The most common question from people who are just starting to raise Private Money is where to find private lenders.
The answer is simple—everywhere! Private lenders are just like us who are looking to invest their hard-earned money into great opportunities. But I’ve found there’s one amazing place to find private lenders, and that is self-directed IRAs.
In this episode, let me tell you how you can start getting people to fund your deals with their retirement money.
Key Takeaways:
- Establish a relationship with a self-directed IRA.
- Why I recommend Quest as the company to work with.
- The 14 steps to Raising Private Money from lenders in self-directed IRAs.
- You don’t need to tell your private lender everything.
- Why you should have a prepared presentation for your private lenders.
Check out my book: 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You Build Incredible Wealth!
Get it here for FREE: www.jayconner.com/moneyguide
Timestamps:
0:01 – Raising Private Money
1:14 – Fund Your Deals With Self-Directed IRA
2:52 – The 14-Step System Using The Private Money Lender’s Self-Directed IRA Account
3:46 – Step 1: Get A Rep at a Self-Directed Company
5:18 – Step 2: 3-Way Call: You, Your Rep, and Your Private Lender
6:47 – Step 3: Have Your Rep Do The Talking
7:13 – Step 4: Signature
8:11 – Step 5: Account Gets Funded
9:36 – Step 6: Find A Deal!
10:10 – Step 7: Call The Lender
11:49 – Step 8: Contact Your Attorney
13:32 – Step 9: What Your Attorney Should Send You
14:19 – Step 10: Send To Your IRA Representative
16:26 – Step 11: Your Self-Directed IRA Rep Sends The Direction Of Investment to Your Private Lender
16:56 – Step 12: The Private Lender Signs The DOI and returns it to your Rep
17:07 – Step 13: Your Rep Will Process The DOI
17:30 – Step 14: Close The Deal
19:15 – The Private Lender Has Only 3 Things To Do
20:11 – Answered Questions
23:54 – Jay’s Free Money Guide: https://www.JayConner.com/MoneyGuide
A Secret Source of Private Money with Jay Conner
Jay Conner (00:00):
Now, step number six was soon as in step number five. As soon as your private lender’s account is funded and, and is re and the money is sitting there, you want to go find a deal just as soon as possible. And the reason for that is that your private lender is not making any money while their cash is just sitting there. So go find a deal to get the account, to use the private lender’s money just as soon as possible.
Jay Conner (01:13):
All right, put on your seat belts folks, and get your ink pins out as we dive in right now. So funding your deals with self-directed IRAs I need to get that turned on. So here we go. First of all, an over half people, over half of my private lenders are using their retirement funds. All right? So Quest, hands down are the best self-directed IRA company in the nation. And so you need a relationship with a self-directed IRA company. I recommend Quest. Their service is impeccable. I get deals funded in 24 to 48 hours. So here’s the deal. If you don’t have a relationship with Quest, then when you’re talking to a new potential private lender and they’ve got retirement funds, you’re not gonna have anybody to refer them to to get their retirement funds moved over so they can start funding your deals. So it’s important to understand the flow of the money and how it relates to your own success.
Jay Conner (02:24):
You are like an orchestra conductor or director. What I mean by that is you’re the communicator and you’re making the moving parts work together. So here are the people that are involved. You’ve got your private lender, your lender, your individual private lender, then there’s you and then there is your representative at Quest. All right, so here are the 14 steps for using private money. That’s retirement money in a self-directed ira. So here we go. First of all, I want y’all, I want to tell y’all, you don’t need to be telling your private lenders everything that’s going on behind the scenes. I’m not keeping anything from my private lenders, but we want to keep it absolutely as simple as possible. I want to keep everything easy for the private lenders. All I want them to do is to be just sit back and collect checks. If you tell ’em everything that’s going on behind the scenes, they’re gonna be confused.
Jay Conner (03:35):
Just keep it simple. So I want, as I said, I want my private Leonard just sitting back doing nothing and just having the checks come in the mail. So here are the 14 steps. Step number one, I want you to write these down on your event notes there. So step number one is you want to get a rep at a self-directed RA company and establish the relationship. Well, you’re gonna be able to do that this afternoon right here at the event. Nate ha will give you instructions on how you can be reaching out to Quest, and get a representative assigned to you. Now, the reason you’re gonna want this relationship with your representative at Quest is for at least two reasons. Number one, when you have a new private lender that has retirement funds, well, you’re gonna want to be able to introduce that new private lender to your rep Quest.
Jay Conner (04:43):
That rep at Quest will be responsible for holding your private lender’s hand and getting their retirement funds moved over and have an account established at Quest. All right? You can ask your rep for some nice brochures from Quest. You can use those types of brochures. When you are conducting and presenting, say, for example, a private lender luncheon. In addition to that, you can get additional marketing materials on Quest. So number one, establish the relationship. Step number two is when you have a new private lender, so now I’m talking about when you’ve got a new private lender and they are considering moving their funds, their retirement funds from where they currently are. Over to Quest. Well, you can do one of two things. You can either have a three-way conference call or a three-way Zoom meeting with you, your new private lender that’s got retirement funds, and your Quest rep and the Quest rep will explain how the process works.
Jay Conner (05:53):
That’s my preferred way of doing it. Or another way you can do it. And of course, this step is about getting the funds moved over to Quest from your private lender, wherever they currently are. Or you can just get permission from your private lender for your rep to call your private lender and explain the process. Either one, either one takes, you know either one, either, either way, works. So sit back, you don’t do the talking after you do the introduction and just let your rep do the explaining. Also, here’s the deal. Your private lender is only going to have to sign one document that will authorize Quest to move the funds from where they currently are, over to Quest. And then Quest is gonna take care of the rest of it. Now, as I said, step number, this, I just said this, really.
Jay Conner (06:53):
So when you’re doing, when you’re having this three-way call or Zoom meeting, let your rep at Quest do the talking. They’ll explain the process of funding, they’ll explain how funds get moved over and again, let them take care of what they are, you know, the best app. Now, step number four is the signature. So, Scott, we got somebody making a racket in the background. If you can mute everybody out except me. So step number four, signature, the self-directed Quest rep will send authorization to your private lender to sign. And Quest has got so much now on DocuSign or e-sign that they may not even need to email that to you anymore. You may just be able, your private lender may be able to just, you know, do an electronic signature. So the private lender here in this step is giving Quest the authorization to act on their behalf and move the funds from where they currently have their retirement account over to Quest.
Jay Conner (08:04):
So the private lender, really simple here in this step is just giving quest the authorization to move the funds. Okay? Step number five may be taken, it might take two weeks, three weeks, or four weeks. It depends on where the retirement funds currently are. So the Quest rep should notify you, the real estate investor, once your new private lender’s account is funded at Quest. And then once the account has been funded, then you are ready to go do a deal. Now let me give you a piece of advice. Do not go get a house or property under contract to buy and you’re waiting on the private lender’s funds to get transferred over to Quest because you don’t know exactly how long that’s going to take. Also, your private lender, if where their funds currently are, where their retirement funds currently are, if that company is dragging its feet, your private lender may need to reach out to where, to their plan administrator where the funds currently are and follow up and you know, ask what’s the problem.
Jay Conner (09:22):
Because there are one or two companies out there that will drag their feet on getting the funds moved over. So again, the length of this process can be between two weeks to four weeks. Now step number six was soon as in step number five, as soon as your private lender’s account is funded and, and is re and the money is sitting there, you want to go find a deal just as soon as possible. And the reason for that is because your private lender is not making any money while their cash is just sitting there. So go find a deal to get the account to, to use the private lender’s money just as soon as possible. Now, when you call you, so now you got a deal, now you got a deal. And if your manuals like mine, steps six and seven were cut off, so you’re having to write this in, so the accounts funded and now you’ve got a deal to get funded by your private lender’s retirement account, you now call up the private lender.
Jay Conner (10:32):
And again, as I talked to you yesterday, you’re not gonna ask the private lender if they want to do the deal. That’s stupid. Of course, they want to do the deal. You’re gonna call up the private lender and tell ’em you’ve got great news, you’ve got a deal and then you’re ready to put their funds to work and make money. And there are only four things that you need to tell the private lender when you’ve got this first deal. First of all, you tell ’em the after-repaired value of the property. Secondly, where is it located? You don’t need to tell ’em the physical address. They could care less about that, but you know, what’s the community it’s located in, then the amount of money from their funds that are required to fund the deal, and then the closing date and that’s it. They don’t need to know any more information than that.
Jay Conner (11:24):
They don’t want to know any more information than that. And that’s all you need to tell ’em. I’ll tell you by the time you do the second or the third deal, y they could care less about all four of these points. All they wanna know is how much money needs to be wired from Quest and when you need it, how much and when, how much, and when, how much, and when that’s, that’s all that they want to know. So that’s step number seven. Now, step number eight, you’ve called up your private lender. You’ve told ’em when the funds need to be wired. And so now you’re gonna contact your closing agent, your real estate attorney, and you’re gonna send your real estate attorney closing agent the closing agent instructions. Now let me tell you what that is. So for all of y’all that are coming in to work with me on the platinum program, or if you already own my where to get the Money Now system, I have a document called Closing Agent Instructions.
Jay Conner (12:23):
The purpose of this document is to simply let by email your real estate attorney, know all the information that they need to know in order to prepare the paperwork, the promissory note, the mortgage, or the deed of trust. Those are the two documents that your closing agent is going to prepare. Again, if you are using a title company or an escrow company, you still want your real estate attorney to prepare the documents. So when I refer to the closing agent instructions, I’m referring to that one document. And all you gotta do is fill in the lines. It’s a template. It’s got, your name or your company name is the borrower. It’s got, your private lender as the lender, you got the principal loan amount, you got the interest rate, you got the frequency of payments, how much of the payments et cetera, right?
Jay Conner (13:22):
So you’re gonna send that to your real estate attorney. Now, next step, step number nine, your real estate attorney is now going to send you by email the promissory note and the mortgage or the deed of trust. These are the two documents that they are preparing for you based on the closing agent instructions that you emailed to ’em. Now, the reason these documents are being sent to you is that you must prove them for accuracy, all right? You’ve got to prove them for accuracy because a human being is actually creating these documents. So you wanna make sure that the promissory note with the loan amount, the borrower, and the lender, all match up to the closing agent instructions that you sent to your closing agent. Once you have reviewed the documents, it’s now time for you to send those documents to your Quest rep.
Jay Conner (14:30):
Alright, now, the Quest rep, here’s what’s gonna happen. The Quest rep is going to match up the documents, the promissory note, and the deed of trust or mortgage to make sure it matches the direction of investment, which is also called the DOI, the direction of investment. Now anymore these days at Quest can no longer prepare the direction of investment. Your borrower actually has to prepare it or you can prepare the direction investment for your borrower. It’s on, it’s on e-sign or you can give them instructions. So again, it’s gotta come from your borrower. You can call up your borrower, and walk them through over the phone exactly how to handle the direction of investment. Again, the direction of investment is a document that just likes it sounds, is directing Quest on how much and where to wire the funds to fund your deal.
Jay Conner (15:35):
The second bullet point here is, guess what? You don’t even have to check the Quest box of expedited processing service anymore because everything at Quest is expedited. Everything is fast service. As I said at Quest, I get my deals funded in 24 to 48 business hours. Now make a note here. An important note here on step number 10, you are going to need to include or give your private lender the wiring instructions of your real Estate attorney’s trust account, okay? So you gotta get the wiring instructions from your real estate attorney’s trust account to go on the direction of investment. If you don’t have that, the quest is not going to know where to wire the funds in order to fund your deal. That’s step number 10. Step number 11, your rep Quest is now going to send the direction of investment. Well, actually this has changed on step 11 now, so change my words.
Jay Conner (16:37):
Step number 11 is the private lender now completes the direct investment by E-sign. Okay? So they’re just gonna do that by email between themselves, your private lender, and your rep Quest now. So there it is right there. That’s step number 12. The private lender is going to sign electronically the direction of investment and that goes right back to your rep at Quest. So now once the direction of investment has been executed, now the request is going to process the deal they’re going to schedule and they’re going to wire the funds that you are borrowing the principal loan amount to your real estate attorney’s trust account. And then there it is. Step number 14, close the deal. Now at this point, your real estate attorney has got the funds in their trust account and now you can actually have the closing. Now all these steps that I just went over, this is assuming you’re, you are just starting out and you don’t have a relationship with Quest.
Jay Conner (17:53):
It’s also assuming you got a brand new private lender. Well, let me go back here real quick, and let me show you. Once you have a private lender and you have done a deal, you don’t have to do the first five steps. All you gotta do now is start with step number six and find more deals. Once your private lender’s got their account funded, you’re ready to do multiple deals and multiple deals and multiple deals without a private lender, you just find a deal. You call the lender up given that they have funds available at Quest, and you tell ’em, I got another deal to do. You contact your real estate attorney and send the closing instruction letter. Your attorney then sends you the promissory note in the mortgage for you to review and then the direction of investment is set up and you send the promissory note and the deed of trust to Quest and now they fund your deal and you just rinse and repeat.
Jay Conner (18:50):
Alright? So again, those first five steps over what I just went over are starting from the point of you don’t have a relationship with Quest and you’re setting up a new private lender. So I’ve done hundreds and hundreds of these deals. It’s a simple 14-step process. I know it was a little fast, might have sounded a little complicated or whatever. I, y’all don’t need to worry about this exception right here. So the lender’s only got one. I’ve only got three things to do. Number one, your lender meets your rep over the phone or by Zoom and I’m talking about your Quest rep, your lender then just signs an authorization for Quest to fund their account and then they sign a direction of the investment for each deal. They do. That’s it. So after they’ve already established their account at Quest, they don’t have to do items number one or number two anymore. All they gotta do is just sign a direction of the investment for each deal. And there you have your deals being funded by your private lenders having their retirement funds at Quest. So that was easy, right? Okay, so Scott, I got two minutes for questions and I’m going to stop sharing
Scott Paton (20:09):
My Awesome. Okay, so from Andrew, how do you get Chris to make the leap from doing CMAs on listed properties to doing CMAs on junkie, no-list properties?
Jay Conner (20:20):
Oh, sure. So why would Chris show
Scott Paton (20:23):
You turn on your there, turn on your video, please.
Jay Conner (20:27):
Oh, sorry about that. There we go.
Scott Paton (20:31):
There we go.
Jay Conner (20:33):
So why would Chris the realtor do a CMA on an off-market house? That’s a FSBO because he knows that when I decide, or if I decide to put it in the multiple listing service, he’s gonna get the listing. So he’s gonna make money when that house is ready to market. If I decide to list it
Scott Paton (20:53):
From Verana, how long after closing typically do the interest payments begin going to the IRA or to the lender directly
Jay Conner (21:02):
That give
Scott Paton (21:03):
Timing examples, please.
Jay Conner (21:04):
That totally depends on your agreement with your private lender as to how often they want payments. That will vary from private lender to private lender. However, I will tell you all of my payments that I have with private lenders that are using their retirement accounts, I do not make monthly payments. Cause the mo the money’s not going back to them. So I either make quarterly interest-only payments or semi-annual or annual payments.
Scott Paton (21:36):
Michael wants to know if you’ll show slide 12 again.
Jay Conner (21:41):
Well, let me look and see what slide 12 was. Slide 12 was your lender signs the direct, so you can fill in the blanks. Your lender signs the direction of the investment and returns it to Quest.
Scott Paton (21:58):
Great. And also now from Andrew, do you have some private lenders that ask more questions before they sign on the dotted line? And what types of things do they ask?
Jay Conner (22:09):
Well, when you go, when you use my private lender presentation, which all of you that are coming in to work with me as platinum or masterminds, and if you own my where to get them in and out system, the PowerPoint presentation that you have access to answers all those questions. It’s called the private lender presentation. So it covers pretty much any question they’re gonna ask. I had a new private lender call me last night after going to church for bible study. And one question he and his wife had that’s the new private lender that called me on my cell phone during the event yesterday. One question they had was what are the tax ramifications. And the answer to tax ramifications is it depends on where the money’s coming from. If your private lender’s just using investment capital, it’s ordinary income tax, whatever tax bracket they’re in.
Jay Conner (23:54):
And I help real estate investors raise private money for their deals. So if you would like to have unlimited funding for your deals regardless of what your background is, et cetera, but be able to get all the private money you would want, and I’m not talking hard money, I have got a brand new just written hot off the press money guide that you can download absolutely for free and you can get it right now. It’s titled Seven Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You In Build Incredible Wealth. Go right on over right now to www.JayConner.com/MoneyGuide.com and it will put you on the path to getting all the funding you need right now for your real estate deals. Download it right now.