***Guest Appearance
Credits to:
https://www.youtube.com/@BrianDavilaShow
“How Private Money TRIPLED His Real Estate Business | Jay Conner.”
https://www.youtube.com/watch?v=xIDtWayTLWM&t=3625s
In the ever-evolving landscape of real estate investing, gaining access to funds can often feel like an uphill battle. For Jay Conner, renowned private money expert and seasoned investor, the solution to this challenge comes down to what he calls the most important principle: “the money comes first.”
Jay’s journey, shared on an insightful episode with Brian Davila on the Raising Private Money podcast, offers invaluable lessons for both new and experienced investors looking to raise private money and build sustainable wealth.
Starting: A Crucial Lesson in Funding
Jay Conner didn’t enter the real estate world with access to private money right away. For the first six years after launching his business in Morehead City, North Carolina—a market with just 40,000 people—Jay relied on local banks and mortgage companies to fund his deals. That changed abruptly in 2009, when he discovered that his line of credit had been unexpectedly revoked. Faced with the threat of losing out on deals and not being able to recover his earnest money, Jay was driven to find a new approach.
Enter private money. Through a recommendation from a fellow investor, Jay learned about this alternative source of funding—friends, family, and acquaintances investing in his deals, backed by solid criteria and security. Within just 90 days, Jay raised over $2 million in private funding and rapidly scaled his business. As Jay Conner emphasizes, losing his bank credit became a “blessing in disguise,” unlocking a faster, more reliable path to funding.
How Private Money Fueled Growth
Jay’s business didn’t just recover; it tripled. By leveraging private money, he was able to close more deals—especially those with sellers requiring all-cash offers. The flexibility and speed that private lenders provided allowed Jay to snap up bank-owned properties and foreclosures during the financial crunch, building long-term wealth through smart, strategic investments.
He stresses a vital wisdom for new investors: “If I knew then what I now know, I would have started with private money.” According to Jay’s data, only 13% of For Sale By Owners are open to creative financing; the vast majority want all-cash buyers. Without private money, investors risk missing out on the lion’s share of opportunities.
Smart Systems for Sustainable Deal Flow
Success in real estate means more than just funding—it’s also about consistent deal flow. In this episode, Jay shares his multi-pronged approach to sourcing deals in a small market:
- Google Ads: Jay runs three campaigns targeting motivated sellers, boasting a low average cost per lead and a high conversion rate. He notes, “On average, I only need five Google Ad leads to buy a house.”
- Foreclosure Letters: With a 57% response rate, Jay’s eight-letter sequence to foreclosure prospects is a standout, made possible by tracking cases at the courthouse and layering motivation (such as inheritance).
- Facebook Ads & Direct Mail: These supplement his funnel with additional off-market leads.
- Networking with Wholesalers: Jay connects directly with local wholesalers, leveraging his status as a cash-ready buyer to close deals quickly.
Why Private Money is Safe—When Done Right
For those hesitant about using other people’s money, Jay offers reassurance. His strict criteria (borrowing up to 75% of after-repair value) create a cushion that protects both the investor and their lenders. He insists private lenders—often friends, family, or connections made at self-directed IRA events—are never left holding the bag, as their loans are secured by a deed of trust (mortgage). His track record: “My private lenders have never lost any money.”
Building Relationships, Not Pitching Deals
Jay’s approach is refreshingly collaborative. He doesn’t pitch deals out of desperation; instead, he educates his warm market and allows them to opt in to his program. Once ready, they’re eager to invest the moment an opportunity arises. This systematic, relationship-focused method removes fear of rejection and transforms private money from an intimidating hurdle into a strategic asset.
Final Thoughts
Whether you’re just starting or scaling a real estate business, Jay Conner’s experience offers clear guidance: Secure your funding first, maintain smart buying criteria, and always prioritize transparent, educated relationships with your lenders. The result? Confidence, speed, and the ability to seize every deal that comes your way.
10 Discussion Questions from this Episode:
- Why is it important for new real estate investors to focus on securing private money before searching for deals?
- How can losing access to traditional bank financing lead an investor to discover better funding strategies?
- What makes private money lending attractive to potential lenders compared to traditional investment options like CDs or stocks?
- How can investors structure deals with private lenders in a way that minimizes risk for both parties?
- What are the key differences between private money and hard money, and how might those differences affect an investor’s decision-making?
- Multiple methods for sourcing real estate deals were discussed, including direct mail and digital ads. Which lead generation strategy seems most effective and why?
- Why is it essential to calculate potential rental cash flow before deciding to flip a property, and how can this protect investors from losses?
- How does educating potential private lenders about the investing process differ from simply pitching them a specific deal, and what are the advantages of this approach?
- In what ways can real estate investing go beyond personal financial gain to support and serve the wider community?
- For someone hesitant to use other people’s money, what concerns might they have, and how might insights from this episode address those worries?
Fun facts that were revealed in the episode:
- Jay Conner has managed to complete over 450 single-family home purchases and rehabs in his small market of Morehead City, North Carolina, which has a population of only 40,000 people!
- Jay Conner never asks anyone directly for money when raising private capital. Instead, he teaches prospective lenders about his private lending program, which often leads to people approaching him to invest.
- According to Jay Conner, in his business, it’s common to bring home a big check—even up to $50,000—at closing, without ever using a dime of his own money, thanks to strategically structuring deals with private money lenders.
Timestamps:
00:01 Failure Isn’t an Option
06:13 Thriving Through Private Funding
13:53 Real Estate Lead Strategies
19:58 Evolving Real Estate Investment Strategy
22:16 Wisdom: Start with Private Money
31:47 Real Estate Success Program
36:54 Profiting from Real Estate Deals
40:02 Buying Right Ensures Lender Safety
46:59 Expanding Your Network for Lending
50:59 Teaching Private Lending Basics
56:49 Teaching, Not Selling Opportunities
01:02:25 Closing Documents Simplified
01:05:14 Free Private Money Guide Offer
Connect With Jay Conner:
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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
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Jay Conner’s Journey: Tripling Real Estate Profits with Private Money
Jay Conner [00:00:00]:
If I knew then what I now know, I would have started with private money. In fact, I. I share with my students all the time. When, if you’re brand new, the money comes first. Are there always going to be deals? Yes, there will always be deals, but it’s just downright depressing and stressful to be talking with a seller who wants all the money, and you don’t have it. So I say and preach, get your money lined up. It’s Easy to get $500,000 or more in private money in less than 30 days. What I call sitting on the shelf, ready to go.
Narrator [00:00:43]:
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 to raise 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 Connor. This is the number one podcast.
Jay Conner [00:01:13]:
Whether you’re looking to flip wholesale or buy rentals, here at Future Flipper, we transform lives through real estate investing.
Narrator [00:01:22]:
And now your host, Brian Davila.
Brian Davila [00:01:26]:
What’s up, guys? Welcome to the Future Flipper podcast. My name is Brian de Villa, your favorite real estate investor. And today we are interviewing a private money expert. He’s going to be teaching you how to raise private money, where to find it, what contracts to use, pretty much A to Z, everything you need to know about private money. But first, we have some quick announcements. So Future Flipper is having its last event of the year, September 26th through the 28th. We have Alex and Layla Hero speaking at this event. Also, AJ Osborne, Matt on a Farrow, Tiffa,n NYYand Josh.
Brian Davila [00:02:07]:
Hi. It’s going to be a great event. You can go to www.futureflipper.com and go to events, and you will see how. You will see where to buy a ticket. And you could use the promo code, Brian, to get a discount. I hope to see you guys there. All right, so now on to Jay Connor. How are you doing today, sir?
Jay Conner [00:02:27]:
Man, Brian, I am fantastic. And thank you so much for inviting me to come on here to talk about my favorite subject, private money.
Brian Davila [00:02:37]:
100%.
Jay Conner [00:02:38]:
Yeah.
Brian Davila [00:02:38]:
You’re. You’re the private money guy. So I guess, before we get into the A to Z of private money, can you give me a little bit of your backstory?
Jay Conner [00:02:49]:
Sure. Well, I can tell you one thing. I just didn’t wake up one morning and Say, you know, I think I’ll go raise some private money. Money. It didn’t work into that. In fact, as with most things in life, Brian and I know you can relate to this. The biggest growth, the biggest advances, you know, the biggest, you know, quantum leaps come from, right? Really big problems and challenges, right? So I’m here in this small area, this small town called Morehead City, North Carolina. And my total target market is only 40,000 people.
Jay Conner [00:03:26]:
Can you believe that? Only 40,000 people. Well, my wife Carol Joy and I started investing in single-family houses. And we’ve done commercials as well. I got paid for a shopping center, but my focus has been residential single-family. We started in 2003 here in the area. And from 2003 to 2009, for six years, I relied on local banks, mortgage companies to fund my deals. I don’t even know what hard money was. I never even heard of hard money.
Jay Conner [00:03:56]:
By the way, private money is not hard money. But anyway, I was using local banks. Well, man, I tell you, I remember it like it was yesterday, Brian. I actually picked up this phone. We actually still have landlines in North Carolina, if you can believe it. But I picked up my phone in my office to call my banker, whose name was Steve, and I had two deals under contract. Now, bear in mind, I had already been doing business with Steve at the local bank for six years. He had funded a ton of houses for me.
Jay Conner [00:04:31]:
So this conversation that I’m about ready to have with Steve in January 2009, I’d already had this conversation many times. For six years. We had our pleasantries. I told Steve I got these two houses under contract. You know, one in particular was in Newport. Mom was in Beaufort. They represented over $100,000 in profit between these two deals. And so I tell them about the deals, and then Steve goes quiet on me, and I’m like, that’s not a good sign.
Jay Conner [00:04:58]:
Anyway, long story short, I found out on that conversation that I had had my line of credit shut down. No way to fund the deals, and I had been given no notice. My first thought, Brian, was that it sure would have been nice to know that before I gave earnest money and got deals under contract. And back in 2009 in North Carolina, you couldn’t get the earnest money back. So I hung up the phone, I sat at my desk for a moment, and I had a new mantra came to my mind. And that is, it’s impossible to fail unless you choose to quit. And quitting wasn’t an option for me. So I called my buddy Jeff in Greensboro, North Carolina told him what had happened.
Jay Conner [00:05:39]:
Jeff said, Jay, welcome to the club. I said, What club? He said, The club of losing your line of credit at the bank. I just lost mine last week. I said, Well, how are you funding your deals? In that conversation, I heard for the first time in my life the phrase called private money and private lending. I’d never heard of it. I hung up the phone, I did my research, and let me tell you something, Brian. I put my private money program on steroids, and in less than 90 days, I was able to attract and raise money without asking anybody for money. I’ve never asked anybody for money.
Jay Conner [00:06:13]:
I was able to attract and raise $2,150,000 in private funding that I did not have. So you know what, that was one of the biggest blessings in disguise, losing my line of credit at the bank. Because in that first 12 months after losing my line of credit and starting to use private money, my business tripled in the next 12 months because I had all the funding that I needed to not miss out on any deals, you know, particularly those that required all-cash offers. And you’ll recall back then, of course, you were probably 12 years old, but you’ll recall back then that all the foreclosures that were coming along in 2007 and 8 and 9, well, the banks weren’t lending money. You had to have your own cash, and I had all this private money. So I bought a ton of bank-owned properties and foreclosures back then, and look what opportunity is now back in our lap again today because of recent times and the economy and etc. So that’s how I got into private money. I backed into it because of the need of having to find a better and quicker way to fund my deals.
Brian Davila [00:07:22]:
Perfect. Okay, so I guess, can you give me some of the highlights of your career, like how many deals you close, how many rentals, stuff like that?
Jay Conner [00:07:30]:
Sure. So since 2003 in our local area here, we have bought, purchased, and rehabbed over 450 houses, which. That sounds like a lot of house,,s and it is. But bear in mind that since 2003 now we’ve done a ton more deals in addition to that creative financing.g, I bought a ton of houses on, you know, subject to the existing note, with creative financing, turning right around and selling those on terms of lease, purchase, or rent to own. So my criteria is when I buy all cash using private money, and I rehab a house, I’m not selling that on rent. I own. I got tired of rehabbing the m More than one time, right? So if I buy all cash, then I’m going to cash out. If I buy on terms, then typically I’m going to sell on terms, meaning rent, rent to owner, lease, purchase.
Jay Conner [00:08:29]:
Because it just makes sense, you know. So we build long-term wealth by buying on terms and selling on terms, and we get big checks. When my average profits right now are $71,000 on my flippers, on my quick flips in this local market. I mean, our median price before Covid our median price was $225,000 for a single-family house. Today, this side of COVID, we’re right around $300,000 median price. But of course, the same thing has happened throughout, you know, across the nation, with an increase in prices. So a ton of rehabs, lots of rehabs, lots of flips, hence being on the right podcast with you, and then a lot of termdeals as well. So right now, you know, I’ll do two to three flips a month, averaging $71,000.
Jay Conner [00:09:29]:
So you know, that works out okay. Over $2 million in profits in this small area per year.
Brian Davila [00:09:36]:
How do you, how do you get your deal?.
Jay Conner [00:09:41]:
In that? The million-dollar question. I can tell you where we don’t get our deals. You don’t get them in the multiple listing service because there’s no inventory. Right now, I think we’re going to see some bank-owned property showing up in the multiple listing service because of foreclosures opening up, but you know, they’re not there yet. So, where do I get my deals? Well, in a small area. First, let me say this, and I know you tell your listeners this all the time, but I believe that unless a real estate investor, or until a real estate investor has consistent seller-motivated seller leads off-market fizbos for sale by owners coming into their funnel every day, then real estate investing is a hobby and not a business. So consistent seller leads are coming in every day. So what’s my number one quality lead source? Well, it’s really two, so it’s sort of a toss between the two.
Jay Conner [00:10:45]:
So I’ll start with Google Ads. So my Google Ads are very, very high quality. Of course, Google Ad leads, you know, cost more. But right now, my Google Ad seller lead is averaging $150, which is pretty cheap. That’s an every Google Ad lead. You know, I mean, folks in Raleigh, North Carolina, are paying $315 on average for a Google Ad lead. But I mean, I only need five, I only need, on average, I only need five Google Ad leads to buy A house on my land, five times 150 bucks. That’s pretty cheap advertising to get a $71,000 average profit deal.
Jay Conner [00:11:31]:
So I have three different ones. I have three different funnels going for marketing ad campaigns, going for Google Ads here in my market. Next to that are my foreclosure letters and my foreclosure tracking system. Carol Joy, my wife, and I started putting this together back in 2004. Where we track physically, we go to the courthouse. We do not rely on any online services because the information is not updated quickly enough for my liking. So we go to the courthouse. I say we.
Jay Conner [00:12:07]:
We have a courthouse assistant that we’ve had for years who goes to the courthouse twice a week, Tuesdays and Fridays. And we track every open foreclosure file. Here in North Carolina, it’s called the special proceedings room. It’s part of the clerk of the court’s office. And we track every open foreclosure file from the date of notice of default. In some states, it’s called a notice of or a summons from the date that the file is opened. And the substitute trustee that’s handling that foreclosure has sent the information to the courthouse. From the day that file is open, we track it.
Jay Conner [00:12:45]:
When’s the hearing date? When’s the sale date? And in between the notice of default and the sale, I have eight sequential letters that we mail to these people get a crazy 57% response on average, which, if anybody knows anything about direct mail, that’s crazy nuts. You’re really knocking it out of the park if you get 3%. But the reason they do so well is that the message is a perfect match to the market, and they’re cumulative. So we mail out eight letters. If they have more than one layer of motivation, we not only do, but also the less. What I mean by that more than one layer of motivation is that they’re in foreclosure, and their house is not going to sell. Yet another layer of motivation would be, is it an inherited property? So if it’s in foreclosure and it’s inherited, we not only mail, but we skip, trace and outbound, and outbound, call them, and we knock on the door, right? If it’s vacant and inherited and in a foreclosure, then, you know, we hire the Secret Service to go find these people.
Jay Conner [00:13:53]:
So, I mean, you know, all those layers of motivation, the more profitable and more likely that it’s going to be a really, really good deal. However, I’ve learned over the years, the harder it is to find the owner or Owners of a property, the more profitable it’s going to be, and the more likely you’re going to get it because the other real estate investors aren’t going to jump through all those hoops to find the people, you know, as we do. So Google Ads, direct mailing people who are in foreclosure, but the house is not going to sell you thirdly, or Facebook ads. So Facebook ads are my ads. And by the way, video obviously works much, much better on Google Ads and Facebook ads than just graphics. So I’ve recorded, I’ve recorded, you know, videos, you know, to increase that response. So on Facebook ads, they just show up in your newsfeed. Well, I need 15 of those to buy a house. A Facebook ad is not as quality as a Google Ad because those people, you know, are looking for us.
Jay Conner [00:15:00]:
Buy my house, sell my house, you know, sell my house fast. All that, all those kinds of things. And we do direct mail as well. I call other wholesaler signs. I love it. I don’t wholesale deals. I’ve never wholesaled a deal in my life. I just like $71,000 better than 7,000 or 10 or 12, or 15.
Jay Conner [00:15:19]:
But within a small area, there are very, very few other real estate investors that are like, really, really consistent. So we’ll call other bandit signs, knowing in all probability they are a wholesaler. And so we’ll call and introduce ourselves and get ourselves added to their buyers list. And of course, we convince them that we can close any deal you got that makes sense within seven days. Because we got the private money, we got the cash lined up, ready to go, ready to close. I get all my title searches done by my attorney within 24 business hours. I got money sitting on the shelf, ready to close. And that’s a, that’s a big benefit of private money.
Jay Conner [00:15:58]:
I mean, when you’ve got the cash ready to go, and you don’t have to apply for the loan, because again, private money is not hard money. You’re not applying for any loan. You’re already approved with your private lenders, having the money pledge, and ready to go anyway. I should catch my breath and let you say something.
Brian Davila [00:16:15]:
No, I think this is all great. It’s very interesting. There are a few things I want to talk about, but how long have you been a real estate investor?
Jay Conner [00:16:27]:
Since 2003. 19 years as of today.
Brian Davila [00:16:30]:
19 years from today. Okay, I guess. What changes have you seen in the last 19 years as far as, like, strategies and fundamentals of real estate investing? Or are they the same? Have they been the same?
Jay Conner [00:16:49]:
Pretty much, yeah. Fundamental. Fundamentals are the same. What do we mean by fundamentals?
Brian Davila [00:16:56]:
I guess fundamentals would be like, how are you finding deals, how are you funding deals, and how are you selling deals? It sounds like.
Jay Conner [00:17:06]:
Excellent question. So let’s address all three of those. Finding deals has changed big time.
Brian Davila [00:17:13]:
Oh really?
Jay Conner [00:17:13]:
19 years ago. 19 years ago, I didn’t know anything about Google.
Brian Davila [00:17:17]:
Oh yeah, that’s true. Yeah. I’m still, I’m still thinking like, yeah, you know, there’s always been Google.
Jay Conner [00:17:24]:
So, I mean, you know, I didn’t know anything about Google 19 years ago. I mean, Facebook, I didn’t know anything about Facebook 19 years ago. So, how did I first start finding deals? Well, wait. Well, way back then, you could actually find them in the multiple listing service. From 2003 until, you know, 2002. Really, until maybe three or four years ago, you could find deals in the multiple listing service, bank-owned properties. You know, you could find a fixer-upper now and then on the multiple listing service.
Jay Conner [00:17:58]:
So the majority of the years that I’ve been in the business multiple listing service was, you know, a good source. But that’s changed in the past three years or so. I mean, hey, Brian, this is going to, this is going to date me. This is going to tell you how old I am. When I first started investing in real estate, realtors and realty companies actually published a monthly thing called the Homes magazine. The Carteret County Realtor Association published the monthly homes magazine with pictures. And you could flip through the magazine and look at pictures and look at list prices. Well, the Internet, you know, did away with all that kind of stuff.
Brian Davila [00:18:43]:
That’s called Zillow.
Jay Conner [00:18:46]:
Yeah, so Zillow. So like, you know, I’ve got some friends that still do outbound calling to people that advertise on Zillow. But the deals there are few and far between, particularly in this market right now. I tell you, there is a source I’ve used for a lot of years and I still use it. And that’s auction.comauction.com. You know that that’s a free service that you can sign up for. But the catch is you’ve got to have the cash, right? If you win the bid on auction.com, you have to give them 5% of the credit card for your winning bid immediately. Like they’re going to charge it immediately if you win the bid.
Jay Conner [00:19:33]:
And then you’ve got to close in a reasonable, you know, pretty quick period of time.
Brian Davila [00:19:37]:
Okay. So I guess.
Jay Conner [00:19:41]:
Oh, wait a minute. We didn’t, I’m sorry, we didn’t finish answering the question. So what’s changed? Finding deals. We talked about that. Funding deals. Well, we sort of answered that. In my first six years, I used local banks. Since then, all cash deals are funded with private money, doing business with individuals, and then selling.
Jay Conner [00:19:58]:
One thing that’s changed is just because of experience. So if I rehab a property that I, my, my, my criteria is that if I’m going to put more than $10,000 of renovations in it, it’s getting to be what I would call, you know, I don’t want to have to put that money in it again. I’m probably going to put it in the multiple listing service and cash out 10 to 15,000 or more. Probably going to put it in the mobile listing service. But if I can buy a home and it doesn’t need hardly any repair, I buy on terms subject to the existing note or seller financing, I’m going to turn around and sell it on terms. Then I go that way. But what’s changed is I used to, and I tell you, Brian, it takes me forever to get knocked in the head and finally wake up and change what I’m doing. But for a long time, I would rehab a house, and I would do multiple marketing efforts.
Jay Conner [00:20:54]:
I’d put it in the multiple listing service, and I would also offer it on rent-to-own. And whoever showed up with the money first that I liked, I’d go with that. Okay, the rental home buyer’s got 15, $20,000 to give me in a non-refundable lease option deposit. I’ll take the 15 or 20 grand, take it off the market, and sell it to them. So the 15 or 20 grand was attractive, but I learned that, you know, if they don’t cash out, if they don’t get ready for a mortgage, I get the house back, and no, I’ve got to fix it up again. So, I did change that on selling. As I said, if I’m buying it with private money, I’m rehabbing it. We’re going to go ahead and cash out in the multiple listing service and sell it.
Jay Conner [00:21:41]:
If I don’t have to put much in it and I’m buying it on terms, then I’ll still sell it on terms.
Brian Davila [00:21:46]:
Okay. Another question before we get into the private money. So this is more like a wisdom question, two parts of wisdom. Right. Because you’ve been in the game longer than I have, obviously. What regrets or what advice would you give someone who is in their first 10 years of real estate investing now that you’re at like 20?
Jay Conner [00:22:16]:
Two. Two very, very valuable pieces of wisdom come to mind from my mistakes. So one is, if I knew when I started what I now know, I would have started with private money. I don’t know how many deals I missed out on because I had maxed out on my line of credit at the bank, and I didn’t have the cash, and I, I, and I couldn’t make an offer on the property; they wouldn’t sell it to me on terms. So I missed out on the deal by not having private money. I mean, let’s face it, in the real world, most sellers, I don’t care if it’s for-sale-by-owner or otherwise, most sellers are going to require all the cash. I buy as many houses on terms as I can, but my statistics show that only 13% of for-sale-by-owner homes will sell to me creatively. What do the other 87% require all the money for
Jay Conner [00:23:21]:
Right. So if I knew then what I now know, I would have started with private money. In fact share with my students all the time. When, if you’re brand new, the money comes first. Although is are always going to be deals? Yeah, there’s always going to be deals, but it’s just downright depressing and stressful to be talking with a seller, and they want all the money, and you ain’t got it. Right. So I say and preach, get your money lined up. It’s Easy to get $500,000 or more in private money in less than 30 days.
Jay Conner [00:24:01]:
What I call sitting on the shelf, ready to go. You know, how much more confident are you going to be in making offers when you have hundreds of thousands or a million or two burning a hole in your pocket? Yeah. So that’s number one. Number two, big mistake. I made a big mistake. So I’d only been in the business for a couple of years, and the market was pretty hot at that time. And so, at the time, if you could fog a mirror and just, you know, give somebody a pulse, they would approve you for a line of credit unsecured. So I had an unsecured line of credit back then.
Jay Conner [00:24:46]:
These were my first two years in the business. And there was this property that was over on the beach. It was a condominium, oceanfront, beautiful bank-owned property. And here’s my big mistake, big mistake. And it cost me a lot of blood for a few years. I bought the property with the intention of flipping it. Right. So I bought it, fixed it up, and turned it into a beautiful, beautiful vacation home or condo.
Jay Conner [00:25:25]:
And by the time I got it rehabbed, all done to put on the market, the market had already started to turn. Prices had already started to come down, and hard-headed Jay Conner, hard-headed J. I kept the price the same. Still trying to get my price. Yeah, my head was in the dirt. My head was in the dirt, my butt was in the air. And you know when your head’s in the dirt, and your butt’s in the air, you’re gonna get kicked in the butt, right? So I was hard-headed, and I wouldn’t come down on my price.
Jay Conner [00:25:59]:
Well, enough time had gone by to I couldn’t even. I couldn’t even sell it. So what did I have to resort to? I had to resort to renting it out. Well, guess what? Guess what I did not figure out up front? I did not calculate. Well, if I get stuck holding this property, can I get it to cash flow and cover my underlying debt, carrying costs, and et cetera? Boy, was that a big mistake. So the property I can only rent out for 12 weeks out of the year because it’s on the beach the rest of the year. There are hundreds of condos for rent.
Jay Conner [00:26:37]:
Nobody’s renting them because it’s not the time of year to come to the beach. So here’s the lesson. Do not, unless you’re going. You want to make the same mistake I did. Do not buy a property even if you intend to flip, as I flip a ton of them. Even if your intention is flipping, calculate what you can rent that thing out for, either on rent-to-own, straight rental, or whatever. And there’s a long list of benefits to do. Rent to own instead of rentals.
Jay Conner [00:27:09]:
But anyway, calculate what you can bring in per month up front. And will that cover your underlying debt? If it won’t, don’t do the deal.
Brian Davila [00:27:19]:
Got it. Okay. Two more things before we get into private money.
Jay Conner [00:27:27]:
I know we’re killing the audience. They’re ready for this.
Brian Davila [00:27:30]:
Well, I’m interested in you, to be honest, because I may sound weird, but I like talking to my elders because I feel like that’s one reason. Yeah, What? Is that the right word? I’m sorry, I don’t know. I like talking to people older than me and people with more experience. Is that. Is because I’m not good at English, so.
Jay Conner [00:27:51]:
Okay, I’m giving you a hard time.
Brian Davila [00:27:53]:
So. So. Oh, man, I forgot my question. Oh, yeah? My question was, what motivates you? I’m pretty sure you can kind of pack your bags and kind of just go hang out somewhere at this point. Why are you still doing this?
Jay Conner [00:28:10]:
Absolutely. Yeah. Well, let me answer that question with a short story. So a few years ago, I was riding down the highway with a good friend of mine. We go to church together, and we’ve known each other for 20, 25 years, really good friends. We’re riding down the road and just, and his name is Neil. And just out of the blue, Neil says, Jayy, when is enough enough? And I said, What do you mean, Neil? When is enough enough? He says, well, you don’t have to be doing all that you’re doing and doing all that business and, you know, helping real estate investors get private money and still doing deals. It’s like, you know, you, you know, you work, work, work.
Jay Conner [00:29:02]:
Of course, by the way, in this business, in the buying and selling house business, I’m in it less than 10 hours a week. He says, How do you reconcile doing all this, getting more, getting more, getting more with the scripture? When the Apostle Paul says to be content, how do you reconcile that teaching? I said, That’s easy, Neil. And here’s the answer. Enough is never enough when it’s not about you. Enough is never enough when it’s not about you. And here’s what I mean by this. What motivates me is being able to make an impact on other people’s lives in various ways. So we’re very involved in our church, so we like to give financially.
Jay Conner [00:29:54]:
We’re also very involved with a college that’s down in Florida that Christians go to. We love to participate in what’s going on with that college. We have a new family that just moved here to our area that their fourth child, which is a baby, is having big time heart surgeries and it’s a baby. Well, we’re able to make an impact on that family’s life. So what motivates me is giving back. What motivates me is serving. What gets me out of bed is making a difference in that other person’s life in whatever way that is, whether it’s encouragement, giving them hope, or helping them out financially. And, you know, I think, and I believe that we human beings were created to serve.
Jay Conner [00:30:43]:
We’re created to help others out. And what motivates me is doing that. But if I sat home on my sofa and watched Andy Griffith and eight Cheetos, I wouldn’t be able to do what I’m doing.
Brian Davila [00:30:58]:
Old school with Andy Griffith.
Jay Conner [00:31:01]:
Yeah. Well, since I am your elder, I need to tell you what reruns I watch.
Brian Davila [00:31:07]:
Okay.
Narrator [00:31:09]:
If you’re listening to this podcast, then my guess is you’re interested in real estate investing. Some of you are just starting, while others are trying to scale their business to the next level. But the problem is that with so much information out there, most people don’t know which program or coach to trust. Well, I’m a bit biased, but I believe my company, Future Flipper, can help you get to the next level. We’ve coached thousands of students from all over the world on how to build their real estate investing business. It doesn’t matter whether you want to flip wholesale or buy rentals. Our coaching program has everything you need to become a great investor. There are many things that we include with coaching, but to give you a few examples, you’re going to get an accountability coach.
Narrator [00:31:47]:
These are people who have had success in their own business, and they want to make sure that you achieve success in yours. We also have all of our documents, our systems, and processes that I’ve used to buy hundreds of homes. You can copy and paste them directly into your own business. And we have events where you get to meet me, top-level guest speakers, and other students who are crushing it. My students deal with each other, and I personally deal with them, too. In fact, at a recent event, I just honored over 20 people in our program who made over a million dollars in the last year. So if you want to grow your real estate business, head over to futureflipper.com and apply for a call with our team. The call is completely free, and they can help point you in the right direction, whether you work with us or not.
Narrator [00:32:30]:
So go to futureflipper.com and book your call today.
Brian Davila [00:32:35]:
I’m gonna start differently. So I actually haven’t been a big fan of private money because I came into this business with the mindset of, like, you know, work hard, make money, save it, and then invest that money. Not like, get other people’s money invested and make money. And it always made me nervous that I would use someone else’s money and then invest it and then lose. And now they lost their money, and I’m. I’m pretty good because it wasn’t my money anyway. And I’ve also seen people do that where they go out, have absolutely no experience. They go out, raise money, and lose because they have no experience.
Brian Davila [00:33:26]:
So they never put in the work to have that money. I don’t know if that makes sense. And then they go lose, and now they just blew someone else’s money. So honestly, I’ve never been a fan, not a I don’t say, I don’t want to say I haven’t been a fan, but I personally haven’t raised a lot of money because of those things. What. Go ahead.
Jay Conner [00:33:48]:
Well, you bring up some really, really important points there, but go ahead before I come.
Brian Davila [00:33:52]:
Yeah, so I guess, like, why do you think it’s safe or smart for someone with no experience to raise private money if they haven’t had to put in the work to make that much money?
Jay Conner [00:34:12]:
So, first of all, I never recommend that a new real estate investor take on a major rehab project with no experience. Right? I mean, you need the general contractor relationships in place. So definitely on your first major rehab joint venture with somebody that knows what they’re doing, or, you know, at least have a smart mentor at Trebek and call on, on the telephone. But here’s why. In all these years. So I’ve been, I’ve been using private money for all cash deals since 2009, as I shared the story when we started. So why have my private lenders never, ever lost any money? Well, I have my private land. I got 44 of them right now.
Jay Conner [00:35:01]:
You don’t need 44; just start with one or two. Right? So I’ve got eight and a half million dollars of those 44 private lenders that I rotate from house to house to house to house. Right. And I’ll have like right now. You know, sometimes people say, Well, Jay, why are you using private money, and you’re making all that money? Isn’t it a smart idea to use your own cash for all-cash deals? Isn’t that like. And then you’re not paying interest on it. Of course, for the short term, that’s a great investment of your own cash. But I don’t want my cash tied up in 20 houses or 20 projects.
Jay Conner [00:35:39]:
Right. I don’t, I don’t want, I don’t want all that cash of mine, you know, going on at the same time. So my second, my second comment is the reason my private lenders have never lost any money. They’ve always been paid what was due to them in the deal. And by the way, I don’t joint venture with private lenders. They do not get a piece of the action. They don’t get a, they don’t get part of the profit. I don’t joint venture with private lenders.
Jay Conner [00:36:09]:
They act as a bank. My LLC owns all the properties, and the private lender is the lender. They get the same protection as a regular bank. Right? So the reason they’ve never lost any Money and always got all the money coming to them is because of my buying criteria. My rule is not to borrow more than 75% of the after-repaired value. 70. So that’s a 25% cushion between the after-repaired value and the amount that I’m borrowing. So if the market changes and prices start to come down, I have plenty of room to lower that price, and my private lender is still made whole.
Jay Conner [00:36:54]:
Now, the only way that formula is going to work, and by the way, I never take any of my own money to the closing table. Never. I always bring them a big check when I buy because I always borrow more than I need to buy the property, and that’s because I’m going to have rehabbing costs and etc. Etc. Very common for me to bring home a 30, 40, $50,000 check when I buy and take none of my own money to the closing. Now, the only way that formula is going to work, and why it does work, is because on a major reha,b it’s very common for me to buy a house, buy a property at 40 to 50% of the after-repaired value. So here’s a quick little old, you know, example. Let’s say I got a house for easy figuring that’s got an after-repaired value of $200,000.
Jay Conner [00:37:49]:
And let’s say, for the sake of conversation, I’m gonna buy that house for a hundred thousand dollars, which is very common in my world. That house is going to need a rehab. I’m not going to be buying a house at 50% of the after-repaired value unless there’s going to be rehab involved. People just aren’t going to sell at that kind of a discount unless there’s major work to be done. So $200,000 after repair value. I bought it for 100. Well, using my criteria, I can borrow up to 75% of the after-repaired value. Let’s say the rehab is 30, $35,000.
Jay Conner [00:38:29]:
Well, I’ll get my private lender to wire one of my private lenders to wire $150,000. That’s 75% of the after-repaired value to my real estate attorney. We use attorneys in North Carolina to close deals. Most states use title companies and escrow companies anyway. So whoever the closing agent is, wire the money to the closing agent. So here’s $150,000 that’s wired in. That’s 75% of the after-repaired value. 200,000.
Jay Conner [00:39:00]:
I bought it for a hundred. Someone brought home a check for a lower closing cost of $50,000. Well, the rehab’s 30 or 35. I can use the other 15,000 any way I want to. Marketing cost. You know, Murphy does exist in every property. Murphy lives in every property. Right.
Jay Conner [00:39:21]:
And sometimes Murphy’s cousins and sometimes Murphy’s children show up. That’s the unexpected, right? So, I bring them a big check. Now, when I go to sell it, let’s say the after-repair value is still 200,000. Well, I still owe the private lender only 150,000. Either the payments the interest is accruing, and I’m making no payments, or some of my private lenders actually need monthly payments because they’re living off the interest. So we’re making, you know, monthly interest payments. Well, I don’t pay principal and interest. I pay interest only. Therefore, the principal loan amount remains the same until cash out.
Jay Conner [00:40:02]:
So I sell it for 200,000, less realtor fees. I’m going to pay the private lender off their 150,000 principal loan amount plus any accrued interest. So why have I never been concerned and didn’t have to be concerned about taking care of my private lenders? Number one, it’s all in buy and write. Repairs are always more than you expect them to be. So you got to buy, right? You have to buy at the right, at the right discounted amount. And I’m not borrowing more than 75% of the after-repair value. Therefore, we got this big cushion. Now, is my private lender trusting my team and me to get that house rehabbed? Because I mean, they’re going and also they’re protected.
Jay Conner [00:40:50]:
I mean, I’m not borrowing unsecured funds. Can I borrow unsecured funds? Sure. It’s legal. I’m not borrowing unsecured funds. My private lender is getting a deed of trust. Same thing as a mortgage here in North Carolina. It’s a date of trust. So if I don’t pay them, and here’s a writer downer in the world of private money, if I don’t pay my private lender, the property does.
Jay Conner [00:41:15]:
In other words, if I don’t keep up my end of the deal, they get the property. And in fact, they’re going to make more money off the property than the interest I would pay them; their investment is secured. There are three big reasons. Private lenders do business with me and do business with my students. The number one reason is that they’re going to make a lot of money. So right now I’m paying private lenders 8%. Well, compare that to what they can get in the local bank, a 12-month certificate of deposit. Right now, nationwide is paying a whopping 0.17%.
Jay Conner [00:41:53]:
Even with all the increase in mortgage rates, etc. That’s less than a quarter of a percent. Well, if I pay them 8%, that’s more than 32 times more money than they’re going to get in a certificate of deposit. So number one, they’re going to make a lot of money. Number two, their investment with me, their loan with me, is secure and it’s safe. It’s secure because I’m not on, I’m not borrowing unsecured funds. They’re getting a mortgage or a deed of trust, and they can foreclose on me if they need to. It is safe because it has a conservative loan-to-value of 75% of the after-repair value.
Jay Conner [00:42:35]:
And then thirdly, the reason they absolutely love loaning their money out is that their investment, or the value of their investment, is not volatile. What I’m doing is I’m contrasting the private money program to the stock market. When somebody invests in the stock market, as you know what they invest in, first of all, they already lose money. There are fees, there are commissions, there are no fees and commissions in this world of private money. Right. Their principal loan amount remains the same until cash out. And they know exactly what their return is going to be. Unlike the stock market, it’s volatile.
Jay Conner [00:43:14]:
The value of their investment can go down, it can go up. And I tell you, the older the private lender is, the more important that is because the older a private lender is, I mean, is there going to be a correction in the stock market year to date? There already has been, and there’ll be more. Does anybody know when? No. But our private lenders get to sleep soundly at night because they don’t have to worry about the value of their investment going up and down and losing any money. They know exactly what their rate of return is going to be, and it just gives them a lot of.
Brian Davila [00:43:46]:
Okay. So I guess I just go like straight into, you know, the basics of private money. Private money or gap funding. Some people use the term gap funding. Where do you find private money investors?
Jay Conner [00:44:07]:
Yes. So first of all, let me talk for a moment about self-directed IRAs. So it’s really, really important to establish a relationship. I mean, if you want to attract a lot of private money and have the money chasing you. Of my 44 private lenders right now, over half of them are investing in my deals, AKA loaning money on my deals from their retirement account. Well, what they’ve done is they have moved existing retirement money over into a self-directed IRA company, also called a third-party custodian, that’s been approved by the IRS. So they move their money over, and now they can truly self-direct or be a private lender and loan it out. So one great place to network and find people who are already private lenders loaning their money out is at networking events of self-directed IRA companies.
Jay Conner [00:45:09]:
Right. So I don’t know if you recommend a particular self-directed IRA company. I’m using one right now that I have been for the past five years, and they fund my deals in three days. Three days. I get the money wired from one of my private lender’s accounts at that self-directed IRA company. So, self-directed companies have Zoom today; they have networking events where you, as a real estate investor, can come into a Zoom networking event and network with those individuals who already have an account at self-directed IRA companies. And did you know this, over 70% of account holders that have self-directed IRA accounts want wanting and do loan money to real estate investors. 70%.
Jay Conner [00:46:03]:
Over 70%. So right there is a great place. There are three primary categories, Brian, where to find private lenders. And here they are. Number one is what I call your own personal warm market. I’ll define that in a second. Secondly are what I call existing private lenders that I just talked about. And the third category is what I call your expanded warm market.
Jay Conner [00:46:29]:
And I’ll describe that briefly. So, who is your warm market? Your warm market is anybody with whom you have a kind of relationship, they are in your cell phone. And I’ll tell you, you know a lot more people than you think you do. Just think how many contacts are in your cell phone. All of them. And the people they know are potential private lenders. That’s your warm market cell phone. Who’s on your email list? Potential private lenders? If they’re on your email list, they’re in your warm market.
Jay Conner [00:46:59]:
Social media. Who are you connected with on Instagram? Who are you connected with on Facebook? Who are you connected with on LinkedIn? Who are you connected with on Snapchat or whatever they call that thing? So any of your all you know, any of your social media contacts are potential private lenders as well. Who do you go to church with? Who do you go to the Rotary Club with? Who are you in the Chamber of Commerce with? Any kind of groups that you are already in. That’s, you know, that’s the warm market. Your expanded warm market is, you know, sometimes students will say to me, they say,, My warm market is broke. All my people ain’t got no money. Well, first of all, I don’t believe them. I don’t believe; I think they’re just intimidated to even start a nation about private money, or they don’t see the benefit of it.
Jay Conner [00:47:57]:
Right, so expanded warm market. Well, how do you expand your warm market? Those areas I just mentioned, get involved in the community, right? You know, get in, you know, Rotary clubs, chamber of commerce, etc. Etc. And then existing private lenders. Well, I already mentioned one place to find existing private lenders, and that’s people who have accounts that self-directed IRAs. But where else can you find them? Well, when I started, I hired my real estate attorneys and, paralegal to search public records in our local county, looking for individuals who are loaning money out, secured by real estate, having a mortgage. I didn’t want company names, I want individual names like Brian de Villa, right, that’s loaning money out and has a deed of trust. Well, in 90 days, I only found two people.
Jay Conner [00:48:49]:
I said, Well, I need a quicker and better way. So years ago, we hired sophisticated software developers, and I now have my own personal private lender data feed, a nd my students have access to it as well. But in that data feed, we update it every month, and we have a record of every private lender loan that’s closed in the United States, everywhere. The individual’s name, who they are, the amount of money they’re loaning out, and he interest rate they’re getting. All this comes from public records, their contact information, all that stuff. And so now and my students access existing private lenders at the push of a button just using the private lender data feed. But those are the primary places to locate private lenders.
Brian Davila [00:49:38]:
And then let’s just get into the super basic little questions that I know sometimes those little questions prevent people from taking action. So let’s just say I find you, you’re a private money lender. I found a deal on Banana Street. I’m like, hey, hey Jay, I got this deal, it’s a hundred thousand dollars, I need $50,000 for the rehab. What do you do, and you agree? What are the next things you do?
Jay Conner [00:50:13]:
I’m so glad you asked that. I’m so glad you asked that question, Brian, because that’s the way most real estate investors approach private money. So here’s the deal. I’ve never pitched a deal in my life. I’ve never pitched a deal because if I contact a private lender for the first time and I have a deal, I’m already sounding desperate, right? Or so here’s the thing. How do I have all this private money, and I’ve never asked for money, and I’ve never pitched a deal, and I get my deals funded? I put on my teacher, that’s a writer downer right there in my warm market. None of my private lenders today had ever heard of private money.
Jay Conner [00:50:59]:
They didn’t know what private money was. They didn’t know what private lending was. So I taught them what private money is, and I taught them my program. So you know, what’s the interest rate? What’s the length of the note? How are you protected? What happens if Jay Connor loses his mind and moves to the Caribbean? How are you protected? How can you get your money back? In case of an emergency, you need to get your money back. So I teach them about private money and my program, and by the end of my teaching, which only takes about 20 minutes to walk through the private lending program that I teach to potential private lenders, that can mean a group. I mean, I’ve raised $969,000 at one private lender luncheon where I only invited 20 people, and I fed them, and I taught them my private learning program. So here’s the secret sauce. This is so important.
Jay Conner [00:51:58]:
I teach the program on how they can earn high rates of return safely and securely and I teach them the program. At that point, I shut up. I don’t even ask them. Well, I mean, now they’re chasing me. Where else are they going to get these high rates of return safely and securely? It’s our job to get the word out. I mean, they need us more than we need them, right? So we teach them the program. Now they tell me how much funding they have available. Is it liquid investment capital? Is it retirement funds? Do I need to introduce them to my representative at my self-directed IRA company that I do business with? Where are they getting the money from? They tell me the range of investment they got to work with, and I say Great, I will now go find you and me a deal just as soon as possible.
Jay Conner [00:52:51]:
Well, that might be within a day, two days, three days, it might be two weeks, three weeks, or 30 days. But I want to put that money to work for them just as soon as possible, so it doesn’t disappear on me, and they use it somewhere else. Now here’s the secret sauce. They love the private lending program. They’ve told me how much they have to invest. Here’s the first secret is do not bring a deal and get a new private lender in the same conversation. All right? That’s the first secret. The second secret is now you’ve got a deal.
Jay Conner [00:53:25]:
The most stupid thing I could do would be to pick up the phone, call them up, and say I got a deal. Explain the deal and ask them do they want to do the deal. That’s stupid. Of course, they want to do the deal. They’ve been waiting for the phone call. So I have a deal. I call them up, and I only tell them four things. And initially,y, that’s actually more than they want to know.
Jay Conner [00:53:50]:
I call them up. Here’s exactly the scripting, Brian. I call them up, and I say, Let’s say, Brian, let’s say you’re one of my private lenders. I’ll call you up and I sayHeyey Brian, how’s the day going? How’s the golf game? Chit chat, chit chat. Get it over with, people.
Brian Davila [00:54:04]:
My golf game’s going terribly. It’s short and to the right right now, but I’m working on it.
Jay Conner [00:54:12]:
There you go, there you go. And I’ll say, Brian, I’ve got great news. I can now put your money to work for you. I’ve got a house over in Newport. The after-repaired value is 200,000. The funding required for the deal is $150,000. Stop right there. I know you’ve already got, I know you got 150 because you already told me, and you’re waiting for me to call you.
Jay Conner [00:54:37]:
I said I got a house over here in Newport. The afterpared value is 200,000. The funding required for the deal is $150,000. And you’ll need to have your funds wired to my real estate attorney next Thursday because that’s when the closing is. End of conversation. I mean, I didn’t ask if you wanted to do the deal. You’ve been waiting for my phone call. Dying on the vine.
Jay Conner [00:55:01]:
When you know, put your money to work, and I’m not asking you to deal, just tell you. And look, that’s the first phone call. On the 2nd, 3rd, 4th, 5th, 10th and 20th phone call. In the future, when we’re doing more deals together, I’ll call you up, and you know what? There are only two things you want to know. How much do you need, and when do you need it? Boom. That’s it. They don’t even, they don’t even care about or notice that I didn’t even tell them the street address. They couldn’t care less what the street address is.
Jay Conner [00:55:29]:
So that’s it in a nutshell. I’m not pitching a deal. Good night. That would be stressful. I’m establishing a relationship first, either with a new private lender that’s out of my warm market, or somebody I met, or an existing private lender. We establish a relationship, and then I call them up with good news.
Brian Davila [00:55:52]:
You more pitch or teach or whatever you want to use the private money investor first, before even introducing a deal. Making sure they’re ready to go, making sure they understand how it is, making sure they understand the whole process. That’s what you call your program. And then once they’re on board, then you call them when you have a deal and let them know, Hey, got a deal, I need the money by here, let’s go. And what if, what if a private money lender says, Hey, like I want to go look at the house, orHeyy you know, can you send me the numbers on the deal? What happens? Because I’m pretty sure people.
Jay Conner [00:56:38]:
I’ve never.
Brian Davila [00:56:39]:
Had, never had anyone, I’ve never had numbers on the deal or the address. No.
Jay Conner [00:56:49]:
Nope. But you know, what if they, if they wanted to, I mean, they never asked me the purchase price. They don’t care. They just want to know what’s in it for them, right? Now, if you’ve got a sophisticated private lender that’s already been doing it for years, they’re going to want to know all that stuff, and they should, right? But the people that I teach in my warm market, they just want it simple, simple, simple, simple. Because I’ve learned the more you flap your lips, the less money you’re going to get. And what I mean by flapping your lips is like trying to talk somebody into a deal. There ain’t no talking anybody into anything. I’m not selling, I’m not begging, I’m not chasing, I’m teaching and offering a fantastic opportunity.
Jay Conner [00:57:39]:
Hey, look, here’s the deal. There is no fear of rejection if you can’t be rejected, right? I mean, I’m not asking anybody for money. I’m teaching them what it’s all about and giving them an opportunity. I mean, there’s no rejection in that, right? Particularly if I’m not feeling like I’m getting ready to lose a hundred thousand dollar deal, and I’m just going to die if I don’t talk somebody into funding this deal. It’s a whole different mindset.
Brian Davila [00:58:10]:
Oh dear.
Jay Conner [00:58:11]:
Hey, look, the worst time to be raising private money is when you need money for a deal. That’s the worst time to be raising private money. The best time to raise private money is when you don’t need it.
Brian Davila [00:58:26]:
And then you said you’re going to be able to talk to our students later today. Right. At 3 pm, I’m going to send out a text. Okay.
Jay Conner [00:58:32]:
All right.
Brian Davila [00:58:32]:
Well, I’m excited because we’re going to talk more.
Jay Conner [00:58:34]:
Absolutely.
Brian Davila [00:58:35]:
I guess the last question I want to ask is about the private money, because we’re about an hour already. Let’s go back to the example. I know your private money lender got the deal. You say, Hey, got, I have a deal. I’m like, hey, Jay, I need 150. You agree? Can you walk me through the documents, the process? Am I going to your house, picking up some cash, and taking it to my bank? Like, how do you? What’s the best way to facilitate everything?
Jay Conner [00:59:14]:
Sure. So first I call. They’re already on the list. I mean, I’ve got a simple file in the filing cabinet. Here are my private lenders, and here’s how much money each one has available, right? So I put them in the queue. When I pay one off, they just work their way up the queue. So I call them up, I tell them the deal, and I tell them when they need to have their funds wired. Right? So typically, it’s about a week out.
Jay Conner [00:59:43]:
It’s about a week out from the time we’re going to close. At that time, what happened? What are the documents? Well, here are the documents, and it’s a million times simpler than a traditional closing with a bank lender. Okay? The first document is the promissory note. What’s the promissory note? Well, you all know what that is. It’s, it’s, it has. Who’s the lender? Well, that’s the private lender’s name, not their company. They ain’t got a company. The private lender’s name is the lender.
Jay Conner [01:00:14]:
Who’s the borrower? That’s my LLC or my land trust, whatever entity I’m buying the property in. What’s the principal loan amount? Right, there’s a principal loan amount. What is the frequency of payments, if there are any payments? I mean, stop and think about it. In this world of private money, you bring home a big check, nd you don’t even have to make any payments until you cash out on some of the deals. So what’s the frequency of payments? What’s the interest rate? Right. Am I giving them a nine a day call option? Can they call them due early if they have an emergency? If they have an emergency. Right. So the promissory note is, very, very simple document.
Jay Conner [01:00:54]:
The second document is the deed of trust or the mortgage, one of the same. Just depends on the state the property’s in that collateralizes their note. Right. That gives them the legal right to foreclose if you do not pay them. Well, guess what, if you’re not making monthly payments, there’s no foreclosure there, and you’re going to need to pay them when you cash out, or your new buyer can’t get a clear title. Right. So deed of trust or mortgage to clarify the note. The third document is the insurance policy.
Jay Conner [01:01:28]:
So on the insurance policy, we name the private lender as the mortgagee. So if you have any insurance claims, the private lender is protected because the insurance company is going to make the check payable to your company and to your private lender. Your private lender’s got to sign off on that check before you deposit it. It protects them. The,n on the non-title policy, the private lender is named as the additional insured in case there are any title issues down the road. And in 19 years, I’ve never had any title issues, but I’d never buy a property without a title policy.
Brian Davila [01:02:03]:
Those three.
Jay Conner [01:02:04]:
And that’s it. That’s all. That’s all the documentation. And here’s what’s really cool. Go ahead. Oh yeah. So here’s what’s really cool. I don’t have to spend 30 minutes or an hour on the phone with my real estate attorney, telling the attorney or the paralegal how to prepare the documents.
Jay Conner [01:02:25]:
And I’m for sure not going to prepare the documents. Nobody on my staff is going to prepare the documents. The real estate attorney always prepares the closing documents that I just went over. Well, they only got two documents to prepare the D3: the deed, the promissory note, and either the deed of trust or mortgage. Now I’ve got a simple one-page Word document that takes less than five minutes, literally, to fill in. That we email, I call it my closing agent instruction letter. And we just fill in who’s the borrower, who’s the lender, what’s the principal loan amount, what’s the physical address that’s collateralizing the note, what’s the interest rate, and what’s the frequency of payments. And we email that document to our real estate attorney, they’re paralegal, and boom, closing documents are prepared and ready to go within 24 hours.
Jay Conner [01:03:24]:
So there’s no cash, it’s all checks. Right. The private lender is wiring the funds to the real estate attorney or your closing agent. And then, by the way, I don’t even have to go sign any documents. I’ve given power of attorney to my real estate attorney. My real estate attorney can buy and sell any property on my behalf because I have given them power of attorney. Since I love to travel and my wife and I travel a lot, I just approved the closings by email with my real estate attorney, and boom, they can actually do the closings for me.
Brian Davila [01:04:03]:
Sa. 100%. Well, I think this was a great podcast, and hopefully I did not offend you when I used the word elder. But I said, I think I’ve had a little bit of success in the last few years, and it’s because I always go to people who have more experience and pick their brains, try to gain their wisdom, so I don’t have to go through the same hardships. So I think it’s a great podcast. If anyone’s interested in learning more about private money. I know you’re going to be on a coaching call with our students, but let’s just say they’re not one of our students. What do you want them to do, the listeners to do?
Jay Conner [01:05:14]:
Sure. So look, if you are listening to this podcast, which you are, or you wouldn’t be hearing me say this, I have got a gift for you. I’m so excited about it. If you’re interested in learning more about private money and getting a lot of private money fast, soo where you don’t miss out on any deals, then I’ve got a brand new I just finished writing it. It’s a private money guide, and it’s called 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and help you build incredible wealth. You can download it absolutely. For free. And here’s where you go to download it.
Jay Conner [01:05:54]:
Go to www.JayConner.com/MoneyGuide, and it will get you on the fast track to private money.
Brian Davila [01:06:19]:
Beautiful. Well, thank you so much, Jay, for coming on. I really appreciate it. If you’re still listening to this, make sure to like this video, subscribe to the channel, and if you’re interested in learning more about flipping houses, wholesaling, and building your wealth. Check out futureflipper.com and book a free call with someone on our team, and we will see you on the next episode. We are out.
Narrator [01:06:43]:
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.