***Guest Appearance
Credits to:
https://www.youtube.com/@jerryscarlato
“Becoming Resilient, Private Lending, and Your Money Mindset with Jay Conner”
https://www.youtube.com/watch?v=-w-a6JPweUk&t=96s
Real estate investing often requires substantial capital, and navigating the funding landscape can be daunting for both seasoned and new investors. In the recent episode of the Raising Private Money podcast, Jay Conner joins Jerry Scarlato in the Good Wolf Project podcast where they delve into the nuances of raising private money—a strategy that can redefine your approach to real estate investments.
Understanding the Difference: Hard Money vs. Private Money
In the world of real estate, financing options are plentiful but can often be confusing. Jay Conner explains a common misunderstanding between hard money and private money. Hard money typically comes from brokers who pool and lend funds from individual investors, charging high interest rates and fees. This traditional route involves jumping through numerous hoops, including credit checks and financial disclosures, which can be time-consuming.
Conversely, private money is a more direct transaction, where a real estate investor borrows money from an individual, cutting out the middleman. Here, the investor sets the terms, interest rates, and payment schedules, providing a more flexible and tailored financing option. This approach eliminates the need to borrow from traditional banks or hard money lenders, offering more autonomy and speed in closing deals.
Navigating the Challenges with a Resilient Mindset
Real estate investing is not without its hurdles. During the conversation, Jerry and Jay highlight the importance of resilience when facing financial setbacks. Jay shares his experience during the 2008 financial crisis when he unexpectedly lost his line of credit with a local bank. This pivotal moment pushed him towards private lending, leading to a successful reevaluation and expansion of his business model.
The key to overcoming challenges is adopting a proactive mindset. Rather than seeing obstacles as insurmountable problems, Jay emphasizes responding constructively and connecting with the right people who can facilitate solutions. This mindset shift from “victim” to “victor” is essential for navigating the volatile waters of real estate investing.
The Power of Community and Mentorship
Another critical element of success in real estate investing is surrounding oneself with like-minded individuals and mentors. Jerry and Jay underscore the transformative impact of joining mastermind groups and engaging in communities that foster collaboration and learning. Jay recounts how mastermind groups have expedited his success by providing access to a wealth of experience and insights from industry peers.
Learning from seasoned investors and sharing experiences can significantly decrease the learning curve, preventing costly mistakes and leading to more informed decision-making. As Jay aptly puts it, “What got you here today will not get you there tomorrow.”
Building a Sustainable Strategy for Raising Private Money
To successfully raise private money, Jay advises a strategic approach focused on education and relationship-building. By teaching potential lenders about the benefits of private lending and offering them a secure and appealing investment opportunity, investors can attract capital without resorting to high-pressure sales tactics. He demonstrates the power of seamless communication and structured programs in cultivating a network of private lenders eager to invest.
Prospective investors can start small by hosting informational luncheons or one-on-one meetings to share insights about private lending programs. By educating others about investment opportunities, investors can build trust and secure funding that aligns with their goals.
Conclusion: Embrace the Journey
The conversation between Jerry Scarlato and Jay Conner offers valuable insights into the world of raising private money in real estate. By understanding the differences between funding options, adopting a resilient mindset, and leveraging community and mentorship, real estate investors can navigate the complexities of financing with confidence. Embrace the journey, redefine your strategies, and open the door to endless possibilities in real estate investment.
10 Discussion Questions from this Episode:
- What are the main differences between private money lending and hard money lending as discussed by Jay Conner in this episode?
- How did Jay Conner’s experience during the 2008 financial crisis influence his approach to real estate investing and private money lending?
- Discuss the concept of “who not how” as mentioned in the episode. How might this mindset shift benefit an entrepreneur?
- Jay Conner emphasizes the importance of being resilient in business. What are some key examples from the episode that demonstrate this point?
- What is the significance of separating the private money program from specific deals when discussing potential investments with private lenders?
- How does Jay Conner utilize private lender luncheons to attract potential private money lenders, and what are the key components of these events?
- Jay talks about the importance of responding to events rather than reacting to them. How does this approach impact decision-making in a business context?
- How does Jay Conner’s philosophy of not asking for money directly align with his overall strategy for raising private capital?
- What role does personal connection and trust play in Jay Conner’s method for acquiring private money, as demonstrated in his conversation with Wayne?
- Reflect on Jay Conner’s emphasis on education and teaching about private money opportunities. How does this align with the values and goals of his business model?
Fun facts that were revealed in the episode:
- Jay Conner’s first introduction to private lending was after he lost his line of credit during the 2008 financial crisis, which led him to raise a couple of million dollars in less than ninety days.
- Jay doesn’t pitch deals; instead, he educates people about private lending and lets them express their interest and potential investment amount.
- Private lender luncheons have proven to be successful for Jay, with one event raising $969,000 without even pitching specific deals.
Timestamps:
00:01 Real Estate Investment and Resilience
06:04 Understanding Self-Directed IRAs
09:13 Financing a Business Acquisition
11:59 Entrepreneurial Financial Strategy Pitfalls
14:54 Purposeful Impact on Real Estate
19:52 Self-Directed IRA Private Lending
23:13 8% Fixed Return Agreement
26:53 Dominating Small Markets Successfully
28:07 Unexpected Credit Line Closure
30:40 Exploring Private Money Strategies
34:28 Investment Rate Negotiation: 8% Offer
38:03 Private Money Strategies for Real Estate
42:29 Proactive Solutions to Financial Crisis
44:56 Business Success: Resilience & Guidance
48:12 Masterminds Revolutionize Real Estate Success
52:03 Private Money Strategies Podcast
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book: Where to Get The Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
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https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
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https://www.pinterest.com/JConner_PrivateMoneyAuthority
The Authoritative Guide to Private Money for Real Estate Investors by Jay Conner
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.
Jerry Scarlato [00:00:29]:
What’s up, everybody? Welcome to the Good Wolf Project. I’m your host, Jerry Scarlato, and today’s conversation is with Jay Conner. Jay is the host of the Raising Private Money podcast and the author of the book, Where To Get The Money Now. This is a very tactical conversation that Jay and I have when it comes to raising private money. If you have ever thought about being in real estate investing or on the other end, if you’ve thought about putting your money somewhere or investing your money somewhere, being a private lender is an option. And so Jay goes over some of the tasks and strategies that you can use on both ends. If you’re a real estate investor and you’re seeking to find a way to get money so that you don’t have to go to a bank and jump through hoops give them all your financials and let them know what’s going on with your whole life, there are options. There are different options.
Jerry Scarlato [00:01:20]:
Or if you’re somebody who’s trying to figure out where to put your money, you want it to go somewhere, then there are people out there who are good at I have friends who are good at investing in real estate, and they will give you a return on your money. So you have options, you have options on both sides. We also go over how Jay has overcome certain struggles in his life. Of course, being in real estate, you have ups and downs. He went through the two thousand eight financial crisis, got his line of credit taken away from him, unbeknownst to him until he made a phone call, and had to do a big shift there. That’s what got him into private lending. He also overcomes overcame several other things. And the main thing that he focuses on is not being a victim instead of reacting to events that happen to you, learn to respond to events that happen to you.
Jerry Scarlato [00:02:12]:
Become resilient. Recognize that there are things that you can control, and it is up to you to control those things so that the outcome is dictated by you and not by some external event. So that’s a big thing we talked about as well. Get your pen and paper out and get ready to enjoy this conversation with Jay Connor. Alright, Jay. I figured we might as well start where I was about to ask you. I have a bunch of places where I want to go where I wanna go, but go ahead and tell me what’s the difference between we were talking beforehand for everybody who’s listening, just catching up and shooting the stuff. And, Jay happened to mention the difference, not the difference, but that he was a private lender a specialist in private lending, not hard money lending.
Jerry Scarlato [00:03:03]:
So tell me what’s the difference? Because I think in my mind, I always felt like they were the same, but there’s a difference.
Jay Conner [00:03:10]:
Yes. There’s a big difference. By the way, Jerry, thank you for inviting me to join you here on your show. So it’s very easy for real estate investors to be confused and think that private money and hard money are the same thing because, hard money lenders and brokers, call themselves private money lenders. Right? Which makes it confusing.
Jerry Scarlato [00:03:36]:
Mess it up.
Jay Conner [00:03:37]:
So here’s the difference. A hard money lender is typically it’s it’s institutional money, is what it is. But it’s a brokerage that has gone out and raised private money from individuals, and these individuals are investing in the hard money lender fund, and then the hard money lender as a broker turns around, lends that money out typically at a higher rate, and also makes their money by charging origination fees and points, and some junk fees and extension fees and that kind of thing. And the hard money lender makes the rules. They are the underwriter, which is, of course, traditional. Typically, the hard, hard money lender or any kind of institutional is gonna, you know, create the terms. They’re gonna set the maximum loan to value. They’re gonna set the frequency of payments.
Jay Conner [00:04:35]:
They’re gonna set the interest rate, etcetera. Well, that’s hard money. And by the way, I say some of my best friends are hard money lenders. I say establish as many relationships as you can with as many funding sources. Right?
Jerry Scarlato [00:04:50]:
Yeah. For sure.
Jay Conner [00:04:51]:
But the difference, what in the what is private money if it’s not hard money? Well, private money is when the real estate investor is borrowing money directly from another individual, doing business directly with an individual, a human being that’s got either investment capital and or retirement funds that they can lend out and get high rates of return safely and securely. So it’s a one-on-one transaction with no middle person involved. And in this world of private money, the lender does not make the rules. We make the rules. Now that right there is a mind shift. You see Sure. Instead of applying for a mortgage, there are no applications. You’re already approved.
Jay Conner [00:05:39]:
Your credit has nothing to do with how much money you can get. And so we make the rules. We set the interest rate as the borrower. We are our underwriter. We set the frequency of payments. We set the maximum loan to value. So what we’re doing is we’re offering an opportunity primarily to people who have never heard of this world. They’ve never heard of private money, never heard of private money.
Jay Conner [00:06:04]:
They’ve never heard of self-directed IRAs and how they can take a current retirement account that is say at Charles Schwab or Morgan Stanley or Edward Jones or a four zero one k from a previous employer or even a current employer if they’ve been there long enough and transfer those retirement funds over to an IRS approved self-directed IRA company. They can then lend that money out, that retirement money out, and earn either tax-deferred or tax-free interest income without having to report anything to the IRS. And so this whole world is like brand new to most people who are walking around. And now, you know, if you’re doing business with an existing private lender, an individual that’s already loaning money out, then, you know, in that case, you’re not putting on your teacher hat. Private money teacher. They already know what it is. So now if you’re talking to an existing private lender that’s already loaned money out, that’s a negotiation conversation. I don’t wanna have a negotiation conversation with my private lenders.
Jay Conner [00:07:13]:
I have 47 private lenders personally myself now, and not one of them had ever heard of private money, private lending, or self-directed IRAs until I put on my teacher hat and shared this with them. I’ve never asked anybody for money, Jerry, since I started you doing private money back in 02/2009. I’ve been investing from 02/2003 to 02/2009 just going to the local bank, borrowing money from my deals. That’s all I knew to do. And then, of course, that changed abruptly in February when I lost my line of credit at the bank with no notice. And, there’s a story that goes along with that. But anyway, I learned about private money, and raised a couple of million dollars in less than ninety days from people who had never heard about private lending, private money, and several IRAs until I told them about this program I’d put together, this opportunity. And, of course, there are steps that I can talk about as to how to go through that.
Jay Conner [00:08:13]:
But that’s a long answer to your question as to what’s the difference between hard money lending and private money.
Jerry Scarlato [00:08:20]:
Yeah. Well, it’s a clarifying answer. More importantly, you know, it’s interesting because so many people don’t talk to a lot of business owners or want to be business owners. I’ll give you an example. There’s a guy at the gym. He’s only 25 years old. He’s currently in real estate, but he works for a new home builder. And so he just sells their plots.
Jerry Scarlato [00:08:44]:
He sells their home plots, and that’s how he makes money. And he does coaching on the side. He’s a big fitness buff, so he does fitness coaching on the side. And he’s trying to figure out how to jump into his own thing. And I keep explaining, like, you’re doing good in this real estate thing, but you’re not building equity in anything. You’re not, you know, you’re not gonna see any long-term wealth development per se even though you’re you might be getting a good paycheck. You’re building their dream. You’re not building your dream.
Jerry Scarlato [00:09:13]:
And one of the things he has a hard time grasping is this idea that we’re talking about. It’s like, you don’t have to have the money to go start the thing that you want to start. For me, for example, I’m currently trying to find a business to buy, which is somewhat similar to buying a house to buy. It’s a little more intricate because there are more pieces and parts and so on. But one of the only avenues I can use right now is having another person to help me buy the business because I don’t have the cash to go buy it. And I know that if I go to the bank, the bank is gonna make me jump through 30,000 hoops. And then at the end of the day, if they accept me, it’s gonna be some whatever terms that they want it to be like you’re talking about, which can be fine and that can be okay, but it just becomes more of a pain and a hassle. But why would someone wanna use I think I know the answer.
Jerry Scarlato [00:10:08]:
But why would someone wanna use a hard lender versus a bank?
Jay Conner [00:10:12]:
Do you mean to use a private lender versus a bank?
Jerry Scarlato [00:10:15]:
A hard money lender. So you might be Okay.
Jay Conner [00:10:18]:
So so I I can tell you a long list of reasons why to use private money instead of
Jerry Scarlato [00:10:24]:
Hard money. The private I get. The private I get. Yeah. Why would you wanna use a hard money lender instead of a bank?
Jay Conner [00:10:32]:
Yeah. So with a hard money lender, it’s excuse me. Typically, they’re gonna close quicker than a
Jerry Scarlato [00:10:39]:
Local bank.
Jay Conner [00:10:39]:
A lot of hard money lenders do tabletop appraisals, so they don’t have to you don’t have to wait for, you know, the appraisal to be done. They do they can do that on their desk. Your they’re gonna pull your credit, so so you’re, you know, your credit needs to be, you know, okay. But they’re not gonna ask for financial statements, you know, a bank’s gonna ask for financial statements. Hard money lender rates are pretty high.
Jerry Scarlato [00:11:12]:
They’re gonna be higher than a bank, probably.
Jay Conner [00:11:13]:
They’re gonna be higher than a bank, but it’s just another avenue of access to capital without having to jump through as many hoops as a traditional bank is gonna make you jump through.
Jerry Scarlato [00:11:26]:
So you’re paying for speed, kind of.
Jay Conner [00:11:28]:
You’re paying for speed and, you know, not having to reveal all of your personal financial, information. Because, you know, a lot of entrepreneurs on paper, they ain’t making no money. Right? Facts. The bank wants to see a profit and wants to see you paying the IRS. Right? If you’re the IRS, you should pay them. Right? But, of course, you know, in this world of real estate, there’s just lots of tax write-offs that are that are available.
Jerry Scarlato [00:11:59]:
Yeah. And I’m dealing with that one company that I just finally set aside. I dug into their last ten years of financials and so on. And sure enough, they weren’t making any money until the last year and a half when it seemed like they decided to sell the business. They finally straightened out, their financials to make it look like they were making money, and now they’re kinda paying for it because it’s taking them longer to sell the business than than they want, and they’re not gonna be able to sell it for as much as they were asking. So, this lesson was learned for entrepreneurs out there for sure. I get it because, you know, you’re you’re trying to lower your your, your tax burden as much as you can. But at the end of the day, my dad always told me, if you ain’t paying enough taxes or if you ain’t paying a lot of taxes, you ain’t making enough money.
Jerry Scarlato [00:12:46]:
So you, you know, you gotta you gotta decide. So speaking of money, I heard one of your recent interviews on another podcast, and you told this story about how you changed your relationship with money a couple times, a couple times in your life. Tell me that story.
Jay Conner [00:13:08]:
Well, I’m I have so many stories. I’m trying to remember which, can you clue me in as to which one that was?
Jerry Scarlato [00:13:17]:
Gotta love that. Yeah. I guess I understand as well. As Dad always says, I got a lot back in this hard drive, and it just kinda sits there until I have to pull it out. So can you can you help me pull it out? You mentioned that whenever you choose you chose to, go after things for the sake of making money, typically, things don’t work out well.
Jay Conner [00:13:43]:
I know exactly what you’re talking about. So, yeah, I’m glad to share that. So, yeah, my relationship with regarding what you’re talking about, my relationship with money changed. This is back in my twenties. So, you know, I’m I have the entrepreneurial spirit. Excuse me. I’ve got the entrepreneurial spirit, and shiny object syndrome, of course. Yeah.
Jay Conner [00:14:08]:
And you probably know all about that. And, you know, squirrel brain, etcetera. And so when I was in my twenties, when the MLM multilevel marketing opportunities would come along, and I would see the money, right, that they presented. Well, every time, Jerry, that I got involved in an opportunity or a venture. And the only reason I was involved was to make the money, I failed miserably. I never even got off of square one. And so what that I mean, the lesson learned on that is to be successful, I’ve gotta be passionate. I gotta be passionate.
Jay Conner [00:14:54]:
I gotta be excited. I gotta want to get out of bed in the morning because I can’t wait to go do whatever it is that I’m doing. And, you know, what kind of impact am I making on other people? How am I serving other people? You know, what am I doing on purpose to make a difference in other people’s lives? And, you know, in business, we’re problem solvers. If they want a problem, then we wouldn’t have a service to try to help fix that problem make someone’s life better, or help get them out of pain. As a real estate investor, we’re serving people all the time. In most of the houses that we buy, either the property is in distress or the owner’s in distress, financial stress, and we’re solving help solve a problem there. In my coaching business where I work with other real estate investors and show them and help them raise hundreds of thousands of dollars and millions of dollars in private money for their real estate deals, that’s a service that I’m providing that is changing their lives. And even when it comes to private money and borrowing private money, you know, the people ask me all the time, Jay, how do you get started raising private money? I say, well, I’ll tell you how you get started.
Jay Conner [00:16:05]:
You gotta own the real estate between your ears first before you can own real estate out here. And so we’re not asking. I mean, we’re not asking, begging, chasing, persuading, trying to talk any new potential private lender into loaner’s money. We simply shared this program, and how they can earn high rates of returns safely and securely. It’s not unsecured, promissory notes. All the notes or all the money we borrow is backed by the real estate that we’re purchasing. Well, so what I came to find out very, very quickly is that we’re impacting these individuals’ lives that become private lenders. We’ve gotten thank you notes, over the years from elderly couples that have said, you have changed our retirement years.
Jay Conner [00:16:54]:
We’ve been able to go and travel and see our grandkids anytime we want to. You know, they have the principle, but they didn’t wanna touch the principle. They want to they want to live off of that principle. So, yes. The relationship with money, now, of course, you gotta have a good business plan, to make money. Yeah. But, if that is your sole driving force, then people number one, you’re not gonna be successful. Number two, people that you’re looking to sell something to or offer something to, they’re gonna see right through it.
Jay Conner [00:17:30]:
Yes.
Jerry Scarlato [00:17:31]:
And if that
Jay Conner [00:17:31]:
Desperation and desperation have a smell to them. Right? And I tell people all the time, the worst time in the world to be trying to raise money for real estate is when you need it for a deal. I mean, that makes no sense to me. Jerry, I’m I’m gonna take I’m gonna take a little risk here. Alright? I’m gonna take a little risk, and I’m gonna ask you if you have ever heard someone on the stage or platform who is teaching real estate investing. Have you ever heard them say this to the real estate investors, the newbies in the audience? Quote, unquote, oh, just get the deal under contract. The money will show up. Have you ever heard that?
Jerry Scarlato [00:18:12]:
No.
Jay Conner [00:18:12]:
Have you never heard that? I have heard it many times. It makes sense. I have
Jerry Scarlato [00:18:16]:
Heard it. I have heard it in, in business terms. Yes. But I’ve admittedly, I haven’t been to many real estate. But in business, I’ve heard that’s why I laugh because in business, I hear that I do hear that a lot. Yes.
Jay Conner [00:18:27]:
Yeah. Definitely. And I and I wanna say, where is the money gonna show up? Is it just like gonna rain out of clouds? Mhmm. Right? You know? So that’s why I practice and preach all the time. Get the money first. The money comes first. Think about how much more confident, how many more offers people would make on real estate deals if they first got the private money burning a hole in their pocket. Now, I need to be clear on something here.
Jay Conner [00:18:53]:
I’ve mentioned already that, you know, I got 47 private lenders right now funding my deals, 8 and a half million dollars in private money that we, you know, use on different projects. So I say all the time, I’ve never asked anybody for money. I’ve never pitched a deal in my life, and so the question is, Jay, how do you get your deals funded if you’re not pitching a deal? Well, here’s the secret sauce. Don’t miss this. We’re gonna separate the conversations with a new potential private lender. They can be people that you’ve already, you know, you go to church with or in your cell phone, you know, ever how you know, you know, someone. We separate the activity and conversation of teaching the opportunity because we pay the same rates no matter what the deal is the frequency of payments and the length of the notes. So we teach the opportunity, the program without a deal attached to it.
Jay Conner [00:19:52]:
And then once they understand the program, they like the program, and they tell us how much they want to start with to invest. And by the way, they always have more than they tell you. How much they wanna start with? Is it retirement funds? Do I need to introduce them to a self-directed IRA, representative at a company that they can transfer their retirement funds over to and then be a private lender with that money? And so they tell me how much they got to work with, and then I tell them, I will put your money to work for you just as soon as possible. So then a few days goes by, maybe a week or two weeks goes by. Now here’s how I get the deal funded without ever asking for money and never pitching a deal. So let’s say, Jerry, you’re one of my new private lenders. Let’s say you had a hundred and $50,000 already in a retirement account, maybe a previous 4 0 1 k, or maybe that hundred and 50,000 is with Morgan Stanley or Charles Schwab or Edward D. Jones, and you’re not happy with the returns that you’re getting.
Jay Conner [00:20:51]:
So I introduced you to the self-directed IRA company. You moved that money over with no tax triggering, no tax effect. And I told you, alright, Jerry, I’m gonna call you up as soon as possible and put your money to work for you just as soon as possible. So now I have a deal for you to fund. I pick up the phone. By the way, Jerry, you may find it interesting. We still have receivers and cords Look at that. Wow.
Jerry Scarlato [00:21:16]:
Carolina. That’s incredible.
Jay Conner [00:21:17]:
A lot of people haven’t even seen it.
Jerry Scarlato [00:21:18]:
Is it a turn is it a turn phone? What is
Jay Conner [00:21:21]:
No. It’s not. It’s got a push button. It’s got a push button.
Jerry Scarlato [00:21:24]:
Okay. Fancy.
Jay Conner [00:21:25]:
But anyway, so now I’m gonna call you up, and you’re gonna phone one of my deals. So I pick up the phone, I call you, you say hello, and you and I have a little chitchat. Here’s the exact script that I said to my private lender when I got a deal for him to fund. I’ll say, Jerry, I’ve got great news for you. 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. The funding required for the property is hundred and 50,000, which matches up to what you have. Closing is gonna be next Friday, so you’ll need to have your funds wired to my real estate attorney’s trust account by next Thursday.
Jay Conner [00:22:04]:
I’m gonna have my attorney email you the wiring instructions. That’s the end of the conversation. The most stupid thing in the world I could ask you is, do you want to do the deal? Of course, you want to do the deal because you’re not making any money until I put your money to work and it’s just sitting there in the account getting nothing and I’m not going to bring a deal to you to fund unless it matches the criteria of the program that I already taught you. And so I’m ethically bound to put your money to work, and so that’s it. That’s it’s that simple. Call them up. Great news. The after-repaired value is the community where it’s located, they could care less about the physical address.
Jay Conner [00:22:47]:
The funding required that you’re gonna borrow, when closing is, wiring instructions are coming. It’s that simple.
Jerry Scarlato [00:22:55]:
So I love, the storytelling part of it in the beginning. Essentially, you’re getting them on board with what’s going to happen. You’re letting them know what, like, here’s the here’s the program that I’m running. Here’s the thing that I’m doing, and you’re letting them know how they’re gonna get a return on the money.
Jay Conner [00:23:13]:
Yeah. It’s just like the way the program works is it’s just like them taking a hundred thousand, 2 hundred thousand, whatever dollars, and putting it in the local bank certificate of deposit. So the private lender doesn’t own any of the projects, they’re not joint venturing, they’re not getting any of the profits, They’re getting a set rate of return, which is 8%. I’ve been paying 8% since February 2009. I’m still paying 8% today, and they know exactly what their rate of return is gonna be. By the way, now that I mentioned the 8% I’ve been paying since 02/2009, in recent months and the past year or two, people will ask me, they’ll say, Jay, how in the world are you still only paying 8% and the and the market rates have gone like sky high out of the ceiling? I said, well, that’s a good question, and here are the two answers. The first answer is I make the rules, not the lender. Right? So I make the rules.
Jay Conner [00:24:14]:
Number two, before COVID, the twelve-month annual certificate of deposit average interest rate got down to 0.17%. Today, you can get about 4%. Right? Well, guess what? 8%, last time I calculated Yeah.
Jay Conner [00:24:36]:
Eight percent’s a lot better than 4%.
Jerry Scarlato [00:24:39]:
Oh, for sure that is. So I’m assuming the person that you’re trying to go after go after is not the right way to put that, Jerry. The person that you’re trying to tell a story to and help understand how you can, help them with their money has not previously been a private lender.
Jay Conner [00:24:59]:
Correct.
Jerry Scarlato [00:25:00]:
Because, generally, that person is gonna want to set they’re gonna wanna set the rules.
Jay Conner [00:25:06]:
Well, it’s gonna be a negotiation conversation. Yeah. Right? They already know this world of private money. Right? Now you can do business with an ex with existing private lenders, but most of them are not gonna be happy with 8% because they’ve already been spoiled getting 11 or 12.
Jerry Scarlato [00:25:22]:
11 or 12. Yeah.
Jay Conner [00:25:23]:
You know? And and and points. Right? In this world of private money, there are no points. There are no origins I’ve never paid a point origination fee to to, to, you know, to a private lender. And so that’s why we expose this opportunity. Most people walking around have never heard of private money or private lending. They’ve never heard they’ve never heard of self-directed IRAs and how they can transfer recurrent retirement funds over to a self-directed IRA company and be a private lender. Right?
Jerry Scarlato [00:25:55]:
Yeah.
Jay Conner [00:25:56]:
And, and and earn tax-deferred or tax-free income.
Jerry Scarlato [00:26:01]:
So you keep mentioning 02/2009, and that’s when you switch from lending from institutionalized lending to private lending.
Jay Conner [00:26:09]:
Correct.
Jerry Scarlato [00:26:10]:
I think we all know what happened in 02/2008 to cause that, but, go over that time frame for me.
Jay Conner [00:26:19]:
Sure. Well and in this story of what happened, there are some very, very important lessons, and takeaways. So as I said, in 02/2003, my wife, Carol Joy, and I started investing in single-family houses in 02/2003 in two little counties here in Eastern North Carolina. And, by the way, our total target market is only 40,000 people. We only do two to three deals a month. Average profits are $82,000 per deal. I don’t share that to brag at all. I share that to make a point.
Jay Conner [00:26:53]:
And that is an argument to be made to dominate a small market and be a big fish in a small pond, instead of competing with all those other real estate investors in highly populated areas. You know, if you’re in a big city, go out in the suburbs or whatever. Anyway, I digress. And the business has been great to us. We’ve rehabbed over 500 houses, so, you know, since we’ve been doing this. But anyway, back to the funding. From 02/2003 until February, that’s all I knew to do. Go to the bank, get on my hands and knees, put my hands underneath my chin, raise my skirt for them to look at my assets, give me a colonoscopy, pull my credit, that’s all I knew to do.
Jay Conner [00:27:35]:
Right? And that worked okay. That worked okay. Mhmm. First those first six years. Well, I was sitting here at my desk in January 2009, and I’ve been doing business with the same bank for six years. My banker’s name was Steve, and I had two houses under contract that represented over a hundred thousand dollars in potential profit. And I called up Steve and this conversation that I thought I was gonna have with Steve, I’d had many times over six years. So I called up Steve.
Jay Conner [00:28:07]:
We had our pleasantries. I went to tell him about these two deals under contract, the funding, you know, that I needed for these two deals. And I learned like that in that conversation that the bank had closed my line of credit with no notice to me. I mean, that’d been nice to know. Right? I mean, this was back when you paid earnest money, you couldn’t get it back. And so, anyway, I said, Steve, what in the world are you telling me that my line of credit is closed? I said we’ve had a great relationship for six years. Always make my payments. I’ve still got a great credit score.
Jay Conner [00:28:46]:
What’s the problem? 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. I don’t have a way to fund my two deals. And, so anyway, I hung up the phone and I sat here at my desk for a moment. And I wanna share with, your audience, Jerry, a very, very powerful question that I asked myself right after that phone call with Steve. And this question I’m gonna share will help fix any problem. And by the way, these people running around saying, oh, you don’t have a problem. You have an opportunity.
Jay Conner [00:29:26]:
I wanna throw up. I didn’t have an opportunity. I had a problem. Now the problem might turn into an opportunity, but at that moment in time, it’s a problem. Right? So I asked myself this question, and this question will help fix any problem anybody’s got. I don’t care if it’s health, relationships, finances, career, whatever it is. Here’s the question I ask myself. I said, Jay, now this is right after I hung up the phone with the banker and I’ve gotten cut off from the bank, And the bank and and and I asked myself, I said, Jay, who? There you go.
Jay Conner [00:30:03]:
Who do you know that can help you with your problem? I immediately thought of my good friend, Jeff Blankenship. Carol Joy and I just saw Jeff and his wife and four kids this past weekend at an acapella gospel singing event. Anyway, this was 02/2009. I called up Jeff. He was investing in real estate, and single-family houses at the time in Greensboro, North Carolina. I called him up after our pleasantries. I told him about the conversation that I just had with my banker. And Jeff sort of giggled and he said, well, Jay, welcome to the club.
Jay Conner [00:30:40]:
I said, what club is that? He said, the club of having the bank shut down your line of credit, the bank shut down my line of credit last week. I said, well, Jeff, how are you gonna get your real estate deals funded? And he said, well, have you ever heard of private money? And I said, no. He says, have you heard of self-directed IRAs and how individuals can loan money out from their retirement accounts and truly self-direct their investments? I said, no, I’ve never, I’ve never heard of that. And so he told me about it, hung up the phone and I started studying private money. And so I decided I’m not gonna be begging, chasing, selling, trying to persuade anybody to give me money. I’m gonna do what? I’m gonna put an opportunity together and I’m gonna put on my teacher hat and I’m gonna go about teaching people what private money is in this opportunity. And so, I did that. I decided what interest rate I was gonna pay no matter what the deal was or who the private lender was and how they could get their money back in case of an emergency.
Jay Conner [00:31:47]:
That’s called a ninety-day call option that I put in the promissory notes. And so here’s how I started. I started when I got my program put together, which didn’t take me long. I started, attracting money without asking anybody for money. It was on Wednesday night at 07:30. Carol Joy and I have been members of the Moorhead City Church of Christ at 209 Barber Road, since 1988. And so we were going to bible study on Wednesday night, and I walked into the foyer, and I was looking for Wayne. Wayne and I had known each other for some time.
Jay Conner [00:32:30]:
And I walked up to Wayne and I said, Wayne, I’d like to visit with you about something confidential after bible study tonight, and he said, sure. So we got together after bible study, went down to the nursery in the church building, shut the door, and here’s exactly what I said to Wayne. I said, Wayne, you know everybody in this town. And he did. He was the original zenith television dealer in Morehead City, North Carolina. Now, if you don’t know who the Zenith television dealer was, that’s because you’re too young to remember life before Walmart came to town. You bought your TVs from the Zenith dealer, he’d finance it for you, he repairs your TVs, all that stuff. Well, he had put a TV in just about everybody’s house in this town over the years.
Jay Conner [00:33:19]:
So here’s exactly what I said to Wayne. I said, Wayne, you know everybody in this town, and I said, Wayne, I need your help. There’s a magic phrase right there. I said, Wayne, I need your help. I said, I’ve now opened up my real estate investing business by referral only, and I’m now paying insane high rates of return to my investors who invest with me in my deals. And I said, Wayne, when you run across somebody that is complaining about, you know, the low certificate of deposit rates in the local bank, or they’re complaining about the volatility of the stock market, would you refer them to me and I’ll tell them about my program that I have. And Wayne looked at me and said well now brother Jay, what are you talking about there? What have you got going on? And I said, well, Wayne are you saying that you might be interested? He said, well, I might be interested. I said, well, why is that? He said, well, we’re losing money in the stock market and I’m only getting, you know, just a little bit of, interest, you know, the in the CDs at the local bank.
Jay Conner [00:34:28]:
He said, what kind of what kind of rates are you paying? And I said, well, Wayne, that sort of depends on the deal. I said, but, you know, what sounds high to you? And he said, well, right now we’re only getting 3% in the local bank, and that’s what it was back in 02/2009. And he says I don’t know. I guess five or 6% would be pretty high. I said, Wayne, I can’t pay you 5 or 6%, but I can pay you 8%. And he said, put me down for $250,000. And so the next day, I went to his and his wife’s home, and I went over the entire program that I put together. Length of a note, interest rate I’ll pay, frequency of payments you’ll receive, they would be interest-only payments, that way you make more money, helps my cash flow because you keep all of your principal invested, etcetera.
Jay Conner [00:35:20]:
And so over two cups of coffee, that $250,000 became $500,000 by that next afternoon. Notice I did not bring up any deal at all in that initial conversation. I’ve just talked about the program. Right? And so they were losing money in the stock market, and they were getting older. So our elderly private lenders particularly love this program because they make a great rate of return. It’s safe and secure because I’m not borrowing any unsecured money. I’m they’re getting a deed of trust or a mortgage backed by the real estate, back in that note by the real estate, and they don’t have to worry about the volatility of the value of their investment. Because their principal loan amount remains the same until cash out, so they know exactly what the return is gonna be.
Jerry Scarlato [00:36:15]:
Yeah. I love that at the beginning of that, you went over the question, the who. And I think that’s important to note or important to point out because most people go to what. I think that’s a big distinction there, and that’s the big mindset shift there is instead of going directly to what do I need to do next, you go to who do I know or who can I reach out to or who whatever the follow-up of the question is, and that actually will allow you to expedite the problem?
Jay Conner [00:36:49]:
Absolutely. Have you heard of the book? It’s a pretty recent book written, and coauthored by Dan Sullivan and Doctor Benjamin Hardy, and the title of it is Who Not How?
Jerry Scarlato [00:37:00]:
I haven’t.
Jay Conner [00:37:01]:
Oh, I highly recommend it.
Jerry Scarlato [00:37:02]:
I know both of them, but, no, I haven’t read that or I haven’t heard of that one.
Jay Conner [00:37:05]:
Yes. Who Who Not How? Highly recommend it. But you’re right, you know, and particularly us guys, I mean, we think we’ve just got to do, you know, we’re all macho guys. We gotta do everything, you know, on our own.
Jerry Scarlato [00:37:17]:
Oh, yeah. I got it figured out.
Jay Conner [00:37:19]:
And figure it out by ourselves. Well, that’s not a very way very wise way to look at things. Right? In the book of Proverbs, Solomon said that there is wise counsel among many counselors. So we all we all we all need we all need people to help us out, you know. And if I had not called up Jeff Blankenship, I probably would have been out of business. Right? I probably would have been out of business.
Jerry Scarlato [00:37:45]:
Well, because it sounds like he gave you a couple of nuggets to think about, and then you went from there and expanded it on your own. Not your own. I’m sure you asked other people and helped gather information that way as well, but you put a program together based on a conversation with a friend.
Jay Conner [00:38:03]:
Absolutely. And what did I do? I sought out a conference where I could learn all the details about how private money works, and that’s what I did. I went to that conference within two weeks of talking to my buddy, Jeff, and I learned all the details of how to put your private money program together, and how to share it with other people and teach it. And so I put it on steroids. And then two years later in 02/2011, I started doing the same thing, coaching and teaching other real estate investors how they can get all the private money and funding for their deals, never miss out on a deal for not having the money, and do it all without ever having to ask for money. You know, another way that I raise a lot of money without, in my mastermind members as well, raise a lot of private money, without asking, are we put on private lender luncheons or private lender events, and we’ll invite 20 or so people from people that we know, you you know, wherever you know them from in the community, you know, you mean are you involved in any civic clubs or whatever? Invite them and have your CPA there, have your real estate attorney there, and have your realtor there that you work with. And I’ve got a PowerPoint presentation that my mastermind members use, and you feed them lunch, and takes only twenty, twenty-five minutes to go through the PowerPoint presentation. You’re not pitching any deals, You’re just exposing people to this program.
Jay Conner [00:39:31]:
And, you know, we’ve got a little interest sheet that we have passed out on the table after I finish. You know, are you interested? And if so, how much? Do you want more details or whatever? Again, I’m not asking for money. I’m just asking for their interest level. And, I mean, I’ve raised $969,000 at just one private lender luncheon myself. So you don’t have to run around town with your hair on fire chasing and begging and selling and persuading, you know, you’re you’re offering this opportunity. Now I did say in my story that that the problem can become an opportunity, which it did. For example, Jerry, the opportunity to be on your show here with you would not have happened. It would not have happened unless I had been cut off from the bank, and I had to find a better way.
Jay Conner [00:40:23]:
I learned an important formula and mindset from Jack Canfield. You know, Jack Canfield is the co-author with Mark Victor Hansen of the Chicken Soup for the Soul series of books that were very, very popular, you know, twenty, thirty years ago. Where there’s a chicken soul, there’s a chicken soup for every kind of soul out there, they’ve written a book about it. But anyway, I went to one of his conferences and he’s got a book out. It’s called the success principles. 69 success principles are in the book. And his very first principle in the book is to take 100% responsibility for everything that happens in your life. Whether you had created it or you didn’t.
Jay Conner [00:41:09]:
So he gave this formula that I just found just mind-boggling and makes so much sense. The formula for taking 100% responsibility, and being in charge of your destiny, is a formula that is e plus r equals o, and the e stands for the event that happened in your life, whether you attracted it or you didn’t. The event plus R, which is your response to that event, equals the outcome, equals what are you experiencing in life or what are you going to experience. Now, unfortunately, most people walking around are living by a different formula. Most people walking around are living by the formula e equals o. The event, whatever happened equals the outcome. Well, that’s called victim mentality. That’s a victim mentality.
Jerry Scarlato [00:42:04]:
Very pervasive.
Jay Conner [00:42:05]:
Victor instead of Victor’s mentality. So here’s the beautiful thing. You get to choose whatever response you want to choose to respond to the event that happened in your life. For example, let’s use what happened to me. I called the bank. I find out I’m cut off from the bank. I didn’t cause that. I had great credit and made my payments on time.
Jay Conner [00:42:29]:
I kept my end of the bargain, but it was because of the global financial crisis that I got cut off. Right? So I had all kinds of responses I could choose to do. Well, I could choose to do nothing, which would be victim mentality, or worse, go home, put my tail in between my legs, and go sit in the corner and eat a bag of Cheetos, you know, and try to escape some kind of way or respond with asking the question, who can help me with my problem and being proactive. So, again, this formula just, I just found so fascinating as to you’re able to be in charge of your destiny by changing the response to whatever event is going on in your life.
Jerry Scarlato [00:43:19]:
Respond, don’t react. I think a lot of people let themselves just react to a situation as well, and that’s where that generally, it’s it’s a fight. You don’t fight for it. You’re either, flying away or you’re, what’s it? Freeze is the other one.
Jay Conner [00:43:34]:
Flight or flight.
Jerry Scarlato [00:43:35]:
Yeah. And then the freeze is the third option. Most people freeze or people fly away from whatever that event is, and that’s why they have the outcomes that they have in their life, and then they look at that and they think that that’s just the way that life is.
Jay Conner [00:43:51]:
Exactly.
Jerry Scarlato [00:43:52]:
Is that something that you’ve had I’m assuming at some point you started to shift your mindset towards that, or is that something that you feel has been a big part of your mindset for a lot of your life?
Jay Conner [00:44:07]:
One attribute that real estate investors, successful real estate investors, or anybody successful in any kind of business, one characteristic that you must have is resiliency. Resiliency. When I was a little kid, my granddaddy got me a pony, and when the pony threw me off, my granddaddy told me, he says, Jay, you got to get back on that pony right now or you’ll never ride that pony again. And so, I have a little sign over here that says, get back on the pony now. Right? And so, I became resilient when I became an entrepreneur and went into business totally for myself. And so, no. I was I wasn’t always like that. I don’t believe it. it
Jay Conner [00:44:56]:
I think that came with maturity when and when you’re in business for yourself, I mean, you either got you either gotta make it or you ain’t gonna make it. Right? And the reason I say you want resiliency is because, trust me, I don’t care what business you’re in, problems are gonna come along. Officers are gonna come along. And so be resilient, have your consultants, and by the way, that also brings this thought up. Don’t make the stupid mistake that I did that cost me hundreds of thousands of dollars. When I started in business investing in, single-family houses, I didn’t go get a coach or a mentor until I got cut off from the bank. And here I was out here trying to figure it out by myself. So when you’re starting in business, for goodness sake, get the right mentor, get the right coach that already understands that industry inside and out.
Jay Conner [00:45:56]:
And here’s what I say, you’re gonna pay for your education one way or the other, and it’s a whole lot cheaper to pay for your education.
Jerry Scarlato [00:46:04]:
That’s true.
Jay Conner [00:46:05]:
So you don’t have to learn from your mistakes. You can learn from somebody else’s mistakes. Right?
Jerry Scarlato [00:46:10]:
So true.
Jay Conner [00:46:11]:
And, just save yourself time, energy, and money. I, I was so blessed, Jerry, to, get to meet my wife and I, were able to meet a few weeks ago, John Maxwell. And he was the keynote speaker at, a mastermind that Carol Joy and I are involved in. And, at the end of his talk, the best public speaker best speaker motivational speaker I ever heard in my life. He, like, blew me away. And, so he opened it up for q and A after his talk. And one lady asked him in the audience, she says, if there’s only one thing or characteristic that you could attribute your success to, what would that be? And he immediately knew the answer. He says, I just fail a whole lot more than anybody else or other people.
Jay Conner [00:47:01]:
And, of course, he went on to explain what that means. He says, on average, when you’re trying something new by yourself, you probably gonna fail 70% of the time and you’re gonna win 30% of the time. He says, so somebody else might try 10 things new and fail seven times and then win three times. He says I’m gonna try 100 things new. I may fail 70 times, but I got 30 wins and not three wins. And, he even wrote a book a few years ago called Failing Forward Failing Forward, and I highly recommend the book. So, I may have already said it on your show, Jerry. I don’t know, but if I did, I’d repeat myself.
Jay Conner [00:47:46]:
Success is a lousy teacher. Success is a lousy teacher. Failure is where you learn your lessons.
Jerry Scarlato [00:47:56]:
True. John Maxwell, he’s another great one, for sure. He’s got a whole plethora of books that are worth going through and digging through. It’d take you a long time to read them all, but, I’d say that if you’ve only read his books, you’d be you’d be in pretty damn good shape for sure.
Jay Conner [00:48:11]:
For sure.
Jerry Scarlato [00:48:12]:
No. Your couple of stories make me think about we were talking about my friend Bob who’s in a couple of masterminds right now, one that you were in previously and then, another one. And before that, he wasn’t he wasn’t in anything. He wasn’t a conference goer or anything like that, didn’t have a coach, did a lot of work, and, like you said, failed a lot in his real estate journey. And he’s like, man, I should have done this so long ago. I should have done this so long ago, after all the people that he’s met and all the coaching that he’s gotten from just the people there in the group. Like, not even direct coaching that he’s that he’s paying for, like, someone to help. Like, people that are willing to just help and, you know, help problem solve and give you ideas and so on.
Jerry Scarlato [00:48:59]:
That’s what happens when you surround yourself with like-minded people.
Jay Conner [00:49:03]:
Absolutely. And you know Napoleon Hill gets credit for coining the phrase, the mastermind. Right? And, you know, Carol Joy and I have been in many mastermind groups over the years, and they are the most beneficial for, you know, getting you there faster. Getting you there faster because what got you here today will not get you there tomorrow.
Jerry Scarlato [00:49:30]:
Very true. Well, and I’d say that a lot of it is because everyone who’s there, they all wanna do something. They’re all trying to make stuff happen. And so, they all are ambitious. They’re all trying to accomplish something, so they’re not gonna sit around and twiddle their thumbs. They paid money. They’re gonna show up, and they’re gonna give their best. And then they wanna make connections, and they wanna be around people that wanna do the same thing.
Jerry Scarlato [00:49:55]:
So that’s why those kinds of things have such a big impact.
Jay Conner [00:50:02]:
Absolutely.
Jerry Scarlato [00:50:05]:
Jay, I appreciate you, man. A lot of good stuff in there. Most definitely, I feel like we could just keep going on and on with the stories especially. But, where can people find you if they wanna find out more?
Jay Conner [00:50:17]:
Sure. So two ways that actually, I’m gonna give out three ways to find out more about about getting private money. First of all, I recently wrote a book and this is not an ebook. This is a book, book, book that is called Where to get the money now. Where to get the money now and the subtitle is, how and where to get money for your real estate deals without relying on traditional or hard money lenders. Now you can spend $20 on Amazon and get it, but don’t spend $20, Just get the book for free. Well, how do you get it for free? Go to www.jayconner, and I’m an er, not an or. So go to www.jayconner.com/book.
Jay Conner [00:51:02]:
I’ll autograph it, I’ll send it to you, three-day delivery, United States Postal Service just covers shipping, and the book is free. I’ll ship it right out to you, and it goes into the exact program that I teach my new private lenders, and you can copy that and just model it and use it. So there’s the book, www.jayconner.com/book, and then I just recently recorded, Jerry my new private money challenge. And so it’s a series of seven videos that are only about fifteen to twenty minutes long, and I go into all the details of private money, etcetera. And you can enroll in the private money challenge at www.privatemoneychallenge.com. Again, that’s www.privatemoneychallenge.com. You’ll get the first video as soon as you enroll in your email box. And then the next six days at 9 AM, you’ll get each subsequent video.
Jay Conner [00:52:03]:
We’ll have a lot of fun. I’m engaging with you right there on the videos, and you’ll learn how to raise private money. And then the third way is, come join me on my podcast. So I’m now in my eighth year of my podcast, which is called Raising Private Money. Imagine that. So whatever your favorite platform is, Spotify, iTunes, whatever, you know, just search for Raising Private Money with Jay Conner. You probably need to put that in there to find it. And I always have two shows a week.
Jay Conner [00:52:36]:
I release some early Monday morning and Thursday mornings, and I’m always interviewing amazing people as to how they have already gone about raising private money. Their favorite methods, how they go about it, and etcetera. So the book, I’ll autograph it, love to ship it, privatemoneychallenge.com, and on the podcast, Raising Private Money.
Jerry Scarlato [00:52:59]:
Very good, Jay. I’ll put all that in the description as well and make it easy, for everybody to get to. So thanks so much, brother. I appreciate your time, and energy, and, definitely appreciate your knowledge.
Jay Conner [00:53:10]:
Jerry, thank you so much for having me come on. Let’s get back together again. In the meantime, god bless.
Jerry Scarlato [00:53:16]:
Till next time.
Narrator [00:53:19]:
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. Download your free guide, which shares seven reasons 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.
