***Guest Appearance
Credits to:
https://www.youtube.com/@therealjenjosey
“251 – Unlocking Private Money Secrets with Jay Conner”
https://www.youtube.com/watch?v=Ww3gU1egqSY
If you’re a real estate investor who has ever felt boxed out by banks, high-interest hard money lenders, or just wanted a faster, more flexible way to fund your deals, there’s a gateway you need to know about: private money. On a recent episode of the Raising Private Money podcast, together with Jen Josey, industry expert Jay Conner broke down his journey from traditional lending to mastering the art of raising millions in private capital—and how you can do the same.
Jay’s Story: From the Mobile Home Business to Real Estate Success
Jay’s foray into real estate is rooted in a family legacy of mobile homes. Raised in North Carolina, his family’s business was the largest retailer of mobile homes in the country at one point. But when the industry collapsed in the early 2000s due to disappearing financing options, Jay was faced with a formidable challenge. It took his family a year and a half to liquidate $22 million in inventory, an experience he describes as much harder than starting a business. That difficult chapter pushed him into the world of single-family homes in 2003, inspired by friends who successfully flipped properties for far more profit (and less hassle) than he could imagine in mobile homes.
For his first six years, Jay relied on traditional bank financing: loan applications, credit pulls, heavy documentation, and all the red tape. But everything shifted for him with the 2008 market crash, when his local banker abruptly stopped lending. In 2009, Jay discovered private money—and he hasn’t looked back since.
What Makes Private Money Different?
Jay is quick to make an important distinction: private money is not “hard money.” Hard money lenders are typically brokers leveraging pools of investor capital, charging steep origination fees and higher interest rates—often 12-14% or more. In contrast, private money deals are direct relationships with individuals seeking solid, safe returns. According to Jay, the advantages are extensive:
- No Loan Applications or Credit Checks: Traditional banks set all the rules, but with private money, you’re in the driver’s seat.
- Flexible Terms: Jay pays his private lenders 8% interest (no points), a figure that has kept 47 private lenders happily funding his deals for over a decade.
- Speed and Simplicity: No more racing against the clock to get bank approvals—when you control the capital, you control the deal.
- Total Funding Coverage: With the right approach, you can even collect a check at closing for repairs and extra equity, maximizing leverage and minimizing personal out-of-pocket risk.
The Secret Sauce: Teaching, Not Pitching
So how does Jay attract private lenders? Surprisingly, he’s never asked anyone for money and never pitches individual deals upfront. Instead, he educates. Jay puts on his “teacher hat” and holds conversations or luncheons focused on how private money works, offering value first. He explains the opportunity, including the mechanics of self-directed IRAs, and then waits for interested individuals to approach him. The key, he says, is separating the education from the ask—raising capital before you need it.
When it’s time for funding, Jay makes what he calls the “good news phone call.” Instead of a sales pitch, it’s a notification: “I now have a house under contract that matches the amount you were interested in putting to work.” This approach builds trust, urgency, and a professional dynamic—no desperate scrounging for financing.
Actionable Advice for New Investors
For those new to private money, Jay recommends starting with your “warm market”—people you already know from your network, social circles, or professional groups. Don’t underestimate the power of structured networking organizations like BNI (Business Networking International), which Jay says have directly led to millions in new funding for his deals.
And remember, the true asset in any deal is not the property itself, but you—the investor. Build credibility, invest in your education, and focus on relationships first.
Conclusion
Jay Conner’s journey is proof that private money isn’t just for industry veterans—it’s an accessible, repeatable system for anyone ready to approach capital with education and integrity. If you’re struggling with funding, consider stepping into the world of private money. The flexibility, speed, and long-term relationships you build may transform your business—and your life.
10 Discussion Questions from this Episode:
- Jay Conner discusses the importance of private money in real estate investing. What are the main differences he highlights between private money, hard money lenders, and traditional bank financing?
- How did the 2008 market crash serve as a turning point for Jay Conner’s approach to funding his real estate deals?
- Jay shares that he has never missed out on a deal since 2009 because of his access to private money. Why does he think private money is such a game-changer for investors?
- The “good news phone call” strategy is a key part of Jay’s system for working with private lenders. What does this script involve, and why does he think it’s effective?
- Jay talks about using separate conversations when teaching potential lenders about private money and when discussing specific deals. Why does he think keeping these conversations separate is so important?
- The notion that “desperation has a smell to it” is mentioned as a pitfall when raising private money. What are some ways investors can avoid coming off as desperate when seeking funding?
- Jay outlines the process of cashing multiple checks on a single real estate deal. What are the different ways he makes money on each deal, and how do these methods work together?
- Lease options or rent-to-own sales play a role in Jay’s investing strategy. What are some benefits and challenges he mentions about this approach, especially regarding helping tenant-buyers become homeowners?
- For new investors, Jay emphasizes finding private lenders through your “warm market” and through networking. What practical steps does he recommend for expanding your network and attracting lenders?
- Jay makes a point that private lenders are ultimately investing in the person, not just the deal. What qualities or actions does he believe are most important for building trust with potential private lenders?
Fun facts that were revealed in the episode:
- Jay Conner’s Dad Is Still Building at 91!
Jay grew up in the mobile home business, and his father, Wallace Conner, is still actively building a 350-home development at the age of 91 and a half—he’s proud enough to include the “and a half!” - Jay Brings Home Checks When He Buys Houses
Unlike the typical real estate transaction, where you spend money to purchase a property, Jay’s private money technique often has him bringing home a check at closing—he essentially “gets paid to buy houses” by borrowing more than the purchase price to cover renovations and even some profit upfront. - Jay Never Misses a Deal for Lack of Funding
Since learning about private money in 2009, Jay hasn’t missed out on a single deal due to a lack of financing. He’s mastered raising private funds so well that his 47 private lenders compete to finance his deals, typically earning 8% interest with no points—without Jay ever having to formally “ask” for money!
Timestamps:
00:01 Passion for Private Money
05:38 Fixer Upper to House Fund
08:29 Private vs. Traditional Money Loans
10:33 Private Real Estate Investing Explained
15:12 Self-Directed IRA Investment Introduction
18:26 Real Estate Funding Strategy Tips
22:19 Final Check: Real Estate Cash Out
24:40 Guided Credit Repair for Ownership
26:20 Lease Option Agreement Explained
31:51 Private Lenders Prefer Holding Investments
32:59 Deed of Trust Secures Private Loans
38:50 Boosting Real Estate Investments via BNI
43:03 Private Money Conference Preview
44:34 Life-Changing Book: University of Success
47:46 Defining Success: Inner Joy
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
How Jay Conner Built a Real Estate Empire Using Proven Private Money Strategies
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.
Narrator [00:00:30]:
Welcome to Reign, the Real Estate Investor Growth Network, with your hostess, Jen Josey. Join like-minded real estate investors and accelerate your business towards greatness. You will hear step-by-step strategies for success, interviews with real estate rock stars, and we will dig deep into past projects where we bare it all, including the good, the bad, and some just plain ugly. So get excited. Here’s the bestower of badassery herself, the real Jen Josey. Listener discretion is advised.
Jen Josey [00:01:10]:
Hi, and welcome back. I’m Jen Josey, creator of Reign, the Real Estate Investor Growth Network. On today’s episode, we have a guest who will be sharing their badassery. We have with us Jay Conner, a seasoned real estate investor who’s been transforming the industry since 2003. Early in his career, Jay relied heavily on traditional bank financing, complete with hefty down payments, origination fees, and personal guarantees. But when the 2008 market crash hit, his banker cut him off, forcing him to rethink everything he knew about financing deals. That’s when Jay discovered the power of private money. Fast forward to today.
Jen Josey [00:01:55]:
Jay has perfected a repeatable system for raising millions in private funds, enabling him to achieve consistently seven-figure profits and work less than ten hours a week. It’s my pleasure to have him on the show. So welcome, Jay Conner.
Jay Conner [00:02:13]:
Thank you so much for inviting me to come along. Talk about my favorite subject that I’m so passionate about. That being private money. And why am I so passionate about it? I’ll tell you why. Ever since I learned about private money in January of 2009, I’ve never missed out on a deal for not having the funding. I know what it feels like to miss out on deals, but I haven’t missed out on a deal since 2009. And you know what I love? One of the reasons I love private money so much is that you’re able to raise it and attract it without ever filling out applications, without ever having your credit pulled, and without ever having to ask anybody for money. Wow.
Jen Josey [00:02:58]:
Well, I cannot wait for this interview because I actually just lent out money like two or three days ago. It’s been a hot minute since I’ve been a private money lender, so I need a good refresher. It’s someone whom I completely trust, but I’m so excited for this one. So, how did you get involved in real estate way back in 2003?
Jay Conner [00:03:21]:
Okay, well, I was raised in the mobile home business. And you being a North Carolinian, I bet you still see a few mobile homes in the countryside. Now. We were really fancy. We called them manufactured houses, but they were mobile homes. They started out as being called wobbly boxes and trailers way back in the day. And you know what’s interesting, Jen? My dad, Wallace Conner, is now 91 and a half years old, and he makes sure, you know, about the half. He’s 91 and a half years old.
Jay Conner [00:03:51]:
He is building a 350-home development. He’s halfway built out. And I told dad, I said, Don’t you dare kick the bucket on me and leave all that mess behind. You’ve got to clean this up before you go see Jesus. But anyway, my dad, Wallace Conner, was the Conner Homes, Conner Corporation. Conner Mobile Homes was the largest retailer of mobile homes in the nation.
Jen Josey [00:04:18]:
Wow.
Jay Conner [00:04:19]:
In the heyday. So I was raised, I was raised with my dad and a family that we went about serving, helping people own affordable housing. Now, unfortunately, the demand is still there, but the financing is gone. So, in 2002, the entire industry fell out of favor with Wall Street. No more financing for the consumer to buy mobile homes. And people back then weren’t walking around with 25 $30,000 to buy a single wide. So we woke up one day, Jen, with $22 million of wholesale inventory, no way to sell it. So we almost had to file for bankruptcy, but we didn’t.
Jay Conner [00:05:05]:
We were able to work out deals with our vendors. And so it’s a whole lot more fun starting a business than it is shutting down a business. I assure you. It took us a year and a half to liquidate all that out. So that was 2003. I knew if I ever got out of mobile homes, I wanted to get into single-family houses. And that’s because 10 years earlier, in 1993, dear friends of mine and my wife, Carol, Joy, Craig, and Kim, lived in New Bern, North Carolina 1993. They still live there now.
Jay Conner [00:05:38]:
And they wanted to build their house, but they did not have any seed money, didn’t have any down payment money. Well, Kim’s daddy lived down in Florida at the time, and he was a full-time real estate investor. And he says, I tell you what, Craig and Kim, I’ll come to New Bern and we’ll find a fixer-upper. He said, I’ll buy it. You all do the sweat equity and fix it up. We’ll flip it and sell it. You keep the profit to build your house to get it started. Well, they did that, and they pocketed over $30,000 in less than 90 days.
Jay Conner [00:06:09]:
Wow. And I went, wait a minute, there’s something wrong with this picture. I’m busting my butt trying to make $3,000 on a single-wide mobile home, and they made $30,000 in less than 90 days. I said, if I ever get out of the mobile home business, I know what I’m doing. Ten years later, the opportunity came along, and I said, Okay, I am getting into single-family houses. So that’s how we started. Of course, back then, I didn’t know. I really didn’t know what I was doing.
Jay Conner [00:06:39]:
If you’re listening to this show, for goodness’s sakes, don’t make the stupid, stupid, idiotic mistake I did. When I started, I relied on my experience to be my own coach. Well, that was stupid. I didn’t know what I didn’t know. Single-family houses are not mobile homes on a retail sales center. So my first six years, I tried to navigate this industry on my own, and it was okay. But my lands, Jim, I lost hundreds of thousands of dollars, and not knowing what I was doing. And so my point is, if I’d had a mentor or a coach like Jen when I started, boy, wouldn’t things have been different? But anyway, that’s why I was involved and why I was interested in getting into single-family houses.
Jay Conner [00:07:26]:
And that’s why I started this all the way back in 2003.
Jen Josey [00:07:31]:
And we on the Reign podcast are big believers in investing in you and learning from people who have already made mistakes, so you don’t lose all that money. So we are big believers of that. So let’s start diving into the hot topic here of private money. And I just want to know, how does it compare? You. We’re touching on this, but how does it compare to traditional financing, doggies?
Jay Conner [00:08:00]:
Well, there are a lot of differences. By the way, if you don’t know who said, Whoo, doggies, that was Jed Clampett on the Beverly Hillbillies. Anyway, so the difference is a big difference. I mean, there are 20 reasons why I love private money. I’m not going to cover all 20. But here’s the big ones. First, let’s differentiate what we’re talking about. There are banks and mortgage companies, there are hard money lenders, and there are private lenders.
Jay Conner [00:08:29]:
So let’s just think. So when I talk about private money, I’m not talking hard money. So here’s, let’s distinguish it real quick. You go to the local bank, you go to a mortgage company. The traditional way to borrow money, which I did for the first six years, is I get on my hands and knees and I say Please fund my deal and they made me pull my skirt up and show all my personal asset,s and they pull my credit score and look at my financial statement and all that mess and do appraisals and all that. Well, you see, I did that for the first six years, and it was okay until everything changed in January 2009. I’ll tell that story if we have time. So you got the local bank, they make all the rules, they set the interest rate, they’re the underwriter.
Jay Conner [00:09:15]:
The traditional way of borrowing money is that everybody thinks whoever’s got the money to loan out makes the rules. Not the case in this world of private money. So that’s institutional money. Okay, then you have hard money. So, hard money is typically a broker that has gone out and raised private money from individuals to invest in their hard money lending fund. And then the hard money lender turns around and loans that out to real estate investors, charges origination fees, etc. I’m not poo poo. And hard money lenders, some of my best friends are hard money lenders.
Jay Conner [00:09:55]:
They use my techniques to raise more money for their fund to loan out to us, real estate investors. So with a hard money lender, as in contrast to the local bank or a mortgage lender, you’re going to be able to close quicker. Typically, with a hard money lender, they’re still going to pull your credit, but you’re still going to have to bring sizable down payments to the closing table. And their interest rates are pretty high. Right now, you’re going to pay 12 to 14% depending on who the hard money lender is. And they make the rules. They set the interest rate, right, like an institutional lender or a bank. Then we have private money.
Jay Conner [00:10:33]:
Oh boy, oh boy. So private money is when you’re doing business with an individual, a human being just like you and me, who loans money out to us real estate investors, either from their liquid investment capital or their retirement accounts. There’s a conversation about self-directed IRAs. And so they are, they’re people that are interested in real estate, but they’re looking for a high Rate of return, safely and securely. But they don’t want to go negotiate deals, they don’t want to go find deals, they don’t want to oversee projects. They just want to sit back. Well, one reason I love private lenders is that I’ve been paying all my private lenders. I have 47 private lenders right now loaning money on our deals, investing in our deals.
Jay Conner [00:11:23]:
I’ve been paying them, Jen, the Same thing since February 2009. 8%, no points. 8%. Wow. No points. And say, and, and people said, Jayy, how in the world do you do that? No points. And your private lenders are ecstatically happy. I can tell you why.
Jay Conner [00:11:44]:
Here’s what’s interesting. Not one of my 47 private lenders ever heard of private money. They never heard of self-directed IRAs until I did. What? Until I put on my teacher hat, my private money teacher hat. And I started teaching people in my own network what private money is, what self-directed IRAs are. As a result, I’ve never asked anybody for money. I’ve never pitched a deal in my life. And they say, Jay, how in the world do you get your deals funded? And you never pitch a deal? Well, here’s the secret sauce.
Jay Conner [00:12:26]:
And I’m going to turn it back to you, Jen. Here’s a secret sauce. You see, the worst time to be raising private money is when you need it for a deal. For goodness’sakes. Here’s a rider downer. Desperation has a smell to it. Desperation’s got a smell to it, right? So how do we fix that? How do we fix that? Oh boy, Jen’s writing that one down right there. How do we fix that? Here’s the answer.
Jay Conner [00:12:53]:
Here’s the magic. We separate the conversations. Listen, this is critical. Critical. We separate the conversations between teaching people in your own market, I mean, people in your cell phone. You go to church with them, you play golf with them, you see them regularly. Wherever you see people regularly, you know that the trust and credibility and likability meter is already high. You have a relationship with these people.
Jay Conner [00:13:22]:
So we teach them about this world of private money, either on one. Or you can do a private inter-luncheon. I mean, it takes the same amount of time to teach the program to 20 people as it does to one. I’ve raised $969,000 in new private money. Just one luncheon by teaching, but with no deal attached to it. And you see, none of my private lenders ever heard of this world and pool I taught them. And about self-related IRAs. And how they can use their retirement funds to earn either tax-free or tax-deferred unlimited money per year.
Jay Conner [00:13:53]:
So you teach, now I don’t have to ask them if they’re interested. They’re going to run me, they’re going to run me down. Because where. I mean, look, right now I just checked this out, Jen. Last week, the national average in a savings account in the local bank was less than a quarter of a percent. Now you can put your money in a CD and you can get 3%. A year ago, you could have gotten 5% and it’s coming down pretty quickly. But you come along and get 8%, well, that’s a whole lot more money.
Jay Conner [00:14:27]:
Anyway, so I teach them, teach them the program, and they tell me how much they have to work with, how much they want to start with. If they have retirement funds and they’re not happy with those, I’ll introduce them to the rep that I recommend at a self-directed IRA company. They’ll move their money over with no tax consequences, and they’re ready to go. Now I’m going to share the exact script, the exact script as to how I get my deals funded by my private lenders. And I never ask for money. So, Jen, I know you’ll play along with me. Let’s hypothetically suppose that you’re one of my new private lenders. And let’s hypothetically suppose we’ve known each other for a while.
Jay Conner [00:15:12]:
We got some, we go to church together or whatever. And so I taught you about this opportunity in this world of private money. Now let’s also suppose that you said, well, I’m interested in that, in the, in the self-directed IRA thing. Let’s suppose you have had $150,000 with a previous employer in a 401 (k) and you’re not happy with what it’s doing. You’re sick and tired of the volatility of the stock market and all that. So I introduced you to my self-directed IRA representative that I recommend, and you liked them. And so you moved a couple of weeks ago that $150,000 to the self-directed IRA company, and now you’re ready to earn money on those retirement funds. So you’ve told me, Jay, I’m ready.
Jay Conner [00:16:02]:
Let’s go. I said, okay, so let’s say I call you up in about a week. I’m now going to give the script to what I call the good news phone call. The good news phone call. So I dial you up and you answer the phone and we have a Little chat. Here’s the script. I say, Jen, I’ve got great news for you. I can now put your money to work.
Jay Conner [00:16:29]:
You see, I’ve got a house in Newport under contract with an after-repaired value of $200,000. Now the funding required for the deal matches up to what you’ve got in your IRA $150,000. And so the closing is going to be next Friday. I’ll need you to wire your funds from your self-directed IRA account to my real estate attorney’s trust account by next Thursday. And I’m going to have my real estate attorney email you the wiring instructions. That’s the end of the conversation. Now let’s unpack. Let’s unpack.
Jay Conner [00:17:07]:
What? Let’s unpack. Why? Jen is ecstatic that I gave her the good news phone call number one. She moved her money over to the self-directed IRA company at my recommendation. She loves the program, so she’s moved her money over. And she trusted me. I introduced her to the self-dayy company, so she’s moved her money over. She’s not earning any money until I put her money to work. Yep, Jen, I am ethically bound to invest Jen’s money because she moved it over to several IRA companies.
Jay Conner [00:17:49]:
Secondly, she knows Jen knows I’m not going to bring a deal for her to fund unless it matches the criteria of the program that I already taught her. For example, I told her the after-repaired value is $200,000. I told her the funding required is $150. That matches the program. I’m not going to have her invest more than 75% of the after-repair value. I didn’t say 75% of the purchase price. I bought it for 100,000. That’s why I’m bringing home a check for $50,000 and taking none of my own money to the closing table.
Jay Conner [00:18:26]:
My real estate attorney’s check that I pick up after closing is called excess cash to close. And I love me some excess cash. So unpacking that. I mean, the most stupid question I could have asked Jen was, ” Do you want to fund the deal? Of course, she wants to fund the deal because her money is just sitting there until I put her to work. Bottom line: separate conversations. Never talk about a deal you’re looking to get funded in that initial conversation. First, teach them about the opportunity, how it works, and then you come back with the good news phone call.
Jen Josey [00:19:06]:
I love that you call it the good news, and I have heard that from others as well. And I think that is Such a great strategy and I.
Jay Conner [00:19:16]:
Where do you think they got it?
Jen Josey [00:19:21]:
My young buck over there on the East Coast, Mr. Conner, with it, by the way. It’s C O N N E R listeners, I thank you at the end, but you started talking about something he, re, and that excess cash to close, and in your write-up that we get before the interview, you talk about cashing three big checks on every deal. So, can you break that down with those three checks and how they work? I think we already heard the first one.
Jay Conner [00:19:56]:
It actually can be more than three. There’s going to be a minimum of two, and then maybe more. So here’s how it works. Your first check, as I just explained, is when you buy. Now here’s a double check. Here’s another writer downer. When you’re paying all cash with private money on a deal, which by the way, I’m a pretty good negotiator, but only 13% of all those for sale by owners will sell to me, creative, subject to the existing note or seller finance. And the other 87% require all the cash.
Jay Conner [00:20:29]:
So anyway, I digress. When you buy a property, here is a double check if renovation is required. If there’s distress and a renovation or rehab is required on that single-family house. If you. Here’s the writer downer. If you cannot bring home a big check when you buy, you’re paying too much for the house. You’re paying too much for the house. If you can’t bring home a check by following the criteria of how I do it.
Jay Conner [00:21:03]:
Right. So you’re going to get a big check when you buy. Some people ask me to say, Jay, what’s the quickest way to get a lot of money? In my checking account in real estate, Private money. Yep. You’re going to bring home a big check. Right. And if you can’t, of course you’re. I mean, the majority of that big check you’re bringing home is for the renovations for the rehab.
Jay Conner [00:21:23]:
But you should have some extra equity in there as well, that you are bringing home when you buy. I mean, it’s like who wants to get paid to buy houses, right? So the second check that you can get is if it’s big. I have. If you are selling the house on a lease purchase or rent-to-own. So if you’re selling it on rent-to-own or lease purchase, your second check is collecting from your rent-to-own buyer, what we call a large non-refundable lease option deposit. The legal term is actually an option fee. They’re paying you A fee for the option, not the obligation, but the option to buy that property within a certain length of time at a predetermined price. No, if they don’t cash you out, you can sell it again on lease purchase and get another non-refundable option fee.
Jay Conner [00:22:19]:
But then, eventually, whenever you cash out the house and you actually transfer title and ownership, that’s when you get your final check. What is the difference between what you sell it for? Less realtor fees, if you’re putting it in the multiple listing service like I do, less what you still owe the private lender or the private lenders, which would be your original principal loan amount. We don’t pay principal and interest payments. We just let the interest accrue if we’re doing a flip or if we’re selling it on lease purchase. If I have money coming in per month, I want a cash flow going out per month. So we only pay interest and not principal and interest to our private lenders because that’s a win for them and it’s a win for us. If I pay principal and interest payments, they don’t have all their money invested.
Jay Conner [00:23:14]:
I’m paying it down, and they don’t earn as much money. And interest-only payments are smaller and help my cash flow. So the interest-only part of all this is a win for all parties.
Jen Josey [00:23:28]:
Okay, so break this down for me a little bit further. So you are purchasing a property. Say it’s a hundred thousand. You are borrowing $150,000. We’re going to use the same example. And it’s a 200 ARV. 200,000 ARV. And you do the renovations, and then you get someone to do the lease option, and they get that very hefty not down payment.
Jen Josey [00:23:50]:
What was the term you said?
Jay Conner [00:23:51]:
Yeah, non-refundable lease option deposit or option fee. Yeah.
Jen Josey [00:23:56]:
And so, how, what is the time frame of them actually purchasing the house from you, the people who have just moved in and given you that non-refundable deposit?
Jay Conner [00:24:05]:
Sure. So I give them 12 months. And I’m a little different. Jen, you got a lot of real estate investors out there, no disrespect, but you got a lot of real estate investors out there. I mean, you’re in the world, you know, a lot of them that leave it to the lease purchase buyer or the rent to own buyer to their own devices to get their credit cleaned up and cash out. The fact of the matter is that less than 5% ever will if you leave them to their own devices. I don’t do that. I force them into credit repair.
Jay Conner [00:24:40]:
I mean, these people want to own a property, so I feel obligated to help them own. So I force them into credit repair. And it is a babysitting business, is what it is. So we hold their hand, we make sure the disputes are sent to the credit repair company that we use. That’s why 80% of our lease purchase buyers actually cash out and own because we force them to do it. Some real estate investors would say that’s pretty stupid, Jay. When you sell that house, your earning potential is gone because you’ve sold it. Well, that’s okay. I’m in a small market.
Jay Conner [00:25:20]:
My total market is only 40,000 people. How much goodwill do you think I’ve gotten over the years by helping all those people? Right. 81% of people can’t even go to the local bank and get a mortgage today. But now we have a pathway and a way that people can own a home who would love to own a home. So sorry, I got on my soapbox about selling on lease purchase.
Jen Josey [00:25:45]:
So then they are just refinancing it into their own name, or are they paying it off?
Jay Conner [00:25:51]:
Well, when we sell on lease. That’s a good question. When we sell on lease, purchase, or rent to own, that’s the same thing, just different words. We’re not transferring title or ownership. So this is not owner financing or seller financing with me being the bank. We tell them when, when we’re sitting down at the closing table, and my real estate attorney handles it. We say, for all practical purposes, this is your house. You can paint the walls, you can do anything you want to.
Jay Conner [00:26:20]:
Can’t do anything structural, can’t do anything structural to the house, but cosmetic. Have at it, whatever you want to do. And then we say, We’re going to transfer ownership and title and deed when you are ready for a mortgage. So while they’re living in the house, they’re paying us rent for the house. And that non-refundable lease option deposit or fee that they paid us up front, say for example, on a $200,000 house, I’m going to collect at least a $10,000 non-refundable lease option deposit. So when, if and when they get ready for a mortgage, I’m going to apply that $10,000 to their closing cost, to their down payment, to their purchase price. If they move out, it’s non-refundable, and then it’s at that point I bring it in as income on the balance sheet, as a forfeited deposit. And then I can go sell it again.
Jay Conner [00:27:19]:
So that’s a 30,000-foot five-minute seminar on rent-to-own lease purchase.
Jen Josey [00:27:25]:
All right, so now let’s talk about your lender. So your private money lender lent you the 150,000 for this property, and they are getting interest-only payments, or is it a balloon payment at the end?
Jay Conner [00:27:40]:
It depends on whether it’s a flip or if we’re selling it on rent-to-own.
Jen Josey [00:27:44]:
So own. Because I love this whole idea. I’m digging deep into this, Jay.
Jay Conner [00:27:49]:
So sure, sure. So we’re selling it on rent-to-own. They are receiving monthly interest payments.
Jen Josey [00:27:55]:
Okay.
Jay Conner [00:27:56]:
I don’t want interest to accrue when I’ve got monthly income coming in. So I want that positive cash flow between. Of course, you know what rents have done the last two years here in North Carolina and the whole nation. It’s crazy. We got a house here in Morehead City, I’m thinking of specifically. And that rent-to-own buyer moved in in 2019, for goodness. They just paid me an additional $10,000 non-refundable lease option deposit to just buy one more year for them to get ready, whatever.
Jay Conner [00:28:31]:
They pay a monthly rent.
Jen Josey [00:28:33]:
Okay.
Jay Conner [00:28:35]:
By the way, another little seminar here. I don’t set the rent, the market does. Isn’t that unconventional? So I put a house out there on the market. We say, What’s the most you can pay per month? Well, what’s the rent? The rent is what somebody can pay the most per month. Because whoever pays the most per month and gives me the most down is going to be the winner of this home. Anyway, I digress again. So they’re paying me a monthly rent, and here in North Carolin, you have to have separate documentation. The option agreement has got to be mutually exclusive from the rental agreement.
Jay Conner [00:29:14]:
So we have the North Carolina residential rental agreement that’s published by the Realtor association. It’s pretty good. I just use it. And then we have the option to go on 30 days. Here’s why I love selling on lease purchase. All the repairs are on the tenant buyer. All the repairs are made after 30 days. No, with the first 30 days, they tell me what?
Jay Conner [00:29:39]:
How do we get off on this, Jim? This ain’t got nothing to do with private money. But anyway, the first 30, I’m getting.
Jen Josey [00:29:44]:
Back to the private money lender. I’m getting back to it.
Jay Conner [00:29:46]:
But anyway, you see, you took me down, you took me down this trail and got me all excited. But anyway, so they’re making me a monthly payment. And of course, I’m paying a lower payment per month to my private lender. I’ve got positive cash flow, a nd so that’s the way that works. And of course, the private lender does not get paid off until we’re selling the house. That’s cashing out.
Jen Josey [00:30:15]:
That’s where I was leading. So if Iweres your private money lender, which you educated me, you put on your, your prop, I love people who bring props to podcasts here. You had your teacher hat on. You taught me to transfer my money from a 403B, by the way, because I’m a former school teacher, into a self-directed IRA, and you gave me that great news phone call, and you said, I have this deal for you. So I lent you the 150,000. What is the length from me transferring that money to you from that self-directed IRA for me to get my principal back? What is the typical timeframe in this situation, the specific situation we are discussing here?
Jay Conner [00:30:56]:
So if you took that 403B money from being a former teacher and you moved it over to a self-directed IRA company and now you’re investing that money with me, loaning me that money, then I’m going to set that note up for five years. Why five years? Typically, I’m not going to use it for five years. But why five years? Because all the returns that you’re getting, all the interest that your self IRA account is earning, it’s going to your account. It’s not going to you. Yep, it’s not going to, it’s going to that account. Therefore, you’re not, you’re not looking for the money to live off of anyway. No, in contrast to that, if you were using investment capital, just liquid funds and non-retirement funds, then I would set that note up for two years instead of five years because you might want that back. But here, here, ‘s reality.
Jay Conner [00:31:51]:
None of my private lenders ever wants their money back because when they get their money back, they’re not earning any money, and they know they can’t put it anywhere else to get these kinds of rates returned safely and securely. In fact, when I have a new private lender come on and we’ll do a deal. And I call them up with not the good news phone call, but it’s really a sad news phone call. And I call them, I say, Well, we’re cashing out this house at 123 Main Street, and you’re going to be receiving a payoff check for $150,000 for principal from a real estate attorney that’s representing the buyer. And we’re going to send you the interim interest that you haven’t earned. And so I just don’t want you to be surprised when you have $150,000 check show up in your post office box and then, I mean, inevitably, quote, unquote, J.J. can’t you just keep the money? And the answer is no, I cannot keep the money unless it is secured by real estate. So you see, I don’t borrow any unsecured money.
Jay Conner [00:32:59]:
I can legally, but we back all those promissory notes and collateralize those notes with the real estate by using a deed of trust here in North Carolina. Most states call it a mortgage. And we back that note by the deed of trust to protect the private lender. A lot of the time, new investors will say, ” Well, Jay, who is going to loan me money? And I’ve never done a deal in my life. Here’s the answer to that question. If you don’t pay your private lender, the property does. What’s that mean? That means since you’re going to give them a deed of trust and collateralize the note, if you don’t pay them, they get the property. And actually, because it’s a conservative loan-to-value, they could make more money than the interest you would pay them.
Jay Conner [00:33:46]:
But the truth of the matter is, they don’t want the property. That’s why they’re investing with you. Right. And by the way, your private lenders really are not investing in your deals; they are investing in you.
Jen Josey [00:33:59]:
Yes, agreed. And thank you for saying that. So I’m curious because, like I said, I just lent some money to a fellow investor friend, but I lent it at 10%. What if your people, like, how do you keep them at the 8% level? Because I mean, I could get 12 to even 14% sometimes if you compare it to, as you were mentioning, hard money lenders, the rates that they are getting. So how do you keep them happy at that 8%?
Jay Conner [00:34:31]:
Well, I keep them happy, first of all, because I always pay them early. I’ve got, I’ve got private lenders that are elderly, so they are counting on that monthly income. So we do what we say. And over the years, I’ve had, I’m thinking of one private lender that lives up in the mountains in Tennessee. I have private lenders in 10 different states. That’s another thing. You don’t have to be doing business in your own backyard. I mean, your private lenders can be anywhere.
Jay Conner [00:35:00]:
And there’s no limit to the number of private lenders you can have because we’re not regulated by the commissioner of banks. But I had a phone call, I don’t know, two or three years ago. And I mean, they’re still just having things, Billy, they’re still private lenders with me now. And they said, Well, Jay, rates are going up. When are you going up on rates? I said, well, I’m not going up on rates. Why aren’t you going up on rates? Because I got more money than I can use. If you want your money back, let me send you a check, and I’ll put some of my other private lenders’ money to work. Secondly, they don’t want 3% or 4% or whatever in a local CD.
Jay Conner [00:35:40]:
I mean, and so, and one, one additional answer I gave myself. Look, what I do is I compare what I can pay my private lenders, and I can contrast that to what they can get in the local bank. So if you like 3% better than 8%, have at it.
Jen Josey [00:35:59]:
Well said. And I have a lender who I’m specifically thinking of as well, who kept wanting more and more interest. And I said, I just can’t afford you anymore. And now I know they are having trouble finding investors to invest with them because they did get a little greedy. But anyway, I want to change directions here because my listeners are typically newer investors, and you were just briefly touching on this. But what is the best way to find private lenders for real estate investing? And more importantly, what are some red flags to avoid?
Jay Conner [00:36:39]:
Excellent question. So first, let’s start with the first part of that. Now remind me of the red flags because I might forget them. Okay, but the first part. Where do you find these people? There are three categories of people where you find these private lenders. The first category is what I call your warm market. Those are your connections. They’re in your cell phone, your social media.
Jay Conner [00:37:00]:
You go to church with them, you play golf, whatever you’ve got, I call it relationship capital. So you’ve already got some kind of relationship with these people. So that’s the first category. Now, if you’re going to scale your business and you really want to get more private lenders, eventually, depending on the size of your network, you’re going to run out of connections. I mean, you’re going to burn through your list of inviting them to your private lender luncheon or talking with them about private money. By the way, too bad I didn’t have to tell I Didn’t have time to tell the story about another way that I got my very first private lender without ever asking for money. That might be part two on another show, I don’t know. So, the first category is the war market.
Jay Conner [00:37:45]:
Second category, since if you’re going to scale, you’re going to run out of that after a while. The second category is what I call your expanded market. So I teach at my live events, etc. I teach how to grow your network very, very quickly because we all know there’s a direct correlation between your network and your net worth, of course. Well, let me just give you a big tip right now. How can you, how can you explode your network overnight? I can tell you. BNI, which stands for Business Networking International, even in little old Morehead City, North Carolina, started a BNI back in 2007. And the way B and I work is they truly only allow one realtor, one real estate investor, one attorney, one electrician, one H Vac, one general contractor, and one essential oil sales lady, if you know what I’m getting at.
Jay Conner [00:38:50]:
So, B NI, the way it works is your fellow members of the local chapter, they are endorsing you, and they’re bringing people to you that you want to get in front of. So you take on the Real Estate Investor Chair, I promise you, you will be the only real estate investor that’s ever asked, probably, to join BNI. And so anyway, you take on the BNI or the Real Estate Investor chair and you just tell your fellow members you have 60 or 90 seconds every week to remind them that hey, you pay high rates of return safely and securely and you want to get in front of people who are looking for higher rates or you want to get in front of people that are retiring or have retirement accounts and they refer these people to you. I’ve gotten millions of dollars in private money just from being active in BNI. The third category of where you find private lenders is existing private lenders. Well, not everybody knows a gin Josey. So, how do you find an existing private lender? Well, here’s one of the easiest ways to find the m and that ito s go to networking events, either virtually or in person, of self-directed IRA companies. Here’s what’s interesting.
Jay Conner [00:40:06]:
Over 70% of account holders in self-directed IRA companies want to be private lenders. They want to loan you money because they don’t want to negotiate deals or oversee deals. They just want to get high rates of return safely and securely, totally passively. So self-telf-tracompanies, networking events, 70% of them, people are looking for you. However, let’s be totally transparent. When you do that, you’re not putting on your teacher hat because then people already know what private money is. They’re like, Jen, Josey, they know what private money is. So now they’re going to have a negotiation conversation.
Jay Conner [00:40:56]:
Yeah, I don’t want to have a negotiation conversation. Right. I made the rules. Traditionally, whoever’s got the money makes the rules. They underwrite the deals. But in this world of being a teacher and sharing this opportunity with people that’s never heard about it, you are your own underwriter, and you want that.
Jen Josey [00:41:19]:
And I love that you brought up BNI because I, after I was a teacher, I, for a hot second, I was in the insurance industry, health insurance industry, and I joined a BNI for that. And I didn’t even think of going back as a real estate investor. So that is a great nugget, Jay. Thank you for that one.
Jay Conner [00:41:38]:
Some early Monday mornings and Thursday mornings, and I guarantee you you’ll learn more about private money, and we’ll have a party.
Jen Josey [00:41:45]:
So, do you do video for your podcasts?
Jay Conner [00:41:48]:
Yes, we were on YouTube, Facebook, live stream, and LinkedIn. Live stream on my LinkedIn. That’s another way to connect with me, Jay Conner, on LinkedIn as well. So, yeah, it’s hard to hide.
Jen Josey [00:42:01]:
But you didn’t do a video in the beginning. I’m asking this because I was like, legit podcast. I’m in my fifth season, so it’s rare to hear anyone go beyond five. And for you to do it twice a week, I mean, that’s a lot of talking. So I’m, I’m very, very impressed, Jay. But I, I stuck strong. I didn’t want to do the video for the longest time, and now I’m finally releasing everything on YouTube as well. But did you do the video from the beginning?
Jay Conner [00:42:28]:
Yes, we did the video beginning. Yeah, we did video from the beginning. And so what we do is we go live on YouTube and Facebook, live stream, and LinkedIn every Tuesday afternoon, two shows back to back from 2 pm to 4 pm on Tuesday afternoons. And that’s life. I mean, that’s raw. Raw and live. And then my producer, Idi, did that, and then we released it. We’re typically about a month out, and we release it on all the podcast platforms, audio only.
Jen Josey [00:42:59]:
Wonderful. And when is your conference that you are hosting?
Jay Conner [00:43:03]:
Well, we do it in February, June, and October. Okay, so the next one that’s coming up is the last week of June, June 25th, 26th, and 27th. And again, just get the book. Let me send this book to you, and you’ll get all the information about the live event, the private money conference. I don’t know another event like it. I mean, I have private lenders come to the event for you to network with. And we go in the field on a real bus renovation tour, looking at real houses that I’m doing and my team is doing. I teach how to run this business in less than 10 hours a week, how not to get stuck selling a house, and how to sell any house in three days or less.
Jay Conner [00:43:43]:
And I have a self-directed IRA company come, and you meet my interior designer, who’s been with us for 20 years. You meet my general contractors, you meet my realtor. Oh, one session I do is with my real estate attorney, on how I get all my title searches done in less than 24 hours for free. So we have a lot of fun. And we have an amazing VIP reception on Thursday evening down at the private beach club, the Dunes Club at Atlantic Beach. That’s on Thursday evening. So, yeah, that’s the live event.
Jen Josey [00:44:14]:
Well, very cool, Jay. I could talk to you all day. But we are going to move into the second part of the podcast here, which is what makes Jay Conner, er, a badass. And I use the acronym badass, and the first letter is B for book. What’s a book that’s made a huge difference in your life?
Jay Conner [00:44:34]:
Oh, my word. So it’s the people you meet and the books you read that will take you and continue to grow you personally. And so there are so many books I could share. So I’ll share the book that changed my life. When I was 24 years old, I was in a very, very bad place. Very, very dark, bad place when I was 24 years old, and I woke up one day and I said, there’s got to be a better way. And so I went to the personal development section in the bookstore and I bought Og Mandino’s book titled University of Success. University of Success.
Jay Conner [00:45:13]:
It’s still in print. It changed my life.
Jen Josey [00:45:17]:
Nice. I’m gonna have to look that one up. All right, the first A in badass is for advice. You have given us an incredible amount of amazing advice. But I’m curious, what’s the best piece of advice you’ve ever received?
Jay Conner [00:45:31]:
Oh, my word. Well, I’ve received a lot of good advice. Boy, just one. Okay, I’ll choose one. This advice was given to me years ago by the legendary godfather of real estate. His name is Ron Legrand from Jacksonville, Florida. And I’ll never forget the day he said, ” Jay, what other people think about you is none of your business.
Jen Josey [00:45:59]:
I love that. And a great guy. All right, the D and Badass are for drive. What drives you to be successful?
Jay Conner [00:46:08]:
A fear of failure.
Jen Josey [00:46:13]:
That is a good one.
Jay Conner [00:46:15]:
So what drives me to be successful, really, that’s what it started as, right? It started os a fear of failure. That’s what drove me years ago. But really, what drives me now is impact. Impact is what drives me.
Jen Josey [00:46:31]:
Well, Jay, I could talk to you all day, and I’m clearly going to have to drive out to Morehead City. By the way, is it the Sanitary Fish Market? Is that still?
Jay Conner [00:46:39]:
Yeah, the Sanitary Fish Market and Restaurant, Morehead City Waterfront. It’s been there over 80 years, and that’s.
Jen Josey [00:46:46]:
Everything’s fried there because I was like, Ohh, I can’t eat anything here.
Jay Conner [00:46:50]:
But anyway, no, you can get it steamed, and now you can get it grilled. Yes.
Jen Josey [00:46:56]:
I remember when I first started teaching in Raleigh a couple of years ago, and all the kids were wearing the Sanitary Fish Market T-shirts. I’m like, what is this place? I just drove out there to make sure I got the shirt so I could be cool with the kids. But anyway, these final S in Badass J is a success. Success. What does success mean to Jay Conner? Er, yeah.
Jay Conner [00:47:18]:
Thank you for the error. So success to me is, are you living your life in alignment with your core values? So do you know what your core values are?
Jen Josey [00:47:34]:
That’s the first step. I, I, that’s an activity I do in my mastermind, because many people, they’re just flying by the seat of their pants. So determining your core values is huge. So I’m sorry, keep going.
Jay Conner [00:47:46]:
Yes, no, that’s it. And so, I mean, there’s this thing called cognizant dissonance. And what cognizant dissonance is, is it’s when the devil and Jesus are fighting with you on either side of your shoulder, and are you living out part of your life that’s not in alignment with your core values? And so that is success. I mean, a synonym for me, for success, is I’m just purely happy. No matter what’s going on in my life, I’m able to rejoice in the midst of everything because my God and my Creator is holding it all together anyway. So success is just being able to rejoice and be full of joy, no matter what’s going on.
Jen Josey [00:48:35]:
Well, I appreciate you sharing your joy today, and this has been a fabulous interview and one more time. How did the listeners find you?
Jay Conner [00:48:44]:
Yes, go to www.JayConner.com/Book. I’ll send you the book. I’ll send you tickets to the Private Money Conference.
Jen Josey [00:48:57]:
Well, this has been a blast. Jay, thank you so much for being here today.
Jay Conner [00:49:02]:
Jen, thank you so much for having me, and God bless you and have a joyous rest of your day.
Jen Josey [00:49:08]:
Well, thank you so much, a nd that is all. Thank you for listening, and we will catch you on the next episode. Now go out there and share your badassery, and don’t forget, make it a great day. Take care. Bye-bye.
Narrator [00:49:24]:
Thank you for listening to the Real Estate Investor Grant Growth Network. Be sure to subscribe to your favorite podcasting platform so you never miss an episode. If you need more badassery, you can follow Jen Josey by visiting therealgenjosy.com or become a member of Reign by registering on Reignmastermind.com.
Narrator [00:49:47]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.
