***Guest Appearance
Credits to:
https://www.youtube.com/@thehustleandgrind
“From Crisis to Opportunity with Jay Conner”
https://www.youtube.com/watch?v=NNMrBDzu4Tk
For many real estate investors, securing funds is the biggest hurdle between a great deal and realizing their financial dreams. Most head to the bank, grovel over loan terms, expose every aspect of their financial lives, and play by the bank’s ever-changing rules. But what if there were another way—one where you set the terms and build a truly resilient business?
On a recent episode of Raising Private Money, Andrew Chesnutt sat down with Jay Conner, a private money maven who transformed a funding crisis into a multi-million-dollar real estate machine.
The Crash That Changed Everything
Jay’s story is a timely reminder that business growth rarely happens when everything is easy. In 2009, after six years of steady real estate deals funded the traditional way, Jay’s banking lifeline was suddenly severed. The 2008 financial crash had prompted his banker to pull the plug on his line of credit overnight—leaving Jay with two properties under contract that represented over $100,000 in potential profit, but with no funds to support them.
That moment of crisis posed a question every entrepreneur can relate to: Who do you know that can help fix your problem? For Jay, a call to a friend turned him on to the world of private money—individuals willing to invest directly in real estate deals for secure, healthy returns.
Building a System Without Begging for Cash
Jay’s biggest breakthrough came when he realized he didn’t have to beg for money or pitch risky one-off deals. Instead, he created a private lending program with clear rules: an 8% interest rate, no origination fees, and loans never exceeding 75% of a property’s after-repair value.
He started teaching those in his network—church members, Rotary Club friends, local professionals—about how they could earn high, safe returns by becoming private lenders. Importantly, he focused on education, not desperation. “Desperation has a smell,” Jay points out. Building trust before you need the money puts you in the driver’s seat.
Once a relationship and understanding exist, funding deals become a matter of making what Jay calls the “great news phone call.” Instead of a hard sell, Jay simply calls to let his lender know there’s an opportunity to put their money to work in a secured deal. This calm, methodical approach has allowed Jay to raise millions in private funding—with 47 private lenders at last count—all without pitching or pleading.
Why Private Lenders Love It
Why are private lenders so eager to work with Jay? He cites three main reasons:
- Higher Returns: Compared to certificates of deposit (CDs) or most traditional options, that 8% fixed rate is unbeatable and often more stable than the stock market roller coaster.
- Security: Notes are collateralized against real estate, private lenders are named on insurance policies, and safeguards are in place in case of emergencies.
- Predictability: Unlike the volatility of 401(k)s or mutual funds—where most investors can’t even quote their exact returns—private lenders know precisely what they’ll earn, with no hidden fees or commissions eroding their gains.
Creative Financing Adds More Flexibility
Private money is just one tool. Jay and Andrew discuss layering creative financing: combining private loans with strategies like “subject-to” purchases, seller financing, and even structuring first-position loans across multiple investors. These methods increase deal-making flexibility, help investors pivot if challenges arise, and offer lenders more options and comfort.
Final Takeaways
The biggest lesson? If you want to level up your real estate investing, look beyond the bank. By proactively educating your network and building a system that benefits everyone, you can transform your funding woes into lasting wealth—on your terms.
If Jay’s story has you rethinking how you fund your next deal, check out his book Where to Get the Money Now. Who knows? The creative, empowering world of private money might be the game-changer your business needs.
10 Discussion Questions from this Episode:
- Brandon Richards mentioned that he initially stumbled into easier funding options by chance. How important do you think luck is versus preparation and networking in finding funding for real estate deals?
- The conversation highlights the value of private money over institutional funding. What do you believe are the main advantages and potential drawbacks of using private lenders for real estate investments?
- Both Jay and Brandon stress the idea of ‘attracting’ money rather than ‘chasing’ it. What are some strategies you’ve seen work (or think might work) to attract private funding in today’s real estate market?
- Brandon talks about demystifying the process for private lenders by comparing them to big banks like Chase. How can real estate investors build trust and confidence with potential lenders, especially if those lenders are unfamiliar with the process?
- Social media played a significant role in attracting private lenders for Brandon. What kind of social media content do you think is most effective in generating genuine interest from potential investors?
- Jay and Brandon both mention the importance of proper documentation (like deeds of trust/mortgages). How much legal and technical knowledge do investors need before approaching private lenders, and where can they learn it?
- Brandon transitioned from house flips to land deals and owner-financed notes. What might be some reasons an investor would make a similar shift in their business model?
- They discussed scaling from a handful of deals to managing millions of dollars in private money. What are the key challenges investors face in scaling their operations, and how can they overcome them?
- Brandon’s CRM, Deal Manager Pro, automates much of the follow-up and deal management process. How important are automation and technology tools for modern real estate investors, and are there risks of relying too heavily on them?
- Brandon wishes he’d started with land and note investing sooner. What lessons from his experience do you think could help investors avoid common pitfalls or seize opportunities earlier in their careers?
Fun facts that were revealed in the episode:
- Jay Conner Has Never Missed a Deal Due to a Lack of Funds
Since discovering private money after the 2008 market crash, Jay Conner hasn’t missed out on a single real estate deal because of funding issues—he’s mastered raising private capital. - The “Great News Phone Call” Approach
Jay Conner raises money without ever directly asking for it; instead, he “teaches” people about the benefits of private lending and then calls them with a “great news” script when an opportunity to invest comes up. This keeps the process friendly and pressure-free. - BYO Bank and “Can’t Decide” CDs
Andrew Chesnutt’s license plate “BYO BANK” is a nod to the idea that you can be your banker through private lending. He also jokingly calls CDs (Certificates of Deposit) “Can’t Decides”—the place people park their money when they’re unsure what to do with it!
Timestamps:
00:01 Valley Growth and Private Money
04:17 Big Fish, Small Pond Strategy
08:32 Discovering Private Money for Real Estate
11:16 Teaching Secure Private Lending Strategies
15:05 Financial Awareness: B.Y.O. Bank Insight
17:30 Setting Attractive Interest Rates
22:14 Real Estate Finance Strategy
26:30 Lender Positioning Strategy Explained
27:43 Combining Lenders for Loans
31:19 Take 100% Responsibility
33:48 Hustle and Grind Podcast Recap
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book, Where to Get the Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Lessons from the 2008 Crisis: Reshaping Real Estate Financing with 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.
Jay Conner [00:00:29]:
You know, growth takes place in the Valley. Typically, growth does not take place when you’re on top of the mountain. And I started teaching people about private money and how they can earn high rates of return safely and securely, and how they can be protected without attaching a deal to it. Because here’s a writer downer, I make the rules. You see, I said at the beginning of the show, institutional money that you borrow, they make the rules. In this world of private money, we’re not asking for a mortgage; we’re offering to take 100% responsibility for everything that happens in your life. And in that first chapter, there’s an amazing formula that will set you free on learning how to make choices.
Andrew Chesnutt [00:01:21]:
Welcome back to the Hustle and Grind podcast, the show where we dig into why real entrepreneurs trade comfort for conviction. This isn’t about vanity metrics or overnight success. It’s about the stories behind building a reputation that matters. I’m your host, Andrew Keynote, architect, platform builder, and fellow founder in the trenches. Today, I’m sitting down with Jay Connor, the real estate investor and private money expert who turned rejection from a banker into a seven-figure business. Jay started in real estate back in 2003, doing deals the traditional way. Big down payments, origination fees, personal guarantees. But when the 2008 crash hit and his banker cut him off, he had to rebuild from scratch.
Andrew Chesnutt [00:02:04]:
That’s when he discovered the power of private money and developed a system that helped him raise over $2 million in just a few months. Now he runs a highly profitable business in under 10 hours a week.
Andrew Chesnutt [00:02:15]:
Let’s get into it. So, Jay, I’m honored to have you on the podcast today because you are in a space that I am very passionate about, and that’s private money. So I’m looking forward to having a great conversation with you today.
Jay Conner [00:02:28]:
Andrew, thank you so much for inviting me to come and talk about the topic that I’m so excited about, private money. Why in the world am I so excited about that? Because private money’s had more of an impact on my real estate investing career than anything else that we have ever employed in our business. It was the biggest game changer it still is today. I’ve never missed out on a real estate deal for not having the funding ever since February of 2009.
Andrew Chesnutt [00:03:00]:
Absolutely. And I think it’s something that a lot of people don’t think about. Whenever I ask somebody, How much is your 401k making? I have not gotten even. People who are pretty sophisticated investors, I haven’t gotten a single answer that was direct. I think it’s making this, and it was never a very good number. I think a lot of people don’t realize there are other options out there, and they’re not that hard. So that’s why I’m looking forward to kind of getting into this, the conversation about what this looks like. But first thing I want to do, like many others, you end up with.
Andrew Chesnutt [00:03:27]:
The crash of 2008 was a major, pivotal moment in your life, I think major way. The way to. The polite way to say that. And a lot of people had this issue as well. So, to do me a favor, tell me the story about 2008, what happened to you, and how you pivoted.
Jay Conner [00:03:43]:
Sure. Well, you know, growth takes place in the Valley. Typically, growth does not take place when you’re on top of the mountain. Well, my wife Carol Joy and I met on my very first Sunday in town at church in Wichita Falls, Texas. We’ve been living here in eastern North Carolina ever since 1988. We started investing in single-family houses in 2003, full-time, here in a very, very small market. Our total target market is only 40,000 people, but we’ll do on average two to three deals a month. Average profits right now are $86,000 per deal.
Jay Conner [00:04:17]:
I do not share that to brag or come from a space of ego. I share that to make a point. And that is, there’s an argument to be made that you can be a big fish in a small pond and sort of dominate your market. That’s why we do, and that’s why our average profits are 86,000 each. We started investing in 2003, Andrew. And from 2003 until January 2009, our first six years of investing, what we did is I went to the local ba,nk and here’s how I got my deals funded. I go to the local bank, I get on my hands and knees, I put my hands underneath my chin, and I please ask my deal. And my banker would make me pull up my skirt so they could look at all my receipts, pull my credit report, look at my financial statements, and they made all the rules.
Jay Conner [00:05:07]:
That’s what most people think you have to do when you’re borrowing money for real estate is he who has the cash makes the rules. So that’s what I was doing. Well, that worked out okay. Okay. Until January 2009, Andrew, I was sitting right here at this desk. The desk may be hard to believe for you and some of your audience to believe. We still have landlines here in my office with cords attached to them. But anyway, I was sitting here at my office.
Jay Conner [00:05:37]:
I picked up my phone here, and I called him, my banker. His name was Steve. He was working for BB&T at the time. Nowadays, it’s called Truist. And Steve and I had a great relationship for six years. Steve was the main funding source, ce using institutional money for my single-family houses. In the first six years I called up Steve in January 2009, I had two houses under contract to buy. They, in total, represented over $100,000 in profit between those two deals.
Jay Conner [00:06:13]:
So I called him up, I told him about the two deals, and Steve and I had had this kind of conversation many times for six years. I didn’t know anything was different. And so I learned immediately over the telephone. Steve informed me that my line of credit for my real estate investing had been shut down with no notice. And I said, Steve, what in the world are you telling me? My line of credit is closed with no notice. We got a great, you know, business relationship here. We’ve done a ton of deals. Why are you closing my line of credit? Steve said, Jay, don’t you know there’s a global financial crisis going on right now? I said, No, I don’t know anything about that, Steve, but I know one thing.
Jay Conner [00:06:55]:
You just gave me a global financial crisis. I don’t have a way to fund my deals, particularly these two deals. He said, Sorry, Jay, we are just not loaning any money out to real estate investors. So I hung up the phone. Andrew, I sat here at my desk for a moment, and I asked myself a very important question. I want to share this question with you and your audience. It’s very powerful because, you know, the power is asking the right questions. And I asked myself, Jay, who do you know that can help fix your problem? And by the way, these people running around saying, Every problem is an opportunity.
Jay Conner [00:07:36]:
I want to throw up and be the Kool-Aid guy that runs into a brick wall. I didn’t have a problem. I didn’t have an opportunity. I had a problem. Let’s face it, I had a problem. So I asked myself who could help me fix my problem immediately. I mean, it was immediately when I asked myself that question, I immediately thought of Jeff Blankenship. He was living in Greensboro, North Carolina, at the time.
Jay Conner [00:08:03]:
Carol Joy and I have known him for many, many years, from singing at gospel Christian events. And he was investing in single-family houses in Greensboro, North Carolina, at the time. I called him up and I told him what had just happened with my banker. And Jeff said, Well, welcome to the club. I said, What club are you talking about? He said, the club of having the bank shut down your credit. He said, My bank just shut me down last week. Now this was January 2009. My first thought was, well, I’m talking to the wrong dude here.
Jay Conner [00:08:32]:
I said, Well, Jeff, how are you going to fund your deals? He said, Well, have you ever heard of private money? I said, No, what’s private money? He says, Well, let me ask you another question. He said, Have you ever heard of self-directed IRAs? I said, No, what’s that? He said, Well, a self-directed IRA, as I understand it, is a third-party custodian company approved by the IRS that allows individuals to move current retirement funds over to their company, then they can lend that money out either tax deferred or tax free to U.S. real estate investors. I said, Jeff, I don’t have a clue what in the world you’re talking about. I said, How? How am I going to learn about private money? He said, Well, there’s this guy down in Jacksonville, Florida, by the name of Ron Legrand that can teach us all about private money. I said, Well, what is it? He said, I don’t know. But Ron says we can get a lot of it for our real estate deals. So Jeff and I went to my very first real estate investing conference and seminar, which was Ron Legrand’s seminar all the way back in 2009.
Jay Conner [00:09:41]:
I learned about private money. I came back home, and what did I do? I raised $2,150,000 in less than 90 days. And how did I go about doing it? I decided that I was going to go about raising money without ever asking for money. And you know what’s interesting, Andrew, to this day, this is 2025. To this day, I’ve never asked anybody for money, and I’ve never pitched a deal. And people say, Jay, how in the world do you get all that money for your real estate deals, and you never pitched a deal? Well, there are two parts to it. Then I’m going to turn it back to you, Andrew. First of all, I tell people it’s very hard to raise money until you own the real estate between your ears and get your mindset right.
Jay Conner [00:10:32]:
So the first thing I did was put my program together that I was going to offer without any deals attached to it. What rate am I going to pay? It’s 8%. I’ve been paying 8% since 2009. It hadn’t changed since. No origination fees. Maximum loan to value is 75% of the after-repaired value, et cetera, et cetera, et cetera. So I put my program together, and then what did I do? I put on my teacher hat, which says private money teacher. And I went about in my connections, people on my cell phone, people I go to church with, people in the Rotary Club, people I’ve already got an association with that they know me like me and trust me.
Jay Conner [00:11:16]:
And I started teaching people about private money and how they can earn high rates of return safely and securely, and how they can be protected without attaching a deal to it. Because here’s a writer downer, desperation has got a smell to it. Meaning if I’m talking about a private lending opportunity and I got a deal attached to it, I’m already saying in so many words, I need you to fund my deal. I’m already sounding desperate without. I mean, when’s the worst time in the world to be trying to raise private money when you need it for a deal, right? And so I wanted to establish these relationships and teach people. I did a private lender luncheon, and I got a pledge of $969,000 from one private lender luncheon with no deals attached to it. So then how do I get my deals funded without ever asking? And then I’ll turn it back to you, Andrew. I’m going to share with you right now with you and your audience right now what I call the great news phone call.
Jay Conner [00:12:18]:
Here’s the script. Here’s the script. The great news phone call. Andrew, let’s say, hypothetically, you’re one of my new private lenders. Let’s say you got $150,000 in a previous 401 (k) at a previous employer, and you’re not happy with what it’s doing. I’ve taught you the program. I’ve taught you the interest rate, how you can get your money back in case of an emergency, how you’re protected being named as the mortgagee on the insurance policy, and all that kind of good stuff. And you love it.
Jay Conner [00:12:47]:
You love the program. Say, Jay, I’m interested in that. I’d like to do that. And Isayy, okay, well, I don’t have a deal for you today, but I’m going to put your money to work for you just as soon as possible. So a week or two goes by, and I call you up, Andrew. Here’s the exact script, the exact words that I say to Andrew to get my deals funded 100% of the time. I call up Andrew, my new private lender, we have a little chit chat, and then I say, Andrew, I’ve got great news for you. I can now put your money to work.
Jay Conner [00:13:23]:
I’ve got a house under contract in Newport with an after-repaired value of $200,000. Now the funding required for the deal is 150,000, which matches up to what you have available in your retirement account. Closing is going to be next Tuesday, so I’ll need you to wire your funds to my real estate attorney. I’m going to have my attorney email you the wiring instructions. That’s the end of the conversation. Now, let’s unpack why Andrew wants to do that deal. And he is ecstatic to get the great news. Phone call.
Jay Conner [00:13:58]:
First of all, Andrew’s not earning any money on his money in the retirement account until I put his money to work. He moved his money over at my recommendation. I introduced him to the self-directed IRA company. He’s done what I recommended. Now he wants to put his money to work. He’s not making any money until I put his money to work. I’m ethically and morally responsible and obligated to put his money to work. And then secondly, I’m not going to bring Andrew a deal to fund that does not meet the criteria of the program that I already taught him before he even moved his money over.
Jay Conner [00:14:36]:
So teach lead with a servant’s heart. You know, I got 47 private lenders. Not one of them ever heard of private money or private lending until I put on my teacher hat. None of them ever heard of self-directed IRAs and how that works until I put on my teacher hat. And we’re not in a rush, we’re not desperate, we follow that. I call them up with the good news phone call, and everybody is happy. Yeah.
Andrew Chesnutt [00:15:05]:
So I should let you in on a little bit of a secret. My license plate is BYO bank, and that’s specifically for this reason. And that’s a lot of people who don’t realize that this is an option. You know, every person we were talking to before the podcast today, that every person I have come in contact with, and I’ve asked them, how much is your 401 (k) making? And some of these are people who watch their numbers, have no idea how much they’re making. And unless you’re making over 3%, that’s the average inflation over the past hundred years. But you’re making more than that; you’re losing money. And I think a lot of people don’t think like this.
Andrew Chesnutt [00:15:36]:
They think, I’m in the stock market, it’s a long play. I’m making maybe something. My financial advisor knows what they’re doing, and they don’t realize this might be an option. And I. So that’s why I’m excited to have you show people that there is another way to do this and to earn something better than the 2% they’re probably making on things at this point. So, yeah, so what, what do you say to people when they first, like, what is that moment, like, where they’re first? They’ve taken the red pill; they know there’s another option. Now what’s that thing that gets them over the hurdle going? This isn’t risky.
Andrew Chesnutt [00:16:05]:
Probably the stock market’s more risky. What do you need to get them over that? Like, what’s that one thing that helps them to understand it? For anyone out there who’s like, who’s intrigued but still not quite, you know, there.
Jay Conner [00:16:16]:
There are three big reasons why private lenders love doing business with us, get interested in doing business with us, and stay with us. I mean, when we cash out on a property and we send them their payoff back, they don’t even want it. They all. They’ll say, Can’t you just keep it? Well, I can’t keep it because I’m collateralizing their notes. And then we go do another deal. Three big reasons why they want to do business with us. Number one, they’re going to make a whole lot more money than they can through traditional sources, such as a certificate of deposit at the local bank. I’ve been paying 8% since 2009.
Jay Conner [00:16:54]:
People say, Jay, how in the world are you paying the same thing today that you were in 2009? And markets have gone up, they’ve gone down, they’ve gone up, they’ve gone down. How can that be? Well, here’s the first reason why I’m still paying them 8%. I make the rules. You see, I said at the beginning of the show, institutional money that you borrow, they make the rules. In this world of private money, we’re not asking for a mortgage. We’re offering. We’re offering an opportunity. So since I’m offering it, I get to make the rules.
Jay Conner [00:17:30]:
We get to set the interest rate, the term, the length of the note, the frequency of payments, all that. And the second reason they love the interest rate is that 8% today is still a whole lot higher than they could get. You know, a little over a year ago, you could get 5% in a local CD for seven months atFirstt Citizens Bank right here on Bridges Street in Morehead City, North Carolina. That same CD today is three and a half percent, and it’s coming down fast. Right. But even at 5%, 8% is a whole lot more than 5%. And their notes are collateralized. So the number one reason they make a lot more money than through traditional sources.
Jay Conner [00:18:10]:
The second reason that they love it is that their investment with us is secure and it is safe. So how is it secure? We’re not borrowing unsecured funds. We’re collateralizing the note. We’re naming them on the insurance policy as a mortgagee. In case there’s ever a claim, the checks are made payable to them as well as me, with them being the lender. We name them on the title policy as additionally insured. And along with that, it is safe because it is a conservative loan-to-value. We’re not borrowing more than 75% of the after-repair value.
Jay Conner [00:18:52]:
Bear in mind, I did not say 75% of the purchase price. Big difference. Since we’re buying these properties at significantly discounted amounts due to them needing renovation, we always bring home a big check when we purchase every property. We never take any of our own money to the closing table. If you’re listening to this or watching this and you’re a real estate investor who wants to get paid to buy houses, right? We always bring home a big check when we buy. So they’re going to make a lot of money. It’s safe, it’s secure. And thirdly, their investment amount, the value of it is not volatile.
Jay Conner [00:19:34]:
So I’m contrasting this opportunity to being a private lender with investing in the stock market. When you invest in the stock market, my lands, is the market volatile? Well, yeah. Take a look at the past week and tell me if the market is volatile or not. Right. I mean, what you could have owned last week is worth, you know, 10% less today than it was. It can be worth more. And there are fees and commissions in this world. There are no fees and commissions.
Jay Conner [00:20:03]:
The bo, the investor, the principal lender, the lender knows exactly what their return is going to be. I love what you said a moment ago, Andrew, when you said you asked people, well, what rate are you getting consistently, you know, in your retirement account? They don’t know. Well, a private lender knows exactly what their rate of return is going to be. It’s like putting money in the local bank instead of knowing they know, with no fees, no commissions, and nothing else coming out of that.
Andrew Chesnutt [00:20:37]:
And I think that’s the one thing that people don’t realize is that a 401 (k) is not for your benefit, it’s for your employer’s benefit, and there are fees behind it as well. And you’re probably not making 4% in that. You’re probably making 2 to 3. And so it’s barely keeping up with inflation. So just from what, from the digging that I’ve done on it. So I wanted to bring that up to let, because that’s what people do. They think, I put a certain amount in my 401k, I have a match. So that’s free money.
Andrew Chesnutt [00:20:59]:
It’s not always advantageous. And I think people need to have that additional information that there’s some, there’s another place out there. So I’d like to pivot for a second because you, you’ve, you’ve mentioned you go into creative financing, and I think that’s a world that a lot of people know less about than private lending. I think some private lenders don’t understand creative finance. Tell us a little bit about what that is. Just interesting.
Jay Conner [00:21:20]:
Yep. Well, there are all kinds of creative financing, one of which is sort of an advanced technique if no one’s ever done it. But one way to have creative financing is to combine more than one strategy on the same deal or the same transaction. So in the world of single-family houses, one creative financing strategy is to buy a property, which is called subject to the existing note. So, a seller will sell you a motivated seller who’s looking for debt relief will sell you their house and agree to keep the mortgage in their name, and you agree to make their payments. And if they have any back payments, bring those payments current. And so over 90% of people within the last three years have refinanced their properties. And you’re talking three years ago, interest rates of 3%.
Jay Conner [00:22:14]:
Two and three-quarters percent. Three and a quarter percent. So when you buy a property subject to the existing note and the seller is keeping that mortgage in their name and you’re making the payments, you essentially just inherited a 3% interest rate right now. Along with that, you can combine private money and borrow private Money if there’s equity in the property. ‘Cause you gotta protect your private lender so there’s equity in the property. You can borrow private money and collateralize that note in what we call a second position or a junior lien position. And the key is you’ll want to add what’s owed on the first mortgage to the amount of private money you’re borrowing in the second position. Add those two together, divide by the after-repaired value of the property. If you’re going to renovate it, and you still don’t want that total loan-to-value to exceed 75%.
Jay Conner [00:23:09]:
So, creative financing, well, some people would call private money in and of itself creative financing. It’s not institutional money. Another creative financing scenario could be if you’re buying a single-family house, and let’s say the seller owns it free and clear. So now the seller can be the bank, take a note back, and you make monthly payments to the seller if they’re interested in longer-term income and not having to pay tax on that sale amount. Well, if there’s equity in the property, and there should be, then you can again borrow private money and put that in second position. Because the first position is the note that you gave back to the seller. And you could use private money in a second position and combine those two strategies. So there are all kinds of creative ways to buy a property without using institutional money.
Andrew Chesnutt [00:24:06]:
And I wanted to mention that too because this is the additional kind of feather in the cap of this is not as risky as people think it is, there’s more than one way out of a real estate transaction. I mean, it’s not like you go, you buy the house, you do this, and it’s not the same formula every time. There are a lot more creative ways to do it. And so that way, then if something goes wrong, you pivot. There’s.
Jay Conner [00:24:28]:
Well, and that’s what I love about real estate, particularly single-family houses. There are always multiple exit strategies. I mean, you can get the property under contract, you could wholesale it if you want to, and not stay in the deal. Get a wholesale assignment fee, and you know, wham, bam, you’re done. I’ve never wholesaled a deal in my life. I don’t have anybody to wholesale it to. And plus I like staying in the property and staying in the deal and making the big profits. But you can wholesale it if you want to stay in it.
Jay Conner [00:24:58]:
If you don’t want to do anything to it, you can turn around and sell it on lease, purchase, or Rent to own. And the longer you own a property, if you do it right, the more money you should make. You can rehab it, put it in the multiple listing service. You can do what I did years ago when the market was slow. I rehab it, put it in the multiple listing service, and offer it for lease purchase, rent-to-own. And if I sold it on lease purchase, I would force them into credit repair and take about 18 months to get their credit cleaned up to where they could get a mortgage and cash me out. So again, as you say, Andrew, multiple, multiple exit strategies. Always.
Andrew Chesnutt [00:25:38]:
Exactly, exactly. And it’s one of the nice parts about real estate is that there are a lot of advantages to it. And I think, I don’t think enough people take advantage of it, and they think it’s going to be tenants, termites, and toilets. No, that’s. There’s another side to it. Being in the bank is the ultimate. So I had a friend of mine cash out. He had 90 doors, crashed out everything, and is now at the bank.
Andrew Chesnutt [00:25:56]:
And that’s. That was his ultimate play, being that bank. But the other thing I wanted to touch on really quickly, as a last question, because it’s something that I’ve seen done regular, regularly, but a lot of people don’t understand. They know like first and second, third position on a title, meaning, you know, if there were a foreclosure, the first person gets paid, then the second person gets paid, it kind of rolls downhill. But there’s a way, there’s another way to do this. So let’s say there are three different lenders on the property. You can put them all in the first position. And it’s something that not a lot of people, not all states, only some states can do this.
Andrew Chesnutt [00:26:27]:
But is that a strategy that you use as well?
Jay Conner [00:26:30]:
Yeah, I’ve never done that, Andrew, and I’ll tell you why I haven’t. But then I’d like to come back to you for you to tell the audience how you can do that, in case someone’s in a state that can take advantage of that. So when I have multiple lenders, I disclose to the lenders on the promissory note what position that note is in. So I use larger amounts for the purchase of the property. So whoever’s got the most money goes in first position if I’m using more than one lender on the property, and then the smaller amounts I can use for renovation. So I would disclose on the promissory note if they’re in second position or third position. I’ve never had a problem with it doing it that way because all of my private lenders have been taught by me. I taught them this world.
Jay Conner [00:27:19]:
And so there’s a super, super high degree of trust that’s cranked into these transactions. But, you know, if you’re talking with a private lender that knows about this world, some private lenders refuse to be in a junior lien position. They only want to be in a first lien position. So, Andrew, please talk through the logistics of how you do that.
Andrew Chesnutt [00:27:43]:
So some of the reasons or the ways I’ve seen this happen are, let’s say, I have $150,000 that I need to borrow, you know, below 70% LTV, which is kind of where I like to sit. So, you know, and I’m within my criteria. But let’s say that I have one lender, so 150 is what I need. Let’s say I have one lender with 125, and that’s all they have. And they’re left in their IRA because they have the rest of their money working. And I’ve got another one with 25. I can put both people in the first position in some states. This isn’t in all states, but I know I’m in New York state.
Andrew Chesnutt [00:28:11]:
We can do that here. And so what it is, is on the loan notes and the mortgage, it lists both people out with a percentage ownership in that first position lien. And so it’s a different way. So if somebody has like 25,000 left over and they just want to throw it into a deal, but they don’t want to take second position, there’s another option for it. So it’s a little bit of a different way.
Jay Conner [00:28:30]:
So it’s, it’s, it’s one promissory note and one in New York. Are you a mortgage or a deed of trust?
Andrew Chesnutt [00:28:38]:
We’re a mortgage state.
Jay Conner [00:28:39]:
So you’re a mortgage state. So the mortgage discloses that John Jones owns 75% of this mortgage and Sally Smith owns 25% of the mortgage.
Andrew Chesnutt [00:28:54]:
Correct.
Jay Conner [00:28:55]:
And they’re both in first position.
Andrew Chesnutt [00:28:57]:
Yeah, exactly.
Jay Conner [00:28:58]:
Simple enough.
Andrew Chesnutt [00:28:59]:
Exactly. And it’s fully disclosed. It’s in the, it’s in the mortgage itself. It’s in, you know, everything is kind of across the board on it. But it’s another thing you can do. It’s called pulled investment. Sometimes you can do it. In some states, you can’t do it.
Andrew Chesnutt [00:29:09]:
I don’t know if you can do it in North Carolina. I haven’t had A deal down there that I’ve seen happen. I. So I don’t really have too much data on it. But it is an interesting concept that a lot of people don’t, don’t know is an option. Especially if you got a little left over in your 401k because you’re using all your money or you’re in your ira, you’re using all your money, you have a little bit left over. You want to make sure we use every penny. So I want to go back to CDs.
Andrew Chesnutt [00:29:30]:
I call CDs. Can’t decide because that’s where you put it when you can’t decide what to do with your money.
Jay Conner [00:29:36]:
That is funny. I’ve. I’ve had over 700 episodes on my podcast. I’ve been a guest on over 800 podcasts. I’ve never heard anybody call a CD. Can’t decide. That is funny.
Andrew Chesnutt [00:29:48]:
That’s an original. If you want to use it, you’re more than welcome to.
Jay Conner [00:29:51]:
That’s why I hadn’t heard it. It’s original.
Andrew Chesnutt [00:29:55]:
Well, I was thinking about it one day, going, what is the only time you’re going to use a CD? And it’s like if you can’t decide what to do with it, you’re going to put it into that and store it away. It’s stuck. So. Yeah, exactly. Not a fan of CDs. They just don’t get a return. My bank is Ally Bank, and they have probably the highest CD rates in anything out there, and they’re about three and a half, 4% right now. So it’s just not worth it.
Andrew Chesnutt [00:30:17]:
But. Well, we’re getting towards the end of things here. And I do have one question that I ask everyone, and that is, what is one book or podcast that has had a significant impact on your life that you want to share with the audience?
Jay Conner [00:30:29]:
That is a hard question, Andrew, because what has had the most beneficial or what has benefited me the most in my growth over these years, professionally and personally, has been the books I read and the people I meet, and the relationships that we nurture. But I’ll. I’ll choose one that’s definitely in the top five, and that is the author is Jack Canfield. And you know, he was the co-author for the Chicken Soup for the Soul series decades ago with Mark Victor Hansen. Anyway, he came out with a book about 10 years ago that is timeless. It was just republished again for the 10th anniversary. The name of the book is The Success Principles. The Success Principles.
Jay Conner [00:31:19]:
And Jack Canfield has identified 65 success principles that are foundational and are a common thread among the most successful people on the planet. I will tell you, the very first success principle, which is foundational for the other 65, is principle number one. And that principle number one is, quote, unquote, take 100% responsibility for everything that happens in your life. And in that first chapter, there’s an amazing formula that will set you free on learning how to make choices. The formula is E plus R equals. Okay, I’m not going to tell you what it means. You need to go get the book. E + R equals O will help you determine and take full responsibility for everything in your life.
Andrew Chesnutt [00:32:20]:
Well, Jay, thank you so much for being on the show today. I appreciate you being here. Thank you so much.
Jay Conner [00:32:25]:
Thank you, Andrew. And I would love it if you would let me, I’d love to give a gift. I’d love to give a gift to you and your audience. And that is, I’m so excited about my new book, which is titled Where to Get the Money Now. Subtitle is how and where to get money for your real estate deals without relying on institutional or hard money lenders. This is not an ebook. This is a book. It’s 20 bucks on Amazon, but don’t spend 20 bucks on Amazon.
Jay Conner [00:32:53]:
I like to give your audience the book for free. Just cover shipping. I’ll autograph it. You can. And I’ll send it out 3 3-day express. You can pick up my book on where to get the Money now for your real estate deals at www.JayConner.com/Book, and I’ll rush it right out to you. I’m going to include with the book two tickets valued at $3,000 to my upcoming private money conference as well.
Andrew Chesnutt [00:33:31]:
Excellent. Thank you so much, Jay. I appreciate it. For those who want to take advantage of this amazing offer, go down and take a look at the show notes. The links will be there so you can sign up. Awesome. Well, again, Jay, thank you so much for taking the time out of your day and spreading some wisdom with us. I appreciate it.
Jay Conner [00:33:46]:
Thank you for having me, Andrew. God bless you.
Andrew Chesnutt [00:33:48]:
Thanks for tuning into the Hustle and Grind podcast, where we unpack what it takes to build something that matters. If today’s conversation hit home, do me a favor. Share it with someone who’s in the trenches, too. And if you’re building your brand, platform, or message and want help turning that story into serious authority, head over to theauthorityforge.com to see how we can help. Until next time, keep showing up, keep shipping, and keep chasing the work that sets you on fire. I’m Andrew, and this was the Hustle and Grind podcast.
Narrator [00:34:19]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConnner.com/MoneyGuide, that’s www.JayConnner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConnner.com/MoneyGuidee to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.