Loan Terms:
How does Jay Conner structure loan terms to benefit lenders, particularly with 8% interest secured with a deed of trust and 10% for second-position funds?
- Protecting Lenders:
What measures does Jay Conner take to ensure the security of his private lenders, and how effective are these measures?
- Market Adaptability:
With low inventory in the flip market, how does Jay Conner adapt his strategies for real estate investing in different market conditions?
Fun facts that were revealed in the episode:
- Jay Conner has impressively never missed a real estate deal due to a lack of funding since he pivoted to private money lending in 2009.
- As a testament to his successful strategies, Jay currently has $1.5 million from private lenders readily available and waiting to be deployed into new deals.
- Generously, Jay offers his book “Where to Get the Money Now” for free to podcast listeners, asking only for shipping costs, to help others learn how to secure funding for their real estate ventures without relying on traditional lenders.
Timestamps
00:01 – Raising Private Money With Jay Conner
06:17 – Unexpected line of credit closure during the global crisis.
09:32 – Financial security is assured with abundant private funding.
11:11 – Empowerment through alternative wealth strategies for savvy investors.
16:04 – Leveraging excess funds through strategic property investment.
20:17 – Private lenders provide expedited, credit check-free financing.
22:13 – Borrower outlines loan details for private lenders.
24:12 – Strategy involves buy and hold, renovations, and flipping.
27:56 – Utilize tax-advantaged self-directed IRAs for borrowing.
31:58 – Jay Conner’s Free Money Guide: https://www.JayConner.com/Book
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
Jay Conner’s Proven Guide to Using Private Money for Real Estate Investing
Narrator [00:00:01]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:00:28]:
That’s another big advantage. When you borrow money from the bank or institutions, you’re gonna have to personally guarantee that note. In the world of private money, no personal guarantees.
Narrator [00:00:38]:
Welcome to the wealth strategy secrets of the ultra-wealthy podcast, where we help entrepreneurs like you exponentially build wealth through passive income to live a life of freedom and prosperity. Are you tired of paying too much in taxes, and gambling your future on the stock market, and want to learn about hidden strategies for making your money work for you? And now your host, Dave Wolcott, serial entrepreneur and author of the best-selling book, The Holistic Wealth Strategy.
Dave Wolcott [00:01:11]:
Everyone, welcome to today’s show on wealth strategy secrets. Today, we are joined by Jay Conner. Jay has been a successful real estate investor since 2003 who started with modest beginnings. Today, we’re going to learn how he teaches investors to raise private money without direct solicitation. After losing his bank credit back in 2009, he has since secured over 2,000,000 in private funds. Jay is also a 2-time national best-selling author and speaker on private funding. Hope you enjoy the show. Jay, welcome to the show.
Jay Conner [00:01:48]:
Hey there, Dave. Thank you so much for inviting me to come along to be here on your show to talk about my favorite subject, which, of course, is private money. And the reason I’m so excited about private money is in our real estate investing business, it’s had more of an impact than any other strategy or anything else we’ve done all the way since 2003 when we started.
Dave Wolcott [00:02:10]:
100%, Jay. I know this is gonna be a great discussion. It’s gonna create tons of value for the listeners and and really unpack, I think, you know, some of these secrets that people don’t really know, right, about how to do, deals without money, how to access, hard money lending, and how to try to figure that out so you can use that in your portfolio to really accelerate your wealth out of nothing. But before we get into some of the tactics, why don’t you share with the audience, you know, a little bit about your backstory and how you really got, into this wonderful world of investing with hard money?
Jay Conner [00:02:47]:
Exactly. I guess, well, I guess the first thing I should differentiate is when I talk hard money, I’m speaking of a broker that actually has gone out and raised money for a fund. Right? Then they lent it out to real estate investors. And so in my world of private money, we’re talking about raising money from individuals just like you and me, ordinary ordinary people that are using their investment capital, liquid capital, and or their retirement funds to invest in our deals. You know, self-directed IRAs. I never heard of private money or self-directed IRAs until 2,009 when I lost my line of credit at the bank, but individuals can use just their liquid capital and or their retirement funds if they transfer those funds over to an IRS-approved third-party custodian, then can loan out to us real estate investors. But my back story, Dave, is my wife, Carol Joy, and I, we live in this very, very small town that you are familiar with, Moorhead City, North Carolina, population, of 8,000. Our entire target market is only 40,000 people, and we do about 2 to 3 deals a month.
Jay Conner [00:04:03]:
Our average profits are $82,000 for each deal right now. I don’t say that to brag at all. I say that to make a point. You don’t have to be investing in a large populated area to really make significant income. And in fact, there’s an argument to be made that you have a big advantage investing in the smaller markets, because you don’t have all that competition that you do in the larger cities. And so I’m enjoying it, and I have been since 2000 3. I’ve been enjoying being a big fish in a small pond because I just don’t have that much competition at all when it comes to the deals. So we started, as I said, in 2003, full-time investing in single-family houses.
Jay Conner [00:04:46]:
We’ve done other types of real estate as well. We’ve done, done shopping centers from the ground up, and condominium developments from the ground up. But my focus has been single-family houses. So from 2003 to 2009, I borrowed money traditionally. I went to the bank. That’s all I knew to do. I thought if you need, if you’re going to get funds, you know, for, I mean, I never even heard of hard money lenders, brokers, which is still institutional money. I hadn’t heard of that.
Jay Conner [00:05:15]:
So the 1st 6 years, it was traditional. So what did I do? I went to the bank. I got on my hands and knees. I put my hands underneath my chin, and I said, please fund my deal. Right? And had to pay origination fees. They pull my credit. I got to give, you know, financial, returns and etcetera and on. And they made the rules.
Jay Conner [00:05:38]:
Well, I called up my banker. His name was Steve. And Dave, you may find this hard to believe, but still here in Morehead City, we have these things called handsets that have cords attached to them to an actual telephone on the desk. Anyway, so I was sitting here at my desk. I picked up my telephone in January of 2009. I’d already been doing the business for 6 years, and I called up Steve my banker. I had 2 houses under contract that represented over $100,000 in profit between those two deals. And I called him up.
Jay Conner [00:06:11]:
I told him about the deal. Steve and I had had this conversation many times. We’ve done many deals in those 1st 6 years. And I learned to like that, Dave, that my line of credit had been shut down with no notice.
Jay Conner [00:06:17]:
I don’t have a line of credit. And I said, Steve, what do you mean you’ve shut down my line of credit? Don’t have a line of credit. And I said, Steve, what do you mean you’ve shut down my line of credit? I have a great history with you, always making our payments on time, etcetera. He said, Jay, don’t you know there’s a global financial crisis going on? I said, no. But now you’ve just given me a global financial crisis. And so I hung up the phone, and I sat here for a moment, and I asked myself a very, very important question. I asked myself, I said, Jay, who do you know that can help you with your problem? And by the way, these people running around saying every problem is an opportunity.
Jay Conner [00:06:59]:
I wanna throw up. I didn’t have an opportunity. I had a problem. I didn’t have a way to fund my deals. So, immediately, when I asked myself that question, I said, Jay, who do you know that can help you with your problem? I immediately thought of Jeff Blankenship, a good friend of mine. He was living in Greensboro, North Carolina at the time, investing in single-family houses. I called him up and I told him what happened. He said, well, Jay, welcome to the club.
Jay Conner [00:07:27]:
I said, what club? He said, the club of the bank shutting you down. They closed my line of credit last week. I said, well, Jeff, how are you gonna fund your deals? He said, well, have you ever heard of private money? And I said, no. He said, have you ever heard of self-directed IRAs? And I said, no. And so I hung up the phone with Jeff, and I studied private money. And so I put my own program together as to what I would offer people in my own warm market that I go to church with, go to the rotary club with, they’re in my cell phone. I put my program together as to what I was going to teach. So, you know, the traditional way to borrow money is you’re asking for a mortgage.
Jay Conner [00:08:06]:
Right? In this world of private money, there’s no begging, no selling, no chasing. What do I do? Well, I put on my teacher hat. Well, what’s my teacher hat say? My teacher hat says, private money teacher. So I simply just started teaching people in my own network how they could earn high rates of returns safely and securely without pitching any kind of a deal. You know, desperation has got a smell to it. And if you’re talking about a deal and somebody becoming a private lender for you, You’re already sounding desperate without without even trying to sound desperate. So, how do we have 8 and a half $1,000,000 that we just churn from project to project? Well, we separate the conversations between teaching the private lending program and how an individual can earn high rates of return safely and securely. They tell us how much they’ve got to work with, and then we call them up with the good news phone call, And we don’t even pitch the deal.
Jay Conner [00:09:09]:
I don’t even ask them for money. I give them the good news phone call and say, hey, Dave. I’ve 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 is 150,000. Closing’s next Friday. You’ll need to have your funds wired to my real estate attorney by next Thursday, the 150.
Jay Conner [00:09:32]:
And by the way, I know Dave’s got 150 because he already told me when I taught him the program, that I’m role-playing as though Dave is one of my new private lenders. And I say, I’ll have my attorney email you the wiring instructions. And that’s the end of the conversation. Notice I didn’t ask, do you want to fund the deal? Of course, you want to fund the deal because particularly if you’ve moved retirement funds over to a self-directed IRA company, you’re not making any money until I give you the good news phone call. So that’s how we launched this thing. Never missed out on a deal since 2009 because of not having the funding. In fact, we have a problem today, and that is having about 1,000,000 and a half dollars sitting on the shelf from our private lenders, waiting to be put to use. But isn’t that a good problem instead of having deals and no money? I’d rather have the money because the money comes first and there’s always going to be deals.
Jay Conner [00:10:27]:
Dave, I’m going to share this with you. Then I’ll turn it back to you. I’ll tell you something that drives me crazy, and I know you’ve heard it, but it drives me crazy. These educators and gurus out there that are teaching real estate investing, they’ll say, oh, just get the deal under contract. The money will show up. I know you’ve heard that. And I want to say, where? Where is the money going to show up? So think about how much more confident that you can be, making offers when you know you’ve got money burning a hole in your back pocket, ready to go to work.
Dave Wolcott [00:11:02]:
Yeah. Very interesting, Jay. I think you actually really did take that problem and turn it into an opportunity.
Jay Conner [00:11:10]:
Oh, it was.
Dave Wolcott [00:11:11]:
Now now certainly propelled, your business 10 x. So that was pretty good. But, you know, one of the things that I find, you know, really fascinating about this entire space of really kind of alternative, wealth strategy conventional thinking, conventional systems, and frameworks put you into their machine and you have no control, you know, just like you were saying, you know, around the entire lending process. And we’ve all been through that process even whether it’s your primary residence, a second family, or a rental, or things like that, and you’re just completely at the whim of the banker. So coming up with alternative solutions and really kind of, you know, creating your own chessboard, you know, where you are always winning is really what separates the savvy investors. So I really love the concept, Jay, I’d like to unpack this further because I think this is a new concept for many people of how hard money lending works. I mean, what types of assets are you guys purchasing? Do you have certain underwriting standards? Do you have targets that you’re looking for around metrics? What about return profiles? Things like that.
Dave Wolcott [00:12:32]:
Let let let’s start to kinda walk people through, the process a little bit more.
Jay Conner [00:12:36]:
Sure. Sure. So as far as the program or the underwriting terms that we offer our private lenders. It’s all the same. We don’t have different deals or different rates with different private lenders. Because after all, they talk among themselves, particularly if you are, you know, fishing or attracting money from your own warm market. Well, birds of the same feather flock together. And so first of all, the interest rate we pay is 8%, and I’ve been paying the same interest rate since 2,009.
Jay Conner [00:13:11]:
And people will say, well, Jay, I mean, interest rates, you know, even at the local bank, I mean, interest rates are higher. I mean, prior to COVID, the 12-month average certificate of deposit got down to 0.17%. 0.17%. And now today you can go down here to First Citizens Bank and you can get an 8-month CD for 5%. And they say, how can you still be paying 8%? And I say, it’s really simple. 8% is still a whole lot more than 5%, and it’s not unsecured. It is secured with a deed of trust, which most people call a mortgage. You’re in North Carolina.
Jay Conner [00:13:53]:
It’s a deed of trust that collateralizes the note. So we’re not borrowing any unsecured funds. You can use private money in the second position for smaller amounts of money, such as for rehabbing or whatever, and we’ll pay 10% of that money. So that’s the interest rate. The length of the note is typically 2 years, is the length of the note. The maximum loan to value, by the way, just as a side note, Dave, did you know that all 47 private lenders, that’s how many Carol Joy and I have right now, 47 private lenders that are funding our deals? And by the way, if you’re listening to this show, you don’t need 47 private lenders. Start out with 1 or 2, and that’ll get you going.
Jay Conner [00:14:33]:
My first private lender started out with $250,000 But anyway, my land stayed. I got so excited. I lost my train of thought. But anyway, the interest rate’s 8%, 10% in 2nd position. Now the maximum loan-to-value is 75%, of the total loan-to-value. So none of my private lenders, by the way, had ever heard of private money or private lending until I told them about it. Right? I mean, this was all brand new to them. And so when I say I teach them the program, I’m going over right now as to the program that I teach them.
Jay Conner [00:15:09]:
What’s the interest rate? How you can get your money back in case of an emergency? Total loan to value, etcetera. So when I say total loan to value, what I’m talking about is if you have more than 1 private lender being secured by the same property, which you can, you want to add all the notes up and divide by the after-repaired value. I didn’t say the purchase price. Divide by the after-repaired value, and that would be a total of 75%. So let’s say that I have a house with an after-repaired value of $200,000 Let’s say I have one private lender that funds to purchase at 100,000 and another private lender, in second position loans 50,000. So I add those two notes together. That’s 150,000 divided by 200,000. There’s your maximum total loan to value of 150.
Jay Conner [00:16:04]:
But, however, as a side note, we always bring home a check when we buy the property. Well, how do we do that? Because we’re borrowing more money than we need to purchase it. So if I bought a property for $100,000 that needs rehab and renovation, buy it for 100, after-repair value 200. Well, if I buy it for 100 and I borrow 150, I’m bringing home a $50,000 check, excess cash to close on the real estate attorney’s check stub. And, of course, someone used most of that $50,000, you know, for the renovation or the rehab. So that’s the total loan to value. We give our lenders what’s called a 90-day call option in the promissory note, which means if they have any kind of emergency come up, they just give me a 90-day notice. That’s plenty of time to replace their private money on that deal with another one of our private money lenders.
Jay Conner [00:16:58]:
And then, we, as I said, we collateralized the note, but we also gave our private lenders further protection. We name our private lenders as the mortgagee on the insurance policy, the property and casualty, insurance policy. So if there’s ever a claim against the property, the insurance company is gonna make the insurance check payable to the mortgage lender, the private lender, and to our company as well. And so it’s not unsecured. It’s backed by the real estate that we are purchasing. By the way, as a side note, private money is not only for purchases. You can use private money on a property that you already own free and clear, or it’s got equity in it. And if you need to pull cash out of it, then you can refinance that property that you already own with private money.
Jay Conner [00:17:48]:
So those are the main ways that we’re underwriting the deal and protecting our private lenders.
Dave Wolcott [00:17:53]:
What if everything you thought you knew about investing was wrong? Would you like to create a wealth strategy with downside protection, tax efficiency, predictable cash flow, and a lucrative upside? Discover how with the Pantheon Advantage and join our investor club today at www.pantheoninvest.com. Yeah. Okay. Tell us, you know, from the consumer perspective. Right? Why would someone be looking for private money lending? Is it because they can’t get traditional financing? What are the top use cases of, you know, what someone’s looking for? And assuming you’re only talking, in this case, of single families.
Jay Conner [00:18:39]:
Yeah. Well, I have 15 reasons I love private money over institutional money, but I’ll give the main ones in no particular order. Number 1, and you alluded it, alluded to it, Dave when you said control. In this world of private money versus the bank or commercial or hard money lenders or brokers. They’re making the rules. They’re setting the interest rate. And this is one of the big things I had to get wrapped around my head when I first started doing it. There’s no begging, chasing, selling, persuading.
Jay Conner [00:19:10]:
It’s all about attracting. And so we’re we’re leading with a servant’s heart and educating people. So when you go into the bank, they’re making the rules. In this world, we’re making the rules. Number 2, cash flow. So all private money deals that I do, are essentially a no down payment deal. Because I’m not having to take I never have to take any of my own money to the closing table when I’m purchasing. I’m getting 100% financing for the purchase.
Jay Conner [00:19:42]:
And then if there are renovations involved, I’m getting all that money upfront as well. Thirdly, there are no origination fees. So there are no points and no origination fees. We just pay a straight 8% or 10%. Fourthly, in addition to what, I mentioned earlier, we always bring home a big check, when we buy. In addition to that, my credit score has nothing to do. Your credit score has nothing to do with how much private money you can get. Because private money is a collateral-based note.
Jay Conner [00:20:17]:
Private lenders are never gonna pull your credit score. First of all, they don’t even have the ability. Cause these are individuals, you know, just like you and me. Another big reason is fast closings. I mean, when you’re borrowing institutional money or doing business for the bank, I’m surprised anything ever closes. I mean, you know, you’re looking at at least 4 weeks or more to be able to close. Some hard money lenders can do 3 weeks, but in this world of private money, I can actually close in 3 days on a deal. I make all of my offers that I can close in 7 days.
Jay Conner [00:20:51]:
So speed wins more offers being accepted. Another big reason. There’s no limit to the amount of private money that I can borrow. When I was borrowing money from the banks, there was a limit to the amount of money I could have at any given time. In addition to that, there’s no limit to the number of private lenders that I can have, and it doesn’t matter where they are. They don’t have to be in the state where you’re doing business. They can be anywhere. They can be out or they can be international.
Jay Conner [00:21:22]:
The reason for that is that private money is not regulated by the commissioner of banks like institutional money is. So the list is very long. It just puts you in control of your business.
Dave Wolcott [00:21:36]:
Sure. And then how about the consumer? Right? So if you’re, doing that type of lending, are you typically working with consumers who are looking to basically purchase a single-family residence, a second home? I mean, is there some type of niche that you’re going after? Is there a certain price point that you have kind of defined to really manage your risk and understand who that consumer is?
Jay Conner [00:22:02]:
Now when you say consumer, are you talking about the real estate investor or the private lender?
Dave Wolcott [00:22:07]:
I’m talking about the person who’s getting the actual loan.
Jay Conner [00:22:11]:
The the borrower. The borrower.
Dave Wolcott [00:22:12]:
The borrower. Yeah.
Jay Conner [00:22:13]:
Yeah. So in my case, you would want to share this with your private lenders. In my case, you wanna let your private lenders know what your geographics are. So everything that I’m investing as the borrower is all right here in Carteret County and Craven County, right around where I live. Secondly, as far as my price points go, that really doesn’t matter to the private lender, because all they have available is all they have available. I do have minimums. So my minimum loan amount that I will borrow is $50,000 from a private lender. Used to, it was $30,000 but, as far as the properties that I’m investing in as the borrower of the private money, is single-family houses up to, $1,000,000 because, you know, we’ve got luxury homes here, at the beach.
Jay Conner [00:23:09]:
And so that million mark and under is what we operate in. Most of the time, most of them are around the median price point, which is now, right around $350,000.
Dave Wolcott [00:23:23]:
Got it. Because I think there’s 2, you know, there’s 2 opportunities for people here. Right? Right? You know, one is that borrow borrower, right, who is looking to say, hey. I, you know yeah. I can’t get bank approval or something, or maybe I’m just trying to get an investment property. Right?
Dave Wolcott [00:23:42]:
You know, they won’t they won’t let me do that for whatever reason. So this could be an alternative play to get that second home, that Airbnb, you know, the single-family rental or something like that on the side is a good alternative solution. And at 8%, you know, that’s that’s definitely a qualitative loan. So and then you typically hold those for 24 months on average. So then what what happens after that? Do people typically convert to conventional at that point?
Jay Conner [00:24:12]:
Well, if it’s a buy and hold, then after you’ve got it seasoned with rental income coming in, if renovations were needed to be done, you got that done. So I’m typically not gonna be holding, for the long term, a single-family house or an Airbnb short-term rental, I’m typically going to refinance if I’m on hold with conventional money. But I would use private money to get in the deal. Most of the deals that we’re doing today are actually flips, because of the market here, there’s no inventory in the multiple listing service. So all the houses that we buy now are what we call off-market houses. So we use, you know, Google, pay-per-click, Facebook ads, direct mail campaigns, outbound calling, etcetera, to find the deals. And when we get them renovated and put them in the multiple listing service, they’re gone. I just listed a house a couple of weeks ago on a Friday.
Jay Conner [00:25:10]:
And by Sunday, we had 22 showings on that one single-family house. So most of the time today, I’m using in this market, I’m using private money for the flips. But you can use private money, as I have in the past, a lot. Get in and then refinance if you’re gonna hold it for the long term.
Dave Wolcott [00:25:32]:
Yeah. Jay, what have been the top lessons learned in doing this business for the past 20 years?
Jay Conner [00:25:40]:
Well, I learned one lesson the hard way, and that is don’t start out in this business by yourself without working with somebody who knows what they’re doing for goodness’ sake. So don’t start out there on an island. I relied on my mobile home experience. I don’t know if you remember the days, Dave, when you lived here in the area of Conner Homes or Conner Mobile Homes. It was pretty large at the time, and that was my father’s business, actually. But, anyway, I was relying on that experience and just reading books. So don’t make my mistake in that regard. And here’s another big mistake that I made when I started out that you don’t want to make.
Jay Conner [00:26:25]:
And here it is. I bought this condominium. It was a foreclosure at the courthouse. I bought this condominium that was over at Atlantic Beach, and, my intention was to flip it. That was my intention, was to buy it, renovate it, and flip it. Well, by the time that I got the renovation completed, and I’m putting it in the multiple listing service, the market had already started coming down pretty quickly, and I didn’t get it sold in the multiple listing service. So I had no choice but to put it on the rental market. Well, guess what? A condominium at Atlantic Beach pretty much only has 13 weeks of rental income, and that’s from Memorial Day until Labor Day.
Jay Conner [00:27:11]:
Most of the rest of the time in Atlantic Beach, it’s gonna be sitting vacant. And so here’s the mistake. And it was a bloodbath. It was a bloodbath, because here’s the mistake I made. I did not calculate my carrying cost and compare that to what rental income I could bring in, in case I had to rent it out. So the lesson learned is, even if your intention is to flip it, you better run the rental scenario in case you gotta rent it out, and make sure it’s a positive cash flow.
Dave Wolcott [00:27:47]:
That’s a great point. And have you uncovered any, particular tax strategies around, doing private lending as
Jay Conner [00:27:56]:
well? Tax strategies. Well, one definitely relates to self-directed IRAs. So when a private lender is borrowing money I mean, when, when you, the real estate investors, borrowing private money from a private lender, and the lender has moved retirement funds over to a self-directed IRA company, and now they’re loaning it out. And so they are a passive real estate investor. Then from their side of the desk, the income that they earn, and the interest that they earn on that money is either tax-deferred, or it could be tax-free if their retirement account is a Roth IRA because Roth IRAs are created with after-tax dollars. The benefit to you is, borrowing the private money, then obviously, the interest, you get to write all that interest off. So you’ve got that tax advantage as well. It’s a write-off for your company.
Dave Wolcott [00:29:01]:
Got it. And if you could give just one piece of advice to our listeners, Jay, about how they could accelerate their own wealth trajectory, what would it be?
Jay Conner [00:29:11]:
Use other people’s money because your money eventually, unless you are Bill Gates or somebody, is gonna run out, and you’re not gonna be able to scale your business. I hear it all the time. Real estate rich and cash poor. Here’s another big benefit to using private money. Did you know that when you’re using private money, and if you have to give someone your financial statement, you do not have to put your private lender loans on your financial statement? Why is that? Because private money is not personally guaranteed. It’s backed by the real estate. That’s a big advantage right there.
Jay Conner [00:29:53]:
Help your financial statement look much, much healthier without having to report personal or, private lending loans. You know, that’s another big advantage. When you borrow money from the bank or institutions, you’re gonna have to personally guarantee that note. In the world of private money, no personal guarantees.
Dave Wolcott [00:30:12]:
Yeah. That’s a good one for sure. What’s your top personal productivity hack?
Jay Conner [00:30:19]:
The rule of 5. The rule of 5, which I learned from Jack Canfield some years ago. The way the rule of 5 works is before the end of your work day, you identify the top 5 activities or things for you to do or work on the next day. And you identify that instead of getting up in the morning and running around with your hair on fire. So identify those important activities for working on your business. That’s where you really make the money how you’re working on your business, improving your business, instead of being in the business all the time. And I’ll give you one more I’ll give you one more hack as well on efficiency. And this is a quote that I coined, and that is successes are scheduled.
Jay Conner [00:31:11]:
I really don’t like to-do lists. If it’s important to be on the to-do list, it needs to be on my calendar as to when it’s going to be done. So you can do time blocking. You can do 90-minute time blocks on your calendar, as to when you’re gonna work on maybe more than one item that’s on a list. But get it scheduled, and identify it at least the day before. Get it on the calendar.
Dave Wolcott [00:31:37]:
Good one. Love it. Jay, it’s been really a pleasure having you on the show and really unpacking your wisdom on private lending, which has been very insightful. And I know that you came to the show today with a special gift, for the audience. So if you’d like to, share that with the listeners, that’d be great.
Jay Conner [00:31:58]:
I would love to, Dave. So I finally wrote my book on private money as to how you, the borrower, the real estate investor, can get all the money you need for your real estate deals. The name of the book is where to get the money now. The subtitle is How and Where to Get Money for Your Real Estate Deals without Relying on Hard Money or Traditional Lenders. This is not an ebook. This is an actual book, a physical book. It’s on Amazon for $20, but I’d like to give it to you here on Dave’s show for free. Just cover shipping.
Jay Conner [00:32:34]:
I’ll autograph it, and we’ll send it out to you 3-day priority mail. You can pick up the book at www.JayConner.com/Book. Again, that’s www.JayConner.com/Book, and I’ll rush it right out to you. Awesome.
Dave Wolcott [00:32:57]:
Thanks so much, Jay. Appreciate it.
Jay Conner [00:33:00]:
Dave, thank you so much for having me. God bless you.
Narrator [00:33:02]:
Thanks for listening to this episode of Wealth Strategy Secrets. If you’d like to get a free copy of the book, go to www.HolisticWealthStrategy.com. That’s www.HolisticWealthStrategy.com. If you’d like to learn more about upcoming opportunities at Pantheon, please visit www.Pantheoninvest.com. That’s www.Pantheoninvest.com.
Narrator [00:33:22]:
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.
