***Guest Appearance
Credits to:
https://www.youtube.com/@ShortTermRentalRiches
“Securing Easy Financing for Life with Jay Conner”
https://www.youtube.com/watch?v=7KcPAcfGmc4&t=12s
If you’ve ever felt that your real estate ambitions are limited by the money in your bank account, you’re not alone. Many aspiring and seasoned investors face the challenge of raising capital, especially in an environment where traditional lending is tightening and interest rates are climbing.
Jay Conner, a recognized authority in raising private money for real estate, recently sat down with Tim Hubbard to share his experience and actionable strategies for accessing private capital—transforming the way investors grow their portfolios regardless of market cycles.
What Sets Private Money Apart?
In the world of real estate finance, the words “private money” get thrown around a lot. It’s critical to draw a distinction: private money is not the same as hard money or institutional lending. Where banks and hard money lenders enforce strict qualifying criteria and often charge hefty fees, private money lending is about building relationships directly with individuals—regular people who have capital or retirement funds they want to grow passively and securely. Instead of going to a fund or intermediary, you go straight to the source.
For the private lender, it’s an opportunity to earn a solid return, often secured by real estate, but without the complications of hands-on investing. As Jay Conner emphasizes, you don’t need to chase or beg for money; rather, you educate potential lenders about the benefits of this method. The property itself typically secures the loan, so if an investor doesn’t make payments, the lender still has the underlying real estate as their protection.
How Private Lending Revolutionizes Investing
When the financial crisis hit in 2008–2009, Jay Conner found his credit lines with traditional banks shuttered overnight. Faced with losing out on profitable deals, he pivoted and built a business rooted in private capital. This shift didn’t just save his company—it tripled his business within a year and resulted in more money available to him than he could immediately deploy.
The beauty of private money is flexibility. Terms are negotiated directly with individuals—not dictated by bank policies. Investors can set rates, payment structures, and loan durations that fit their business model. Whether you need short-term capital for a flip or long-term financing for a buy-and-hold rental or short-term rental conversion, private lending adapts to your goals.
Lowering the Barriers for New Investors
A common worry among those new to real estate is how to attract private lenders without experience or a proven track record. Jay Conner argues that this concern is largely misplaced. The key isn’t in your resume—it’s the structure of the deal. Private lenders are secured by the value of the real estate and the equity cushion you build in. Instead of risky, unsecured loans, the lender holds a mortgage or deed of trust, just as a bank would, and is often listed as the mortgagee on your insurance and title policy for added protection.
Education is the cornerstone for building these relationships. By teaching friends, family, and community contacts the ins and outs of private lending—and not immediately pitching deals—you build trust and credibility. When an opportunity arises, your network is already familiar with your program and ready to act.
Structuring Private Money Deals
Another advantage of private money is the ability to customize each loan. Investors aren’t locked into rigid amortization schedules or high interest rates if the numbers don’t work. For flips, it might make sense to let interest accrue and pay upon sale, boosting cash flow. For long-term rentals and short-term rental conversions, interest-only or principal-and-interest payments can be set based on projected revenue.
Creative deals are also within reach. For example, when acquiring properties from retiring landlords who want to sell but also desire monthly income, using private money for a down payment while offering seller financing for the balance can be a win-win for everyone involved.
Get Money Lined Up First
Perhaps the most powerful piece of advice is to secure your funding before finding deals. Contrary to some popular “money follows the deal” mantras, having capital on hand is what truly empowers investors to act quickly on opportunities—especially in competitive markets where fast closings matter.
Private money isn’t just a tool—it’s the foundation that can fuel your next phase of growth, no matter where you are on your investing journey. Education, relationship-building, and a flexible approach to structuring deals will set you apart in a challenging market—and open doors to opportunities others can’t access.
10 Discussion Questions from this Episode:
- Jay Conner talks about the difference between private money and hard money. What are the key distinctions he mentions, and why does he emphasize going “straight to the source”?
- How did the 2008-2009 financial crisis drive Jay Conner to shift from traditional bank lending to using private money, and what lesson does he share from this experience?
- Why does Jay Conner stress the importance of “teaching” instead of “begging” or “selling” when attracting private lenders? How might this mindset shift impact your approach to raising capital?
- What actionable steps does Jay Conner recommend for real estate investors who want to leverage retirement funds as private money, and why are self-directed IRAs significant in this strategy?
- Tim Hubbard and Jay Conner discuss interest rates and flexibility with private money deals. How does the ability to “make the rules” with private lenders affect deal structuring and negotiation?
- For those just starting in real estate, Jay Conner suggests not going it alone. What mistakes did he make early on, and how can partnering with an experienced investor mitigate those risks?
- The episode explores the idea of leveraging relationships in real estate investing. What examples do Jay Conner and Tim Hubbard offer for bringing together people with resources and experience?
- What protections does Jay Conner recommend providing private lenders (such as promissory notes, mortgages, insurance, etc.), and why is this important for building trust?
- When discussing deal structures, Jay Conner mentions using private money for fast closings and refinancing later with conventional loans. What are the pros and cons of this strategy?
- At the end of the episode, Jay Conner shares a practice for enriching his life outside of finances. What is the practice, and how might it be applied to personal growth in real estate or other areas?
Fun facts that were revealed in the episode:
- Jay Conner currently works with 47 private lenders funding his real estate deals, but he points out that you can easily get started with just one or two.
- Over half of Jay Conner’s private lenders use their retirement funds, like 401(k)s or pensions, to move into self-directed IRAs to invest in real estate deals.
- Jay Conner’s very first private lending conversation was with a fellow church member, which led to securing $250,000 from that person to fund his deals.
Timestamps:
00:01 Private Money Strategies Explained
03:44 Private Lending for Real Estate
07:04 Private Money and Growth Journey
12:07 Indirect Method to Private Money
15:59 Starting Smart: Avoiding Mistakes
18:13 Secured Real Estate Lending Basics
23:26 Flips vs. Short-Term Rentals
24:15 Math Over Emotions for Decisions
27:34 Private Lending Opportunities Explored
30:41 Secure Funds Before Deals
35:50 Raising Private Money Podcast
37:34 Free Private Money Guide
Connect With Jay Conner:
Private Money Academy Conference:
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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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Cash Flow and Closing Fast: Using Private Money to Win Real Estate Deals
Jay Conner [00:00:00]:
Another fear I hear from new real estate investors, Tim, is: who’s going to lend me money on a deal when I’ve never done one? Who’s— why would they do that? And here’s the answer. So here’s another writer downer. The answer is: if you, the borrower or real estate investor, don’t pay your private lender, the property does.
Narrator [00:00:29]:
If you don’t— 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.
Tim Hubbard [00:00:57]:
Welcome back, everyone, to the Short-Term Rental Riches podcast. Happy you’re here again. As always, I’m also happy because we have a fabulous guest today, Jay Conner. And as we know, before we buy a short-term rental, we’ve got to have money from somewhere, right? But one of the beautiful things about investing in real estate is that it doesn’t always have to be our money. We talk about OPM, right? Other people’s money. And we have some very traditional ways that we do that. Of course, going to the bank, but Jay has been specializing in an alternative option for quite a long time. He’s got a ton of experience.
Tim Hubbard [00:01:36]:
So I’m excited to jump into the topic of private lending today with Jay Conner. Welcome to the show, Jay.
Jay Conner [00:01:43]:
Tim, thank you so much for having me. I’m so excited to be here because we’re going to be talking about my most passionate, uh, topic, which means private money. And the reason I’m so passionate about it is that, using private money lenders to fund our deals, we got 47 of ’em today funding our deals. And of course, nobody’s gotta have 47, start with 1 or 2, but it has had the biggest impact on my business of any strategy. I mean, when I was cut off from the banks all the way back in 2009, and the banks weren’t lending money,y and all those foreclosures were coming along. Our business actually tripled in the first 12 months we started using private money. And I ended up with a good problem very, very quickly. I couldn’t use all the private money that was chasing me.
Jay Conner [00:02:30]:
And, so, well, that’s one thing that I talk about all the time, which is how we get all this private money without ever asking for a mortgage, without ever applying for a mortgage. No chasing, no begging, no selling, no persuading. Yeah, I’m excited to be here.
Tim Hubbard [00:02:46]:
Yeah, I’m glad to have you, Jay. And, uh, private money is in fact something that I’ve used a couple of times in my personal real estate portfolio. So, why don’t we, before maybe we get into a little bit of your background, why don’t we just define for the audience what exactly private money is and how it differs from some traditional methods?
Jay Conner [00:03:05]:
Yeah, so with private money, first of all, what it is— what it is not. So private money is— I’m not talking about any kind of institutional money. I’m not— or institutional funding. I’m not talking about going to the bank. I’m not talking about hard lenders. A lot of people use that word synonymously with private money, hard money. They’re not the same thing. Most of the time, a hard money lender is a broker or a brokerage that has gone out and raised private money from individual investors to invest in their fund.
Jay Conner [00:03:44]:
And then the hard money lender turns around and loans that money out to real estate investors from their fund. What this world of private money is all about is going straight to the source, going straight to the individual. So, a private lender is a human being, an individual, just like you or me, who is interested in real estate, but they want to be totally passive. They don’t want to go find deals, negotiate deals, oversee deals, manage properties, and all that stuff. They just want to sit back and get nice rates of return safely and securely. So simply put, a private lender is a person that loans money from either their investment capital and/or their retirement funds to us, the, the, uh, real estate entrepreneur. And the reason I say retirement funds is that’s really important because of our 47 private lenders, over half of them are using retirement funds, either a 401(k) they already had or a pension, any kind of dedicated retirement funds. And they move those at my direction.
Jay Conner [00:04:53]:
They move those retirement funds to a self-directed IRA company, also known as a third-party custodian. And now they can lend those retirement funds out on our deals. And they earn tax-deferred or tax-free income depending on the type of retirement fund they’ve got. So that’s the first actionable item. If you are a real estate investor wanting to get more funding very quickly for your deals, you want to establish a relationship with a self-directed IRA company that you can then refer people to when you talk to them, and you learn they have retirement funds and they can move them over. But don’t be confused. It’s not only retirement funds. It can be just liquid investment capital as well that the private lender uses.
Tim Hubbard [00:05:37]:
Yeah, uh, I’m excited today because this is really timely advice, right? Obviously, interest rates have pretty much doubled, which means if we go the traditional routes with banks, which a lot of us are used to working with, our cost to borrow money is much, much higher, uh, and that doesn’t leave us with a whole lot of options. And so Private money can be a great, great option. Jay, how did you— I guess you mentioned in 2008, 2009, it was kind of difficult to get in. Can you give us a little bit more of the backstory?
Jay Conner [00:06:09]:
Sure, absolutely. And you know, you just said something important. I mean, as of today, with us being here, Tim, the federal government has raised interest rates 22 times in the last 11 months. Can you believe? And in this world of private money, I haven’t raised— I have— I’m not spending any more on interest than I was even before COVID. And the reason is, and there’s the big difference right there between hard money and private money, is that with private money, we make the rules. You know, the traditional way to borrow money is you go to the bank, you go to the hard money lender, you go to an institutional lender, you get on your hands and knees, you put your hands underneath your chin, you say, please fund my deal. Right? And verification of income, credit score, and all that. In this world of private money that I’m talking about, there is no asking, begging, or chasing. There’s no— you’re already approved.
Jay Conner [00:07:04]:
Yeah. Your credit score has nothing to do with it. And so here’s the big difference. Instead of asking for a mortgage, you are offering a mortgage, right? And so, how did I get started in this world? Well, I can tell you, Tim, I just didn’t wake up one morning and say, ” Hey, I think I’ll go raise me some private money. You know, growth— personal growth, financial growth, uh, entrepreneurial growth— the growth takes place in the valley. Typically, when there’s a problem that has come along, you have to fix your problem, and therefore you grow in your business or personally, or all the above. Well, I remember it like it was yesterday, Tim, is the— how I got into this. You know, you may find it hard to believe, Tim, but we actually still have handsets here in North Carolina with cords attached to them.
Jay Conner [00:07:53]:
You know, a lot of people I know don’t even know what that is. But anyway, I was—
Tim Hubbard [00:07:57]:
For those catching the video, Jay just showed a real phone, not a cell phone, a real phone. Thanks for that, Jay.
Jay Conner [00:08:05]:
You got it. And so I was sitting here at my desk, and I had two houses under contract that I wanted to buy. And I had been using the same banker, the same bank, from 2003 until 2009, my first 6 years. Uh, and that’s, and that’s all I knew to do was go to the bank, borrow money for my real estate deals. That’s all I knew to do. And so I picked up the phone, and I called my banker. I learned very quickly from that conversation— and that was January 2009. I called up my banker, and I learned very, very quickly that my line of credit had been shut down with no notice to me, and that they’re not loaning money out.
Jay Conner [00:08:43]:
And my banker’s name was Steve. I said, Steve, why are you shutting me down? By the way, these two houses I had under contract represented over $100,000 in potential profit. And I said, Steve, I got a great credit score. I’ve never been late on my payments in 6 years. Why have you closed my line of credit? He said, Jay, don’t you know there’s a global financial crisis going on right now? I said no, but now I have a financial crisis because I don’t have any way to fund these deals, and you’ve cut me off. And so I hung up the phone. And I sat here for a moment. And by the way, Tim, these people that are running around saying, oh, every opportunity is an— I mean, every problem’s an opportunity.
Jay Conner [00:09:22]:
I want to throw up. I didn’t have an opportunity. I had a problem, right? I didn’t have— how am I gonna fund these deals? So I sat her,e and here’s another actionable item. Whenever you have a problem, here’s what I do. I ask myself the question, who can help me with my problem? Who can help me with my problem? Well, immediately I thought of Jeff Blankenship, a good friend of ours who lives in Greensboro, or did live in Greensboro, North Carolina at the time. I called up Jeff and told him what happened. He said, ” Well, welcome to the club. I said, ” What club? He said, the club of getting cut off from the banks.
Jay Conner [00:09:58]:
He said they cut me off last week. I said, ” Well, how are you funding your deals? He said, ” Have you ever heard of private money? I said, no. He said, ” Have you ever heard of self-directed IRAs? I said, no. Well, I put on my research cap, and I learned all about private money very, very quickly. So one of the first things I had to do was to put my program together, my private lending program. And after putting my program together, I had to put on my teacher hat right here. I had to put on my private money teacher hat, and then I just started teaching people, not selling, not begging, not talking— trying to talk anybody into anything. I started teaching people that I go to church with, that I know in my cell phone, at the Rotary Club, and at Business Networking International.
Jay Conner [00:10:45]:
I just started teaching people what private money is and how they can earn high rates of return, safe and secure. And so I started teaching my program. So, you know, what interest rate am I paying? What’s the length of the note? Frequency of payments? How can you get your money back in less than 90 days if you have an emergency, etc? So I just started teaching people. Now here’s another writer downer. Desperation has got a smell to it. And the worst time you can be looking to raise private money is when you need it for a deal. So I did not tell any of my people that I was teaching about private money for those two deals that I had under contract.
Jay Conner [00:11:23]:
Because if I taught them my program and told them about the two deals, now I’m pitching a deal. Now I’m asking, and I’m coming across desperate,e and I’m not even trying to sound desperate. So I separated the conversations of teaching the program and then having a deal for them to fund. So I remember like it was yesterday, Tim, I, I went to Bible study on Wednesday night at 7:30, and there was a gentleman there that I wanted to talk to. And so I walked up to him,m and I said, ” Hey, could we visit, uh, for a few minutes after Bible study? He said, ” Sure. So we got together,r and here’s exactly what I said to him. His name was Wayne. I said, Wayne, I need your help. So here’s a little bit of scripting.
Jay Conner [00:12:07]:
This is called the indirect method of attracting private money. I said, Wayne, I need your help. I said, I’ve now opened up my real estate investing business to people I know and trust. And when you run across somebody who is complaining about the low interest rates and CDs and the volatility in the stock market, and losing money in the stock market, would you refer them to me, and I’ll tell them about my program? Well, what do you think Wayne said to me? He said, ” Well, now, Brother J, what you got going on there? Well, by the end of that conversation, he had become my first private lender because I asked him for his help to spread the word. Now he’s asking me, ” How does it work? I went to his house the next day, sat down with him and his wife, and $250,000— and, you know, an hour later I got $250,000 burning a hole in my pocket. From him saying, ” Well, look, we’ll start with $250,000. And, uh, so I didn’t tell him about the deal. So I let 2 or 3 days go by, and I called him up, and I gave what’s called the good news phone call.
Jay Conner [00:13:05]:
I called up Wayne. I said, Wayne, I got good news. I can now put your money to work. I got a deal under contract over in Newport with an after-repaired value of $200,000. The funding requires $150,000. I know he’s got $150,000 because he told me he got $250,000. I said the funding requires 150, and, um, the, uh, the closing is next Thursday. So you’ll need to have your funds wired to our real estate attorney by next Wednesday.
Jay Conner [00:13:33]:
And I’ll have my attorney email you the wiring instructions. You notice how I didn’t ask him if he wanted to fund the deal. That’s the most stupid question in the world. I’ve got to ask. Of course, he wants to fund the deal because he’s been waiting for the phone call. For me to put his money to work. And I’ll tell you another thing real quick. I’ll turn it back to you, Tim. And I’ll tell you another thing.
Jay Conner [00:13:53]:
If you— like, if Wayne had had retirement funds and I had introduced him to the company that I recommend to all my private lenders to move their retirement funds to, if I had had him move funds over, now I am ethically bound to put that money to work because they’ve moved the retirement funds over waiting for me to put it to work and they’re not earning any money. Until I give them the good news phone call once they’ve moved those retirement funds over. So, again, it’s all— I had to get my mind wrapped around this, this whole thing of there’s no asking, begging, chasing, persuading, or selling. It’s all about teaching, edifying, serving these people, and making a difference in their financial future.
Tim Hubbard [00:14:37]:
Gosh, Jay, that’s so many nuggets there. I mean, it’s clear that you’ve been doing this for a while, and you’re a fabulous educator. Um, and I love that idea. Teaching people about this now, when we don’t actually need the money. And again, I think this is super timely advice because there are a lot of people out there who are thinking interest rates are really high, but when they come down, boom, I’m gonna pull the trigger. But that doesn’t necessarily mean that the banks are gonna be lending easily, you know, even because interest rates come down. So I love that advice about teaching and educating people right now. I’ve got quite a few things I want to jump into.
Tim Hubbard [00:15:16]:
One is about the actual structures. And, uh, as you said, this is up to us, right? So it’s very flexible. A lot of our listeners on the show, um, were buy-and-hold, the long-term rental investors, you know, with a focus on short-term rentals, hence our show name. Um, but before we get into that, uh, I know there’s also a lot of our audience out there that are thinking, gosh, this all sounds fantastic, Jay, but I haven’t gotten started. I haven’t gotten started with real estate yet, and I don’t have any experience. What would you say to some of those people starting down this road of educating people, and hoping to have some private lenders lined up?
Jay Conner [00:15:59]:
Well, first of all, don’t start by yourself as I did. Big mistake. I was in the mobile home manufactured housing business for a long time, and the, uh, consumer finance for that product virtually went away. That’s why I started this in 2003. So I just used my experience and my knowledge from that industry, but I can tell you it is not directly transferable. So my advice, if you’re brand new looking to do your first deal, you need to get someone like Tim to work with you on, on, you know, that’s already knows where the minefields are. And I mean, when I started, oh, Tim, I hate to even think about all the stupid mistakes I made or ignorant mistakes I made because I didn’t know any better. All right.
Jay Conner [00:16:48]:
So the first thing is to get a coach, get a mentor like Tim. But in addition to that, one, one, um, common fear that I hear from new real estate investors is, are two things they say. They say, first of all, um, I’m not comfortable asking anybody for money. Well, we already fixed that. You’re not asking anybody for money. You’re not asking anybody for money. You’re teaching, you’re teaching, you know, what you know, you’re teaching them about how they can earn high rates of return. Safely and securely.
Jay Conner [00:17:26]:
So you teach the program. And by the way, I’ve got a book that I’m gonna offer, uh, everyone here on the show when we get here to the end that will teach you the program right in the book. What’s the interest rate? What’s the, you know, the length of the note, et cetera. Uh, and, and, you know, just, just duplicate my program. Another, another fear that I hear new real estate investors say, Tim, is who’s going to loan me money? On a deal, a nd I’ve never done a deal? Who’s— why would they do that? And here’s the answer. So here’s another writer downer. The answer is: if you, the borrower or real estate investor, don’t pay your private lender, the property does. If you don’t pay ’em, the property does.
Jay Conner [00:18:13]:
So what does that mean? What that means is, we’re— we don’t ever borrow unsecured funds. You can legally, you can just get a promissory note drawn up, but look, you’re not protecting your private lender. So we borrow secured funds,s and then what do we do? We’re going to give the lender, the private lender or private lenders, you can have more than one private lender, uh, funding the same deal. We’re gonna give them their own promissory note and their own mortgage or deed of trust. Here in North Carolina and about 10 other states, it’s a deed of trust, all the same thing. What that mortgage or deed of trust does is it collateralizes that note. So those— these promissory notes, this money we’re borrowing is backed by the real estate that we’re buying. So we typically don’t borrow more than 75% of the after-repaired value.
Jay Conner [00:19:05]:
I didn’t say anything about the purchase price. I did not say the purchase price of the after-repaired value. So typically, you’re gonna be able to bring home a check when you buy. That’s one beautiful thing I love about this private money. Every private money deal is a no-down-payment deal. And some people say, well, Jay, how in the world can you get private money and not have any skin in the game? I can tell you what the skin in the game is. The skin in the game is the equity cushion that’s protecting your private lender. That’s the difference between the after-repaired value and the borrowed amount.
Jay Conner [00:19:36]:
So it’s a very con— it’s a conservative loan-to-value. Everybody is protected. And again, I mean, you’re changing these people, these people’s lives. It’s win-win-win all around. Mm-hmm.
Tim Hubbard [00:19:50]:
I love that.
Jay Conner [00:19:50]:
I love that.
Tim Hubbard [00:19:51]:
And I love real estate. I mean, and one of the reasons I love it is because it is so flexible. It’s one of, you know, the unique investments where we can work with other people, as you mentioned. So, we can’t do that with stocks, right? If we go to buy a stock, we’re not sharing that with someone. We’re not creating a partnership. With lots of traditional investment opportunities, it’s kind of like you and you alone. But with real estate, we can find someone who has the experience already. Maybe we have some family or friends or acquaintances that want investor money, or maybe we’re at least open to asking them.
Tim Hubbard [00:20:27]:
And then we also have another friend who has all the real estate experience, and we can kind of put that all together, can’t we?
Jay Conner [00:20:33]:
Absolutely, absolutely. Nothing wrong with leveraging your relationships.
Tim Hubbard [00:20:38]:
Yeah, awesome. So, Well, Jay, yeah, a lot of us in the audience are buy-and-hold long-term investors. So, whereas we might not be going down the flip approach, we certainly can be adding value to a property, maybe taking a property that was a traditional long-term rental, furnishing it,t and turning it into a short-term rental. That’s been a really good approach for a lot of us, assuming the regulations allow for it. So let’s talk a little bit about some potential structures. And I know, as you said, I mean, private money, there are no rules, right? It’s kind of what you create with the person lending the money. So what advice might you have for some potential structures for someone maybe wanting to look for a little longer-term private lender?
Jay Conner [00:21:26]:
Sure. So there are a couple of different ways to approach it. First of all, we’re not— we’re not creating and putting together private equity deals. In other words, we’re not giving a partial ownership or a percentage of your profit or whatever to the private lender. So here’s another writer downer. The private lender is the bank. So just view the private lender as the bank. You own the property, your entity, whatever entity structure that you’re buying in your— be sure you don’t put it in your personal name for goodness ‘ sake, but whatever your entity structure is, your entity owns that property.
Jay Conner [00:22:05]:
Private lenders are gonna get the same protection as the local bank. Well, what’s that protection? Well, of course, the promissory note we talked about, the deed of trust we talked about, but we’re also gonna name the private lender on your insurance policy, just like the bank. Remember, the private lender is the bank. You’re gonna name them on the insurance policy as the mortgagee. So if there’s a claim against your insurance policy, then your lender is protected in that way. You know, mortgagees, when a check is made payable by the insurance company. Typically, they make that check payable to your entity, the ownership, and to the mortgagee as well. So they have to sign off on those checks, another layer of protection.
Jay Conner [00:22:45]:
We name the private lender also as, uh, an additional insured on the title policy. So if there are any kind of title issues down the road, then they are protected. As far as the structuring of the deal, as I said, they’re gonna get a mortgage, um, and we’re going to pay. You’ve got a couple of different options. I, since most of what I do, and I do have short-term rentals myself. In fact, I am now converting my grandparents’ home, which is in the country. I’m converting that to a short-term rental as well. And it’s got the original beadboard ceilings and the original pinewood floors built in 1927. And anyway, I’m having a, in fact, I talked to my contractor this morning.
Jay Conner [00:23:26]:
I’m having a great time converting that to a, um, to a short-term rental. But anyway, on my flips, and this is not a flip, that house I was just talking about, but on my flips, I’m typically, um, if I’m gonna be in and out of a deal in 6 months or 9 months, then you don’t even have to make monthly payments. Just let the interest accrue, right? Talk about fixing your cash flow. You buy a property, you bring home a big check because you borrow more than you need to buy it and rehab it if rehab’s involved. I bring him a big check, and then I don’t make any payments to the private lender until, you know, I cash out 6 or 9 months down the road. That’s a different deal here now where we’re talking about short-term rentals, cuz you’re staying in that deal, um, you know, for quite a while. So you can either— and, and let the math make the decision. There’s another writer downer.
Jay Conner [00:24:15]:
The math makes the decision, not your emotions. So you can, you can pay interest-only payments. If your cash flow, if your cash flow makes sense. So for a flip, I’m paying 8% and no points. 8% and no points. It’s been the same program since 2009, and I haven’t raised it since craziness has been going on in the last few years. But now on a long-term basis, to where you’re gonna be holding that property, then, you know, depending on what, how much monthly income, uh, you know, take out your vacancy and all that kind of stuff. Tim can teach you those percentages, but be— look, what’s your conservative cash flow looking like or revenue coming in? So, you know, on the long-term hold, you may only be offering, you know, 6 or 7% for the long term, right? Now, I believe, and I do not have a crystal ball, but I have some very, very smart friends who do have crystal balls.
Jay Conner [00:25:15]:
I think we’re gonna see a reduction in mortgage rates within the next 12 months. Probably significantly for several reasons. But you can structure it at 6 or 7%, right? I mean, I’ve— I have sold a lot of homes on rent-to-own, and I was paying out 8%. And of course, rents have gone crazy. As you know, Tim, rents have gone crazy, like in recent times. So it comes down to the cash flow. Now, if you can buy a property and get it to cash flow, uh, you can pay principal and interest, right? Particularly if you could pay that thing off in 10 or 15 years, if you can get it to cash flow, then you can pay principal and interest payments, right? Another way to approach it, you know, so often when you’re buying a property, speed is king. Fast closings are important, right? To a particularly motivated seller.
Jay Conner [00:26:14]:
And by the way, some of my best deals I’ve just recently bought are from tired landlords. I don’t know what’s going on with the tired landlords, but they seem to be everywhere, and they’re getting more tired by the day. Anyway, um, you can, you can use private money to close quickly. See, I make all my offers, and I can close in 7 days. Well, the bank can’t close in 7 days. I mean, in this world of private money, there are no appraisals. You don’t have to wait for appraisals. You know, you can close very, very quickly.
Jay Conner [00:26:43]:
So, what you can do is you could use private money to close quickly. And then if you’re gonna fix it up, furnish it, whatever, use that private money for that in the short term, maybe for 6 months or whatever, then you can go conventional, and you can refinance it for a 30-year, you know, amortized or whatever you want, pay off your private lender. Now you’ve got that private money sitting there waiting to get the next deal that you can close quickly. Because I tell you, I’ll get deals and my offers accepted at a lower price. In fact, I got one right now. Competition offered $135,000, but they can’t close for 2 months. I’m buying it for $100,000 because I’m closing in 7 days. So use private money for a fast closing, and then just refinance it out with your conventional lending.
Tim Hubbard [00:27:34]:
Yeah, that’s great advice. Uh, and it’s just my mind spinning here because it really is like sky’s the limit. I mean, with private lending, right, we can set up our loans however we want. And I was thinking of something when you were going through all that, Jay, in terms of closing quickly. And also, you mentioned there are a lot of tired landlords. I mean, the reality is that a lot of our baby boomer generation, which is the second biggest demographic in the US, are retiring, you know, and they’re, they’re at those ages. A lot of them own their properties outright, so they don’t have any loans on them, but a lot of them want to sell them. So there could even be some sort of mix going on here where the owner is providing seller financing, but they still want their down payment.
Tim Hubbard [00:28:18]:
Maybe it’s 25%. We could use private lending, for example, to get that down payment. So again, it’s not coming out of our pocket. The owners are selling their property. They’re happy campers because they got— they’re getting out of a deal in a time where it’s not as easy to sell. So there’s just— gosh, there are so many ways to do it, aren’t there?
Jay Conner [00:28:37]:
Absolutely. And I’m glad you brought that up. I mean, the seller could care— I mean, uh, one question we ask our sellers, tired landlords, is what’s more important to you, cash today or long-term monthly income? And you know, a lot of those tired landlords, I mean, they will, you know, they’ll finance it for you and take back a note. But of course, most of them are still gonna want the down payment. So I’m glad you brought that up to them. You can use private money. In what we call the second position, or a junior lien position. But, but here’s the formula.
Jay Conner [00:29:10]:
You still want to protect your private lender. You want to, you know, protect the landlord in this example, that’s, you know, has got a first mortgage. So again, typically, depending on the scope of the rehab, if rehab is involved, and most of the time you want— if you’re getting a short-term rental ready to go, Tim, I probably— you probably do advise you want it to be looking good and smelling good.
Tim Hubbard [00:29:32]:
You want it looking good. That’s right. And smelling good.
Jay Conner [00:29:35]:
Even more important, you can put that private money in second position as the down payment money, uh, as well. So I’m glad you brought that up.
Tim Hubbard [00:29:44]:
Yeah, a lot of, lot of flexibility. I love it. Um, Jay, I know you’ve been teaching on the subject for a long time, so we’re going to let people know where they can reach out to you. Uh, and I’ve got one other question. It’s actually not related to real estate, but before we get into that Any other last nuggets that you might have out there or words of wisdom?
Jay Conner [00:30:05]:
Well, in the real world out there, most real estate transactions that take place, uh, the seller’s gonna require the cash. Most of them are in the real world. And if you don’t have the cash readily available, you’re simply just gonna miss out miss out on deals. If you don’t have it, you know, it’s ready to go. And, by the way, here’s the big— here’s the biggest advice, most important advice I could give as we’re starting to wrap up. But don’t go anywhere, folks, because I’m getting ready to give away my book. Write this down. The money comes first.
Jay Conner [00:30:41]:
Now, what am I saying? Tim, let me tell you something that just drives me bonkers, and I just want to go run headfirst into a wall every time I hear this. But you’ve got educators out there, aka gurus out there, going around, and I’ve heard it, I don’t know how many times, I’ll say, oh, just get the deal under contract, the money will show up because money follows deals. I wanna say, where in the world is the money gonna show up? Is it like gonna rain out of a cloud somewhere or whatever? So I preach,h and I teach, and I practice, get your private money lined up first with one or two private lenders, there are always deals. There are always deals. I mean, you know, I’ve reviewed thousands of property lead sheets, uh, over all these 20 years. And my statistics show, and I’m a pretty good closer, and my acquisitionist has been with me 18 years, my acquisitionist who negotiates with sellers. And my statistics show that 13% of those for sale by owners, Fizbos, 13% will sell creatively, either with owner financing or subject to the existing note,e or any of those other creative financing methods. But 87% of them require all the money.
Jay Conner [00:32:00]:
Get your private money lined up first.
Tim Hubbard [00:32:04]:
Excellent advice. Excellent advice. And I don’t think it could be more timely. Uh, well, Jay, as we wrap up and before we let everyone know where they can, uh, get in touch with you and learn from you. I’ve got a question. So the name of the podcast is Short-Term Rental Riches. So when a lot of people hear that, they think about financial riches, right? But as we know, living a rich life is so much more than that, right? And so I’m just curious if you have any sort of anything that you’ve added in your life recently that’s not financially related that’s helped enrich your life.
Jay Conner [00:32:39]:
Absolutely. I’ve got a really, really good friend. His name is Tom Krol, K-R-O-L. And he shared, not too long ago, a practice that he started some time ago in the past. And his practice is to read 8 pages a day in whatever book you’re interested in. And the reason he advises that and he practices it is that, you know, I love to read, right? I mean, the book— Me too. —That book that changed my life and had the biggest impact way back when I was 24 years old was University of Success by Og Mandino. And I, I read that book, changed my life, um, got my head screwed on right.
Jay Conner [00:33:22]:
But, you know, I would be buying these books, and they’d sit there, a nd I’d never get around to them, right? Even though I wanted to. So 8 pages a day. And what I learned when I started practicing this, reading 8 pages in the morning as part of my morning routine, what I learned was that most of the time I read more than 8 pages, but I’m setting it up as well, I can read 8 pages, particularly in a book that I’m interested in. Well, the average-sized book is 200-some pages. Well, 8 times 30 is 240. So when you read just 8 pages a day in the morning or whenever, well, that’s 12 books that you have, you know, read over the course of the next year. So it’s a simple practice that has a huge impact. And you know what? I love it.
Jay Conner [00:34:11]:
If you’re not constantly learning, you’re going backwards. I
Tim Hubbard [00:34:15]:
love it. That’s gold, Jay. And I agree. I’m a huge reader. The thing that fascinates me about books— well, I’m just a curious person, but someone can dedicate their whole life to one subject and they can boil it down for us in one simple little book that we can read in a couple of weeks or even a month, or even if it took us a year, we’re taking someone’s experience from decades and we get, we get the benefit of that. So, I guess that’s a good segue into the fact that you have a book. Can you tell us about that and where we can find it? Absolutely.
Jay Conner [00:34:54]:
So, the name of the book is Where to Get the Money Now? Where to Get the Money Now, and the subtitle is How and Where to Get Money for Your Real Estate Deals Without Relying on Traditional or Hard Money Lenders. You can’t download it. I mean, believe it or not, the post office is still in business. So I will send this priority mail out to you. The book is free, just cover shipping, and you can pick this up at Jay Conner— by the way, I’m an er, not an or— so www.JayConner.com/Book. I’ll autograph it and we’ll priority mail it right out to you. That’s
Tim Hubbard [00:35:41]:
awesome, Jay. That’s awesome. And you are also a fellow podcaster. Can you tell us the name and where people can find your podcast? Absolutely.
Jay Conner [00:35:50]:
Thank you, Tim. So we’re in our 6th year of the podcast, and the name of the podcast is Raising Private Money with Jay Conner. And I have fantastic guests on there all the time. In fact, Tim, I got you lined up. And we always talk on the show about private money and how my guests have gone about raising private money, what words they use, and how to start conversations. And so wherever you like to tune in on your podcast, whether it’s iTunes or Spotify or wherever, whatever directory you like, your iPhone purple podcast icon, whatever it is, um, easy to find. Just type in and search for Raising Private Money and, uh, with Jay Conner, and that’ll pop right up.
Tim Hubbard [00:36:34]:
It’s fantastic, Jay. Well, I really appreciate you being on today. I mean, words of wisdom, and these are life skills for any serious real estate investor. I mean, it all starts with getting money before we get the properties, right? So I really appreciate you joining us today, uh, and we look forward to, uh,
Jay Conner [00:36:52]:
staying in touch. Thank you so much, Tim. It was great being on. Thank you. I’ve
Tim Hubbard [00:36:57]:
dedicated years figuring out how to manage my personal portfolio remotely, and it wasn’t always easy, and it took a long time, but now my amazing team can professionally manage my properties without me. And good news, our team can also manage yours. Let us save you the stress, headaches, and some money by offering you an industry-low fee. To find out more about partnering with us, head to strriches.com, hit the property management button, answer a couple of quick questions, and meet with me personally. That’s strriches.com. Rest easy knowing that with my team, your properties will be in excellent hands.
Narrator [00:37:34]:
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 7 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.