Episode 233: Fundamentals of Private Money and Real Estate Investment: Insights From Jay Conner

***Guest Appearance

Credits to:

https://www.youtube.com/@TheClosingTablePod 

“Jay Conner Discusses Private Money Raising”

https://www.youtube.com/watch?v=cNtgseDPZMk

 

Today, on the Raising Private Money podcast, Jay Conner had an amazing time joining Kat Schooler on The Closing Table Podcast. During the discussion, Jay elucidated the stability of private money lending compared to traditional investment avenues and shared invaluable insights on attracting private lenders. Here’s an in-depth look into the segments of their dialogue.

Stability of Private Money Lending vs. Stock Market

Jay Conner draws a clear distinction between private money lending and stock market investments. Unlike the stock market, where values fluctuate wildly, private money offers a more stable route. When lending private money, the principal amount remains constant until cash-out, behaving similarly to a bank CD. This stability allows for predictable returns, an invaluable feature for any investor looking to mitigate risk.

Finding Private Lenders: Three Essential Categories

Jay lays out a comprehensive strategy for finding private lenders, categorizing them into three pivotal groups:

  1. Personal Connections: Utilize your existing network. Family, friends, social media contacts, and community members are all potential sources of private money. Jay emphasizes that an active online presence, akin to his, can bolster these efforts significantly.
  2. Expanded Warm Market: Build and grow your connections by joining networking groups like Business Networking International (BNI). These groups offer a fertile ground for expanding your influence and tapping into broader financial resources.
  3. Existing Private Lenders: Seek out individuals who already have self-directed IRA accounts. These seasoned investors are often keen on private lending opportunities and understand the mechanism and benefits involved.

Leveraging Social Media to Attract Lenders

One of the significant revelations from the discussion is the compelling use of social media for attracting private lenders. Jay advises using platforms like Facebook and Instagram to showcase ongoing projects and successful deals. However, he cautions against directly mentioning terms like “private lending.” Instead, he advocates creating curiosity by inviting questions, which compels potential lenders to reach out for more information.

Personal Journey and Transition to Real Estate

Jay Conner’s journey from the mobile home industry to real estate investing is both inspiring and instructive. His transition was catalyzed by a significant disruption in 2002 when Wall Street funding for manufactured housing was cut off. By 2003, Jay had pivoted to flipping single-family homes, a venture that has seen him rehab over 500 homes with substantial average profits per deal.

A key challenge early in his career was assembling a reliable team. He underscores the importance of delegating tasks and avoiding the pitfalls of trying to handle everything alone. This realization led to automating his business operations, enabling him to work a lean 5-7 hours per week while focusing on education and teaching others through platforms like his podcast, “Raising Private Money.”

The Game Changer: Private Money Post-2008 Crisis

Jay recounts the 2008 financial crisis, which abruptly closed his line of credit. This crisis turned into an opportunity when fellow investor Jeff Blankenship introduced him to private money lending using self-directed IRAs. In an impressive feat, Jay raised $2,150,000 from private lenders within just 90 days without any direct solicitation for funds.

Jay underscores the importance of self-education and educating the community about private money. His motto is to lead with a servant’s heart and aim to inform individuals unaware of the profitable and secure nature of private investing.

Building Trust and Ensuring High Returns

Trust is the cornerstone of private money lending. Jay recommends offering an 8% interest rate to private lenders, aligning with industry standards set by hard money lenders. This rate, steady since 2009, makes private lending an attractive proposition even in fluctuating market conditions.

To build trust, Jay advises new lenders to leverage their track record, use secured investments, and maintain transparency. The focus should be on providing high returns safely and securely, thus attracting private lenders by demonstrating the trustworthiness and potential of their investments.

Educational Outreach and Private Money Challenge

Further emphasizing his dedication to education, Jay promotes his “Private Money Challenge,” a 7-day online course designed to teach participants how to raise significant private capital. This initiative is part of his broader mission to demystify private money lending and empower more people to harness its benefits.

In essence, whether you’re a seasoned investor or a newcomer, Jay Conner’s strategies and insights offer a roadmap to successfully utilizing private money lending to achieve financial stability and growth in real estate investment. For more information and to join the “Private Money Challenge,” visit https://www.PrivateMoneyChallenge.com,  and for a deeper dive, don’t miss out on Jay’s free money guide at https://www.JayConner.com/MoneyGuide

10 Discussion Questions from this Episode:

  1. Personal Insights: Jay, you started as a real estate investor after transitioning from the mobile home industry. How did your early experiences in your father’s business prepare you for the challenges of real estate investing?
  2. Private Money vs. Stock Market: Could you elaborate on why you believe investing in private money is more stable than the stock market, and provide examples from your own experiences?
  3. Private Lender Categories: You mentioned three categories for finding private lenders. Which category do you believe is the most effective for someone just starting out, and why?
  4. Social Media Strategy: You’ve successfully attracted private lenders through social media by creating curiosity. Can you share some specific examples of posts or strategies that have generated significant interest?
  5. Business Automation: How did automating your business impact your work-life balance, and what advice would you give to entrepreneurs looking to automate their operations?
  6. Team Building: One of your early challenges was assembling a reliable team. What key qualities do you look for when hiring members for your team, and how do you ensure they align with your business objectives?
  7. Educational Pursuits: How has focusing on education and creating resources like your podcast and the “Private Money Challenge” influenced your real estate business and personal growth?
  8. Interest Rates: You recommend paying private lenders an 8% interest rate. Can you discuss how you arrived at this figure and how it compares to other investment options available to private lenders?
  9. Trust Building: Trust is crucial in private lending. Can you share more about how you build and maintain trust with your private lenders, especially those you may not have a personal connection with?
  10. Ethical Responsibility: You emphasize the ethical responsibility towards investors. How do you ensure that the investments from your private lenders are put to work promptly and managed effectively?

Fun facts that were revealed in the episode:

  1. Church Connection and Magic Phrase: Jay secured his first $500,000 in private money by approaching a church acquaintance, using the phrase “I need your help” to gain interest without directly asking for funds.
  2. 7-Hour Work Week: Through delegation and automation, Jay now effectively runs his real estate business in just 5 to 7 hours per week, allowing him to focus on teaching and podcasting.
  3. Showcase Over Sell: Jay uses social media to attract private lenders by showcasing ongoing projects and successful deals, creating curiosity without directly mentioning “private lending.”

Timestamps:

00:01 Raising Private Money Without Asking For It

05:20 Struggles in scaling business, overwhelming workload.

10:05 Private money was the biggest game changer.

14:22 Using private money and self-directed IRAs.

17:35 Created a private lending program to secure funding.

20:08 Seeking referrals for profitable real estate investments.

25:06 Ethically bound to invest client’s retirement funds.

29:00 Trust yourself and leverage prior successes confidently.

30:03 Leverage business relationships; don’t start alone.

34:40 Stock market volatile; private loans offer stability.

37:57 Network through BNI, local groups, and online.

40:51 Post projects on social media to attract lenders.

43:07 Join the private money challenge: https://www.PrivateMoneyChallenge.com 

 

Connect With Jay Conner: 

Private Money Academy Conference: 

https://www.JaysLiveEvent.com

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:

https://podcasts.apple.com/us/podcast/private-money-academy-real-estate-investing-with-jay/id1377723034 

Facebook:

https://www.facebook.com/jay.conner.marketing  

Twitter:

https://twitter.com/JayConner01

Pinterest:

https://www.pinterest.com/JConner_PrivateMoneyAuthority

 

Fundamentals of Private Money and Real Estate Investment: Insights From Jay Conner

 

 

Jay Conner [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]:

How do I get my deals funded without pitching a deal? Do not make this mistake. Do not bring up a deal that you need to be funded in the initial conversation of private money.

 

Kat Schooler [00:00:43]:

Welcome everyone to the Closing Table podcast, real accounts from real estate professionals, brought to you by windowsill. I’m your host, Kat Fuller. And today I’m sitting down with real estate investor, Jay Conner. Jay has been in this business for over 20 years and is the leading expert on private money lending. Jay has rehabbed over 500 homes, and his private money investors average $82,000 in profits per deal. Jay is also sharing everything he knows and talking to other leading real estate investors on his podcast, Raising Private Money with Jay Conner. Jay and I sit down today and talk all things private money, how to find it, how to use it, and how to build trust with your investors. There is so much knowledge packed into this episode, and Jay is just so incredibly charming.

 

Kat Schooler [00:01:33]:

I’m so excited for you to listen to our conversation. So let’s jump right in. Jay, thank you so much for joining me this morning. I’d love to kick it off with what first attracted you to real estate investing back in 03 and how you got started.

 

Jay Conner [00:01:48]:

Sure. Well, first of all, Kat, thank you for inviting me to come along. I’m so excited to be here to talk about my favorite subject, private money because it’s had more of an impact on my and my wife, Carol Joy’s real estate investing business than anything else. So what attracted me through real estate investing, full time in 2003? Well, I was raised in the mobile home business. Way back in the day, they called them trailers. Before that, they called them wobbly boxes, and then they got fancy and called them manufactured homes. So, anyway, my dad, Wallace Connor, he’s still living, by the way. He’s gonna be 91 years old next month.

 

Jay Conner [00:02:29]:

And, he’s in the middle of a building of 350 houses, new development at 91 years old, halfway built out. When I grow up, I wanna be like my dad, Wallace Hunter. Anyway, he had, at one time, the largest retailing company for manufactured homes, and mobile homes in the nation. And so I grew up around, that industry. I mean, my dad put me to work in the summertime when I was 12 years old. He had his acceptance corporation where he financed the homes, and he put me on the telephone at 12 years old, calling and checking people’s credit and talking to landlords and talking to the furniture company to see if they’ve made their payments on time. So I grew up around the industry. Well, in the early 2000s, you know, Wall Street provided all the funding for the consumers that bought the mobile homes.

 

Jay Conner [00:03:20]:

Well, the whole industry, manufactured housing, fell out of favor with Wall Street. Wall Street cut off the funding. Well, if you don’t have financing for your product, for your customers, then, you know, you can’t sell them. So we woke up in 2002, one morning, and realized we had $22,000,000 in wholesale inventory of mobile homes and had no way to sell them. And so, it’s a lot more fun building a new company than shutting down an old company. So we spent about a year liquidating everything, and I and I already decided before that if I ever got out of mobile homes, I wanted to get into single-family houses and be a flipper. And that was before HGTV even existed, which by the way, is not reality TV. There’s nothing real about HGTV.

 

Jay Conner [00:04:05]:

But anyway, so I, Carol Joy, and I bought our first, single-family house to flip, to rehab, flip, and sell it in 2003, and we’ve been full-time ever since. In a small town here in Eastern North Carolina, our total target market is only 40,000 people, but we do 2 to 3 deals a month. Average profits are $82,000 on each deal. And I don’t say that to brag. I say that to make a point. There’s a big argument to be made to invest in smaller areas and be a big fish in a small pond.

 

Kat Schooler [00:04:38]:

That’s a great point. I’m curious, you know, because the the market has changed a lot in the last 20 years. What was kind of some of your early challenges at the beginning of your real estate investing journey?

 

Jay Conner [00:04:50]:

Putting my team together, and the team is so important. I started out running around with my hair on fire. That’s actually when I had thicker hair. And I was running around trying to do everything myself. And you can’t do everything yourself. I mean, why do we get in real estate? We get into real estate, most of us, for wealth and freedom. And what does that wealth allow us to do? Well, what it allows me and Carol Joy to do is serve other people. That’s what it’s all about, is serving and helping people solve problems.

 

Jay Conner [00:05:20]:

That’s the business we’re in. But putting the team together, you know, locating general contractors that you can trust, hiring assistance that can help you scale your business, you know, who’s who’s gonna be my assistant? Right? So Carol joined us for about a year, the 1st year. We tried to do it all, and I tell you what, Cat, I’ll never forget. On a Monday at 10 PM, I walked from the living room down the hall into the kitchen in our home, and I took a left. And there was my Carol Joy sitting at the kitchen table at 10 p.m. with tears coming down her face. And I said, babe, what’s wrong? She said I can’t handle it anymore. I said, I’m sorry. What do you mean? She says I can’t do all this work.

 

Jay Conner [00:06:07]:

She had bills, you know, stacked, you know, a foot high. And so, you know, we get into this business for wealth and freedom, and so why replace a previous job with a new job? You just happened to be the owner. And so I made up my mind that night, Kat, at 10 PM, I’m a do everything to automate this business, put the team together to where I can get out of my way, and here’s a rider downer. Set your team up so that you run it and don’t let it run you.

 

Kat Schooler [00:06:39]:

Those are such wise words. And I think sometimes that’s hard for people to grapple with. Right? Especially entrepreneurial people, they’re they want everything to be perfect. They’re hard workers, and it’s, I think, a little bit more difficult for them to take their foot off the gas.

 

Jay Conner [00:06:57]:

Oh, and I, and I still I mean, I am so driven. Right? Naturally driven I still have a challenge. I have a personal challenge, and that is taking my foot off the gas. Well, you see, everything’s delegated. I mean, the only thing that I do are 2 things in the business. I make decisions based on what I wanna offer on single-family houses, and I’m in charge of the marketing. I love it. I love testing, marketing, how we get new leads, and all that coming in.

 

Jay Conner [00:07:28]:

So I’m actually in the business, maybe 5 to 7 hours a week. So what do I do the rest of my time? Well, I’m so I’m so passionate about teaching other real estate investors about how we do the business. So that’s really where I focus most of my time because I have dictated, delegated, and disappeared for the most part, and all my communication is in software. It’s through the leads that are coming in, talking with my I mean, communicating with my acquisitions as to what offers we wanna make. But, anyway, I’m sorry. That’s a long answer to a short question. What was the beginning of the challenge? Putting the team together and getting out of the way. You know, when you get out of the way, it works better.

 

Jay Conner [00:08:12]:

I found out that all of them all the people that I have brought on to the team, do that stuff better than I do. So dictate, delegate, delegate, you know, disappear. Get out of the way, but you gotta have a measuring tool. Don’t leave it on autopilot without coming in. So you gotta have built-in check systems, you know, to make sure everything’s getting done properly.

 

Kat Schooler [00:08:34]:

Okay. I love that. So what are some of your check systems?

 

Jay Conner [00:08:37]:

Well, I have an accountability virtual assistant that, she’s called a lead manager. A lead manager. And if anybody’s been in this business for any length of time, you know what a lead manager is. So what my and I’ve had Trixie is her name. She’s been my lead manager now, I think, for 7 years. And so her job is to make sure no leads and what’s a lead? That’s a motivated seller who owns a property that’s not in the multiple listing service, the MLS. Trixie’s job is to make sure all these leads come in from all of our Google vendors, I do pay per lead, pay per Google search lead, and all these vendors are coming in that when these leads come into the system, none of those leads fall through the crack and all of them are being nurtured and talked to right away by the acquisitionist because here’s a rider downer, time kills deals. Time kills deals.

 

Jay Conner [00:09:33]:

The more time that goes by between when a lead comes in and you getting on the phone to talk to them, the less likely you’ll ever talk to them or buy their house.

 

Kat Schooler [00:09:44]:

That’s perfect. So, Jay, you’ve talked about, you know, your automation has bought your time back, and now you’re focusing a lot on education, your podcast, all about private money lending. So I’d love to dig into that and kind of how you discovered it, you know, what you’re teaching, all that good stuff.

 

Jay Conner [00:10:05]:

Sure. Well, private money, sorry to use the cliche, but it was and is the biggest game changer, of anything we’ve done since 2003. But you know what’s interesting? I’ll tell you a short story as to how I got into private money. I backed into it, not intentionally. And so here’s how it happened. From 2003 to 2009, the 1st 6 years that we were in business investing in single-family houses, all I knew to do, Kat, was go to the local bank, get on my hands and knees, put my hands underneath my chin, and say, please fund my deal, and pull up my skirt so they can look at all my assets and do a colonoscopy and pull my credit and look at my financial statements and all that mess. Well, that worked okay. That worked okay for 6 years.

 

Jay Conner [00:10:56]:

I mean, I couldn’t close deals fast. I mean, today, I make offers. I close deals in 5 days. I just got we just closed the deal, on a house, at 106 Pilot Place this past Friday, and I didn’t talk to the seller on Monday. So on Monday, we closed it on Friday. But, anyway so using the local bank, it worked okay until, and by the way, it’s hard to believe we still have handsets and cords here in North Carolina where you talk on a landline. But, anyway, I picked up the phone in January 2009 after being in this business for 6 years, and I called my banker. His name was Steve.

 

Jay Conner [00:11:37]:

Now Steve had been my banker for 6 years. We did a ton of deals. He’d funded a ton of houses for me in those 1st 6 years. And, by the way, that was back in the day when you had an unsecured line of credit. Can you believe it? Unsecured line of credit. I mean, if you could fog a mirror, you could get you could get credit in 2003. So January 2009, I called up Steve. I had 2 houses under contract, and, I told him about the deals and the funding that was required for the deals.

 

Jay Conner [00:12:07]:

And I learned like that over the phone. Steve told me my line of credit had been closed with no notice. I said I said, Steve, what are you talking about? I said we’ve been doing business for 6 years. Why are you shutting down my line of credit with no notice? Thank you very much. He said, Jay, don’t you know there’s a global financial crisis going on right now? I said, no. But you just gave me a financial crisis by shutting me down with no notice. He says, sorry, Jay. We’re not loaning out the real estate investors anymore.

 

Jay Conner [00:12:41]:

And, so I hung up the phone and I sat here for a minute, and I asked myself, Kat, a very, very important question. And I’m gonna share this question with your audience, and I’m telling you, this question will fix, the answer to this question will fix any problem that you got going on in your life. I don’t care if it’s career, financial, health, or relationships, it doesn’t matter. So here’s the question I asked myself, you know, the power’s in questions, quote-unquote, I said, Jay, who do you know that can help you with your problem? By the way, these people running around saying every problem’s an opportunity. I wanna throw up. I didn’t have an opportunity. I had a problem. Right? Now a problem answered can turn into an opportunity, but at the time, it was not an opportunity.

 

Jay Conner [00:13:34]:

It was a problem. So it’s not who. I mean, it’s not how. It’s who. There’s a great book put out by that. Anyway so, immediately, when I asked myself that question, Kat, the name Jeff Blankenship came to mind. Pat Carroll Joy and I just saw Jeff Blankenship this past Saturday, and his wife, Megan, and their 4 kids at a big acapella singing event because that’s what we do. So, anyway, I thought of Jeff.

 

Jay Conner [00:14:00]:

Jeff was investing in single-family houses in Greensboro, North Carolina at the time. And I said, maybe Jeff can help me with my problem. And so I pick up the phone. I called Jeff. I told him what just happened, and he said, well, Jay, welcome to the club. I said, what club? He said, the club of the bank shutting you down. My bank shut me down last week. My first thought was, well, I’m talking to the wrong dude.

 

Jay Conner [00:14:22]:

The same thing happened to him. I said, well, Jeff, how are you gonna fund your deals? And he said, well, Jay, have you heard of private money? I said, no. He said, have you heard of self-directed IRAs and how people can use the retirement funds that they already have, transfer them to a self-directed IRA company, and then loan that money out to us real estate investors, and their returns are tax-free or tax-deferred depending on the, the type of account they’ve got. I said, what in the world are you talking about, Jeff? So I stood so I knew he had told me something very important. I studied private money. What is it? Where do you find it? Where are these lenders? How do you structure the deals? I studied private money, and I also studied self-directed IRAs, how people can use retirement funds to be private lenders. And so here’s what I did. Here’s what’s funny, Kat.

 

Jay Conner [00:15:16]:

In less than 90 days, I raised I attracted $2,150,000 from private lenders that I didn’t have before so the bank gave me a raise. And, so I went about it, Kat, and I still go about it today without ever asking for money. And people ask me all the time, I said, Jay, how do you do you have all that private money? You never asked for money. I said, well, it’s it gets even better than that. I never pitch a deal. I’ve never pitched a deal ever to my private lenders for them to fund the deal. And they said, Jay, how do you do that? And so I answered the question. The question or the answer begins with putting on my teacher hat.

 

Jay Conner [00:16:03]:

My teacher hat. My teacher hat says, private money teacher. And so this whole approach, this whole mentality, this whole mindset, people ask me, I said, Jay, how do you get started in private money? I can tell you that for I said, well, the first thing you got to do is own the real estate between your ears before starting to try to own real estate or own single-family houses. So, this is so important. This is so important. Lead with a servant’s heart, and this is all about teaching people who have never heard about private money or self to rid of the IRAs and showing them a whole new world as to how they can get high rates of return safely and securely in a space private money that they’ve never heard of. Carol Joy and I now have 47 private lenders. Individuals.

 

Jay Conner [00:16:57]:

So what’s a private lender? I’m not by the way, I’m not talking hard money. I’m not talking some of my best friends are hard money lenders. I’m thinking of Wendy Sweet and her brother Bill down in South Carolina. Carolina hard money. Fantastic, good Christian people. And I say establish as many relationships as you can with as many funding sources for sure. But a private lender is an individual, a human being, just like you and me, that loans money from either their investment capital and or their retirement funds that they already have that they’re not happy with. And so, it’s all about teaching.

 

Jay Conner [00:17:35]:

So, what I did, in those 1st 90 days when I was cut off, the first thing I did was put my private lending program together. Now what does that mean? That means there is the private lending program I’m going to offer to individuals, the kind of returns they get, how they’re protected, how they can get their money back in less than 90 days in case of an emergency, and all that. And I’m gonna go about teaching that program to people that have never even heard about this world, which 99% of the people walking around have never heard of this space of private money and private lending and self-directed IRAs. So, you know, instead of asking for a mortgage, you’re offering a mortgage, right? And so, I’ll tell you a short story, Cam. How I got my first $500,000 in private money when I was cut off from the bank. I put I put my I put my teacher hat on. I put my program together, and it was on a Wednesday night at 7:30 on 209 Barber Road here in Morehead City at the Morehead City Church of Christ. That’s where Carol Joy and I have been going since 1988.

 

Jay Conner [00:18:40]:

So bible studies on Wednesday night, and I walked, to the foyer of the building, and I was looking for Wayne. Now Wayne’s already passed away, but this was in 2003. And I walked into the foyer, and there was Wayne. I walked up to Wayne, and this is a great example of how I never asked for money. And so I walked up to Dwayne and I said, and Wayne and I, we’ve known each other a while. I said, Wayne, there’s something I wanna talk with you about confidentially after bible study. Can we get together? And he said, well, sure. Of course.

 

Jay Conner [00:19:10]:

So we have bible study. Wayne and I get together. We walk down to the nursery. We shut the door. And here’s the script, Cat. Here’s the script. Here’s exactly what I said to Wayne. I said, Wayne, you know everybody in this town.

 

Jay Conner [00:19:28]:

And he did. He was the original Zenith television dealer. Now, if you don’t know who the original Zenith television dealer is or was, you’re just too young to remember life before Walmart came to town. You went to Zenith and you financed your TV and Wayne actually would come to your house and repair your TV. Anyway, I digress. So I said, Wayne, you know everybody in this town, and here’s the magic phrase of how to attract money without ever asking for it. I said, Wayne, you know everybody in this tow,n, and Wayne, I need your help. There’s the magic phrase, I need your help.

 

Jay Conner [00:20:08]:

I said, Wayne, you see I’ve now opened up my real estate investing business to people I know and trust, and by referral only, I am paying insane high rates of return to people that want to invest in my deals and be a private lender with me. I said, Wayn when you run across somebody that’s complaining about the low interest rates on certificates of deposit at the local bank, and they’re complaining about losing money in the stock market and the volatility of it. Would you refer them to me, and I’ll tell them about my program and my opportunity? So you noticed I didn’t ask for money. I asked for bail. I asked Wayne to spread the word. Now what do you think Wayne said? Wayne said, well, now, Jay, what you got going on there? What you know, how’s this program work? What kind of rates are you paying? And I said, well, Wayne, are you saying that you and your wife might be interested in this yourself? He said, well, I might be. He said, what kind of rates are you paying? And I said, well, that sort of depends on the deal. I said, Wayne, what sounds high to you? He said, well, we’re earning 3% in the local bank right now, and that’s what it was in 2003.

 

Jay Conner [00:21:18]:

We’re we’re earning 3% right now. He says, I don’t know. Could you pay, I don’t know, 5 or 6%. I said, Wayne, I can’t pay you 5 or 6 percent, but I can pay you 8%. He said, put me down for $250,000. So the next day, on Thursday, I went to Wayne and his wife’s home on Country Club Road here in Morehead City, And I sat down, and I put on my teacher hat just like I’ve been talking about. I put on my teacher hat, and I taught them the private lending program, what kind of rates of return they can get, get their money back in case of emergency, how they’re protected, and all that. Well, over 2 cups of coffee, that $250,000 became $500,000 by Thursday afternoon.

 

Jay Conner [00:22:04]:

And, and, you know, in that conversation, I asked Wayne to help me spread the word, and boy did he and his wife spread the word. I don’t know how many referrals we got of other people they know in the Rotary Club and etcetera that became private lenders for us. And then, one more quick thing, Kat, and I’m gonna turn it back to you. Well, how do I get my deals funded without pitching a deal? Well, I’m gonna give your audience the script right now as to how to get your deals funded without pitching a deal. So we separate don’t don’t miss this. This is critically important. We separate teaching the private lending program to people who have never heard of this space. Teach it to them.

 

Jay Conner [00:22:46]:

Do not make this mistake. Do not bring up a deal that you need to be funded in the initial conversation of private money. Here’s a rider downer, quote, unquote, desperation has got a smell to it. I mean, the worst time you can be looking to raise money is when you need it, right, for a deal. And so we separate the conversations. So first, you teach the program. You don’t have to ask them if they’re interested. I mean, if they’re if they’re listening to you talk about the program, they’re already interested.

 

Jay Conner [00:23:15]:

And then they’re just verbally gonna tell you how much they gotta work with. Is it investment capital? Is it retirement funds? Do you need to introduce them to the self-directed IRA company for them to transfer their funds over, etcetera? So they verbally tell you there’s nothing for them to sign. They verbally tell you how much they gotta work. Now you’re gonna separate the conversations between teaching the program and then having a deal for them to fund. So Wayne told me he had $500,000. I let a few days go by. I wanted to bring up those 2 deals so badly, but I didn’t. Separate the conversation.

 

Jay Conner [00:23:50]:

So I let 4 days go by. And now listen to the script. Here’s how to get your deal funded without ever asking for money and without pitching the deal. So I call up Wayne. This is called the great news phone call. This is the great news phone call. So I called up Wayne. We had a little chitchat.

 

Jay Conner [00:24:09]:

I said, Wayne, I’ve got great news for you. I can now put your money to work. Now let’s stop right there. That’s the phrase I told Wayne and his wife 4 days earlier. I said I’m gonna call you as soon as I can put your money to work. Alright. So call them up. The great news phone call, Wayne, I got great news.

 

Jay Conner [00:24:28]:

I can now put your money to work. I’ve got a house in Newport under contract with an after-repaired value of $200,000. Now the funding required for this deal is $150,000. Now the closing is gonna be next Tuesday. I need you to wire your funds, the $150,000 to my real estate attorney’s trust account, and I’m gonna have my, real estate attorney email you the wiring instructions. That’s it. That’s the end of the conversation. Kat, the most stupid thing I could I could have done is ask Wayne, do you want to fund the deal? Well, of course, he wants to fund the deal.

 

Jay Conner [00:25:06]:

He’s been sitting by the phone, and particularly, when I have a private lender, a new private lender, and they’re using retirement funds, and they’ve transferred those retirement funds over to a self-directed IRA company, they’re not making any money until I put their money to work for them. So I’m ethically bound to put their money to work because they moved their money over to the self-directed IRA company and my recommendation. So, you know, unpack that. I didn’t ask Wayne for money. I didn’t pitch the deal. I called him with good news. He’s been waiting for the phone call. I told him I could put the money to work.

 

Jay Conner [00:25:42]:

I told him the after-repair value of the single-family house. I told him the closing date. I told him that the instructions from the real estate attorney would be emailed to him to wire the funds. Boom. That’s it. Or as my good friend, Tom Crowell, would say, bam.

 

Kat Schooler [00:25:59]:

Okay. So I have some questions here that there’s a lot there. When you’re first having this conversation with this potential investor and you’re saying I can give you 8%, how are you determining that number, especially maybe for somebody who’s starting in their private money lending Right? You know, foray.

 

Jay Conner [00:26:20]:

Yeah. I recommend 8% because that’s the national average as to how much individuals are being paid. Like, for example, let me tell you where that figure comes from. Mhmm. So a lot of individuals will invest in a hard money-lender fund. Alright? And then the hard money lender would take that money, turn around, and loan that out to us real estate investors. And the hard money lender will make their money on the points or origination fees. See, in this order of private money, there are no points.

 

Jay Conner [00:26:50]:

There are no origination fees. So the hard money lender will make their money on the origination fees. So they’ll pay the in, the private lender, 8%. Then they’ll mark that rate up, make money on the spread, and make money on origination fees. So the individuals that are investing in hard money lending funds are around 8%. So I pay them 8%. So that’s where that comes from. And by the way, as a side note, Cap, I’ve been paying 8% ever since 2009.

 

Jay Conner [00:27:18]:

I still pay 8%. I pay it 8% then. And people ask me now, they say, Jay, how in the world are you paying your private lenders only 8% when the market is the interest rates have just gone sky high in the last 2 or 3 years? And I said, well, there’s two reasons for that. Number 1, I make the rules. Right? I’m not asking for money. I’m offering an opportunity. I’m teaching the program.

 

Jay Conner [00:27:45]:

And so I made the rules. And why would the private lender want to be happy with 8%? Well, because right now, if they go to the local bank, it’s about 12 a 12-month CD certificate of deposits paying about 4 to 4 a half percent right now. Well, 8% is a whole lot more than 4 or 4 a half percent. That’s, like, double. Now granted, back before COVID, the year before COVID in 2019, the average certificate of deposit at the local bank was paying 0.17%. Right? But I paid 8% then, I paid 8% now, everybody’s happy.

 

Kat Schooler [00:28:22]:

And then my other question is, so you, you know, you have your local network, you have your people that, you know, you thought might take advantage of this opportunity and things like that. How can people kind of build trust in these relationships and trust in these conversations? You, you know, have some very hard rules about separating, like, the deal from the conversation, and it’s not salesy or anything like that. But how would somebody you know, if they feel like they’re struggling to build trust, what can they do?

 

Jay Conner [00:29:00]:

Well, if you don’t trust yourself, who’s who else is gonna trust you? If you don’t believe in yourself and know what you’re doing and know, for example, the maximum allowable formula that you should pay using a private lender’s money, then you need to get educated, for sure. But as to your question, how do you build trust? People are attracted to confident other people. People are attracted to other people that are who come across as trustworthy. So how do you build that trust? You gotta be confident in knowing the program that you’re teaching. Right? What if you’ve never done a deal? Right? What if you’ve never done a deal? And you’re thinking to yourself, well, who in the world is gonna loan me money, and I’ve never done a deal? That’s a really good question. Right? Well, there are 2 answers to that. First of all, if you’ve already been successful in other things before, well, lean on and leverage your prior success. If you were successful in something prior, you’re gonna be successful at this.

 

Jay Conner [00:30:03]:

Right? Secondly, leverage your business relationship. That’s one thing that a lot of my real estate investing members in my mastermind and etcetera, leverage the business relationship, in my case, with me, and they can honestly say that my business partner has flipped and rehabbed over 500 houses, and that’s 100% true. Well, you don’t have to you know, I don’t have to be your business partner. You know? Get somebody else to be your business partner. And for goodness sake, don’t start in this business by yourself and try to navigate it. Big mistake. Ask me how I know. Right? I lost 100 of 1,000 dollars because I wasn’t I wasn’t in business with somebody else who had already done this or hadn’t been educated.

 

Jay Conner [00:30:50]:

So don’t make the mistake I did. Building trust, building, trust, and belief is, first of all, starting with yourself. And, you know, at the end of the day, nobody’s gonna loan you money unless they do feel trust, you know unless they do feel like that they can trust you. Now even with all the trust, we still give them security. Do not borrow unsecured money. You can legally but don’t do it. Protect your private lender. We give all of our private lenders.

 

Jay Conner [00:31:22]:

In North Carolina, it’s a deed of trust. Most states call it a mortgage. But they get a deed of trust, to secure the promissory note. They get a promissory note. We name them as a mortgage. So here’s how the here’s how you build trust. You’re protecting your private lender. Right? You’re protecting them in case, you know, something goes wrong.

 

Jay Conner [00:31:40]:

Hey. Look. Here’s another way we protect them and build trust. Do not borrow more than 75% of the after-repair value of the house. I didn’t say 75% of the purchase price. We always pick up a big check when we buy and close a deal. But maximum, 75% of our prepared value. We name them as the mortgagee on the insurance policy.

 

Jay Conner [00:32:02]:

In case there’s a claim against that insurance policy, then the check by the insurance company is made payable to them, the private lender, the mortgagee, and my company. But they gotta sign off on that insurance policy check before I get the money. We put them on the title policy as additional insured. So not only being trustworthy and being a trustworthy individual, perhaps leveraging a business relationship, get they they they feel safe. I mean, the only reason somebody’s not gonna loan you money and invest is they don’t feel safe. They don’t think their money’s safe. So those are the ways that we build trust so they know that their investment is safe.

 

Kat Schooler [00:32:44]:

I love it. Yeah. Just tons of evidence. Right? You know? Hit them with the fact.

 

Jay Conner [00:32:49]:

Exactly. One question you sent in, Kat, I love.

 

Kat Schooler [00:32:53]:

Okay. Yeah. Let’s hit it.

 

Jay Conner [00:32:54]:

You sent in a question and said, why would someone be interested in becoming a private lender? I mean, we know why we’re interested. Right? I mean, why am I interested in even using private money and not going to the local bank? Well, there are 20 answers to that question. You’re in control. You’re the underwriter. Right? You make the rules. You can close fast. There’s no limit to the number of deals you can do. When I was borrowing money from the bank, there was a limit to my line of credit.

 

Jay Conner [00:33:21]:

There’s no limit to the number of private lenders you can have, and, you know, you set the program. It just puts you in the driver’s seat. Right? Mhmm. You can scale your business very, very quickly. But in answer to your question, why would someone be interested in becoming a private lender? There are 3 big reasons that people wanna be your private lender. Number 1, they make a lot of money. Money money gets the attention. Right? The second reason they love it is because their investment, their principal loan amount with you is secure and it’s safe.

 

Jay Conner [00:33:54]:

How is it secure and safe? Well, it’s secure by what I just said. We’re not borrowing unsecured funds. We’re collateralizing their note with a deed of trust. And then thirdly oh, oh, and it’s safe and secure. So it is secure, as I just said, it’s safe because it’s a conservative loan to value. We’re not going to borrow more than 75% of the after-repair value. The third reason they love being a private lender is that their investment, their principal loan amount, they what they invest, is the value of it, is not volatile. So what am I contrasting someone being a private lender with their money versus them putting the money in the stock market or mutual funds?

 

Jay Conner [00:34:40]:

I mean, whatever you invest in the stock market is worth more, it’s worth less, it’s worth more, it’s worth less. So, here’s a rider downer, when someone loans private money, the principal loan amount remains the same until cash out. It’s just like them putting them, it’s just like them putting money in, a CD in the local bank and they know what the return is going to be. That’s the same program here, They put in $100,000. They know they’re gonna make 8% or 8 or $8,000. So that is why they’re interested. And, Kat, another question you sent in love, if you don’t mind me answering it, and that is, what’s the best way to find private lenders? Is that is that a good question to answer? What’s the

 

Kat Schooler [00:35:25]:

Best way to find private? Yeah. Well, go for it.

 

Jay Conner [00:35:28]:

There’s 3 there’s 3 categories of where you find private lenders. One category is what I’ve already been talking about. That’s your connections. People that are in your cell phone, people that are on your, connected on social media, people that are on your email list, people you go to church with, people you play golf with, people that you consistently see every week, right? We’re all creatures of habit. Well, who, where do you go every week that you see? I mean, all those people you’ve already got the trust built. The trust factor is already there. So, that’s the first, but you’re going to run out. You’re going to run out of your connections.

 

Jay Conner [00:36:08]:

That, that, you know, that’s what’s going to run out eventually. Some for us very quickly, some it’s going to take longer, but eventually going to run out. So, the second category is what I call your expanded warm market. How can you grow your network? Cat, I know your audience will agree that there’s a direct correlation between your network and your net worth. Right? The better your network, the better your net worth. So how can you grow your warm market? How can you grow your connections very, very quickly? Well, I’m gonna give you 2 answers right here. I have many more answers. I’ll give you 3 answers.

 

Jay Conner [00:36:46]:

I guess we got so many running through my head. So how can you grow your network very, very quickly? Number 1, overnight. If you want overnight, grow your network, do what I did. Join BNI, which stands for Business Networking International. There’s a very good chance, if you’re listening to this show, there is a Business Networking International chapter in your town. Morehead City, North Carolina, where I am, only has 8,000 people. We got a BNI. There you go.

 

Jay Conner [00:37:16]:

All you gotta do is go to bni.com, search your local area, you can find a BNI. What makes Business Networking International so wonderful is that each chapter has members and the reason for the membership is to give each of your fellow members leads, and leads for the type of business you’re in. And BNI truly only has one professional category per chapter available. So, like, here in Morehead City, there’s only one realtor. There’s only one real estate attorney. There’s only one HVAC contractor. There’s only one general contractor. There’s only one essential oil lady.

 

Jay Conner [00:37:57]:

You know what I’m saying, right? And so, you meet once a week and you give each other leads. I have attracted 1,000,000 dollars from my fellow BNI members, giving me the leads of other people who are looking for a high rate of return on their investment capital. So, BNI, join other networking groups. Go to Google. Search a networking group, you know, in your local area. Meet us. There’s, you know, that’s free, right? So, how else can you grow your network very quickly? Well, did you know that self-directed IRA companies have networking events online on the internet? Did you know that 70% of account holders at self-directed IRA companies want to be a private lender for you? They want they wanna be passive. They wanna loan money out to real estate investors and just be a private lender and collect checks.

 

Jay Conner [00:38:52]:

Now, an important note and a caveat, you’re not gonna put on your teacher hat. You’re not putting on your teacher hat to peep those are called existing private lenders. They already know what private money is. So now in talking with those people, it’s gonna be a negotiation conversation. Well, I don’t like negotiation conversations with private lenders. That’s why I prefer my warm market, but that’s another place where you can find existing private lenders. And so those are the 3 categories, your warm market, your expanding warm market, and then existing private lenders, such as networking with people that are already private lenders and they’re in a self they have self- traded IRA account. So, those are the 3 main categories where you find them.

 

Jay Conner [00:39:39]:

Your existing warm market, your expanding warm market, and, existing private lenders.

 

Kat Schooler [00:39:46]:

I’m also curious, Jay, because you have your podcast, you know, so you’re out there on the Internet quite a bit. Do people ever contact you through, like, socials or things like that about, like, hey, I see you’re this expert, you know, how can I work with you?

 

Jay Conner [00:40:02]:

Oh, sure. Sure. And I’m very active I’m very active on Facebook. I’ve got my own YouTube channel. The podcast, I get a lot of response from the podcast, which, by the way, if you’re interested in raising private money, and you’re listening to this show, then I’m on all the platforms. The name of the podcast is Raising Private Money. Imagine that. Raising Private Money with Jay Conner, and my guess is if you just go to any platform that you’ve got that you listen to podcasts, just search for Raising Private Money, and I’m probably gonna pop up right there.

 

Jay Conner [00:40:36]:

You know, I have 2 shows a week, and I interview other people who have already raised private money and how they go about it.

 

Kat Schooler [00:40:42]:

It’s wonderful. So it sounds like social media is maybe, like, another avenue people can use as they’re building out their business, as they’re kind of establishing their credentials.

 

Jay Conner [00:40:51]:

Oh, absolutely. And here’s a big tip on how to attract people to you to be a private lender. So just post on social, on Facebook, on Instagram. You can do TikTok, but the top ones are Facebook and Instagram. Just post what you’re doing. Like, if you’re doing a project, if you’re doing a property, if you’re doing a house, no matter what you’re doing, people are entered and and and, you know, show pictures like you can be showing here. You know, I’m rehabbing a house, and, you know, here here here’s here’s where we are, you know, in this house. That’s naturally going to attract people.

 

Jay Conner [00:41:26]:

And look, you can plant a seed. You can plant a seed or 2 that’ll make the audience, the social audience curious. You can be posting, and then when you get to the end of a deal, you can post and say, look at this house. My private lender made x number of dollars. You’re not gonna call any names. My private lender who invested in this deal made and you’re not gonna put interest rates. No interest rates, and make it very specific. The private lender that invested with me in this house made $8,923 in x number of months.

 

Jay Conner [00:42:00]:

And then you can ask a question, want to talk money? So I’m not saying private money or private lending. I’m saying if, want to talk money, question mark, DM me, direct message me. And I’m telling you, showing it on social will attract them, and that’s, you know, attracting private lenders for free.

 

Kat Schooler [00:42:18]:

Oh, and that’s such a good call to action too because it’s it’s, like, mysterious. It sparks people’s curiosity. I love it. Jay, thank you so much for joining me today. You have been a wealth of knowledge. Everyone should go and check out Jay’s podcast, Raising Private Money, for so much more on private money. Jay, do you wanna let everyone know where they can find you on social media as well and how they might be able to work with you?

 

Jay Conner [00:42:42]:

Sure. Sure. I tell you the best way, Kat. I’m so excited to share this with your audience. I just launched my brand new private money challenge. Well, what in the world is the private money challenge? Well, it’s 7 days of recorded videos I just did, and so here’s the website, and I’m going to tell you what happened. It’s www.privatemoneychallenge.com. Privatemoneychallenge.com.

 

Jay Conner [00:43:07]:

And when you enroll immediately in your inbox, in your email, you’ll get the 1st video training on private money. And guess what? Each of these videos is only 15 to 20 minutes. And then the next 6 days at 9 AM Eastern, you’ll get the follow-up video training. And I’m telling you, it’s me on video in my real estate attorney’s conference room, just going over step by step how this works. And so, I promise you 2 things. Number 1, you’re gonna learn how to raise $500,000 in less than 30 days in private money, and you’re gonna have a whole lot of fun doing it because if I’m not having fun, I ain’t gonna do it. So come join me in the private money challenge at www.privatemoneychallenge.com.

 

Kat Schooler [00:43:49]:

Awesome, Jay. And we will put that in the show notes so people can find it with just a click. Thank you so

 

Jay Conner [00:43:55]:

Much. Kat, thank you so much. It’s been a joy to be with you.

 

Kat Schooler [00:43:58]:

Thank you for listening to The Closing Table brought to you by WindowsDale. I’m Kat Skooler. Please be sure you’re following our podcast on Apple or Spotify. And if you’re part of our YouTube audience, make sure you hit that subscribe button. If you’re enjoying our show, please feel free to leave us a comment or review. It helps us find more amazing listeners like you. Thank you so much, and we’ll see you next time.

 

Narrator [00:44:18]:

Are you feeling inspired by the knowledge you gained in this episode? Then head over to https://www.JayConner.com/MoneyGuide, That’s https://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’shttps://www.JayConner.com/MoneyGuide, to get your free guide. We’ll see you next time on raising private money with Jay Conner.