Guest Appearance
Credits to:
https://www.youtube.com/@yieldcoach
“S02 E37 – Jay Conner – The Big Fish in a Little Pond”
https://www.youtube.com/watch?v=c8SRgpoCfXU&t=46s
When most people imagine real estate investing at scale, they picture bustling cities and high-profile investors closing multi-million-dollar deals in large urban centers. Jay Conner’s story, as revealed in his guest appearance on Ian Brown’s Yield Coach Show, flips this conventional wisdom on its head. Based in a market of just 40,000 people, Jay has built a thriving operation, completing over 475 rehabs and maintaining an impressive average profit of $78,000 per flip—all by leveraging the power of private money.
Building a Real Estate Machine in a Small Market
Jay’s journey began in the housing industry alongside his father, who once owned the country’s largest mobile home retail operation. Witnessing an abrupt end to consumer financing for manufactured homes, Jay transitioned into single-family investing in 2003. Rather than chase larger markets, he decided to master his small local area, demonstrating that significant profits can be earned even far from the big city spotlight.
Initially, Jay started solo. By his own admission, the first year’s three house flips were ambitious for a team of one. Over the years, he scaled up, and today his local operation handles two to three properties monthly—all without the intense competition or wholesale activity common in larger markets. In fact, Jay notes that wholesaling isn’t even present in his area; he’s the go-to buyer.
The Power of Positioning Private Money First
One of the most important shifts in Jay’s approach came during the financial crisis of 2008. When traditional bank financing suddenly collapsed, as it did for so many investors, Jay had to rethink his approach. Instead of relying on banks that could shut down credit lines with a single phone call, he began raising private capital. Within three months, he’d secured more than $2 million by educating local contacts about the returns and security of lending on real estate deals, often via self-directed IRAs.
Rather than approaching private lenders with a sense of desperation or pitching specific deals, Jay positions himself as a teacher. He explains the safety features and returns of private lending, building trust and credibility. Prospective lenders learn about the process, and when they’re ready, they’re excited to lend—often reaching out proactively to fund deals. This mindset shift—from asking for money to offering an investment opportunity—has been foundational to his success.
Jay now works with 47 private lenders, who collectively provide about $8.5 million in funding for his deals. Private loans typically come in at 8% interest for first-position liens and 10% for subordinate liens. Regular people—retirees, acquaintances, friends from church, and family—make up this lender base. Many had never even heard of private lending or self-directed IRAs before Jay introduced these concepts.
Automation and Smart Deal Flow
Jay’s streamlined operation is built on proactive, automated marketing and systematic deal flow. His company deploys multiple Google and Facebook pay-per-click campaigns using third-party vendors. By running three separate campaigns under different names, he maximizes lead generation and dominates the search results for motivated sellers in his local market. Despite paying $150 per Google lead, he needs only seven prospects to secure a purchase, given his acquisition strategy.
Direct mail to pre-probate and foreclosure lists, high-conversion sequences, and direct outreach to new wholesalers round out his marketing mix. Having a quick response system is key to converting leads since speed builds credibility and rapport with distressed sellers.
Flexible Structures for Investors
Jay’s approach to structuring investments is flexible, catering to his lenders’ needs. Some investors prefer monthly income, while others want accrued interest payable on sale. Retirement funds are often paid quarterly or semi-annually through their IRA custodians. Jay prioritizes safety and transparency, always giving lenders a first lien position when appropriate and never borrowing unsecured.
For investors looking to create a repeatable, resilient source of funding in any size market, Jay’s model is instructive. By blending strong local relationships, wide-reaching automated marketing, and a focus on education rather than hard selling, he’s built a machine that adapts through market changes and puts the deal—and the funding—directly in his control.
10 Discussion Questions from this Episode:
- Jay Conner emphasized the advantages of operating in a small market for real estate investing. What are some specific benefits and challenges he mentioned about working in a market with a population of only 40,000?
- Jay Conner shared that his average profit per flip is $78,000 in a small market. How does he achieve such high margins, and what lessons can investors in larger or smaller markets take from his approach?
- The episode discusses the importance of private money in Jay Conner’s business. What strategies does he use to attract private lenders, and why does he believe it’s crucial to “get the money lined up first” before finding deals?
- Ian Brown and Jay Conner touched on marketing techniques like Google Ads, Facebook ads, and direct mail for deal flow. Which strategies seemed most effective, and why?
- What are the key differences between sourcing deals in residential versus commercial real estate, as discussed by Ian Brown? How do their methods of deal sourcing compare?
- Jay Conner insists on serving and educating potential private lenders instead of pitching or begging for money. How might this approach help build trust and long-term business relationships?
- The podcast talks about using self-directed IRAs for private lending. What are the benefits of educating lenders about this option, and how has it helped Jay Conner scale his business?
- Jay Conner shares his approach to deal structure—using cash deals for quick flips and terms for rentals or lease-to-own. How does he decide which strategy to use, and what risks/rewards are associated with each?
- Both speakers discuss the importance of immediate follow-up on prospect leads (“the older, the colder” principle). Why is speed so crucial in responding to leads, and how can investors automate or improve this process?
- What did you find most surprising or inspiring about Jay Conner’s journey—from his early days flipping single-wides to building a business funded by dozens of private lenders?
Fun facts that were revealed in the episode:
- Jay Conner operates a thriving real estate investment business in a small market of just 40,000 people, yet he consistently achieves impressive average profits of $78,000 per house flip.
- Jay Conner funds his deals through 47 private lenders, none of whom had heard of private money or self-directed IRAs until he introduced them to these concepts.
- Jay Conner has automated his lead generation by using multiple Google Ads vendors in his market, cleverly making it appear that several different companies dominate the search results—when in reality, they all lead back to him.
Timestamps:
00:01 Investment Insights with Jay Conner
05:15 Flipping Challenges and Funding Struggles
08:39 Starting Deal Flow Strategies
12:46 Foreclosure Leads & Marketing System
16:49 Foreclosure Timing & Marketing Tips
18:09 Speedy Lead Response Strategy
21:22 Instant Callback Impresses Callers
27:02 Real Estate Deal Instructions
27:33 Private Lending Mindset Explained
33:17 Attracting Private Money Tips
34:55 High Returns, Unique Investment Strategies
38:29 Flexible Lending and Loan Terms
43:03 Strategy and Funding Are Key
Connect With Jay Conner:
Private Money Academy Conference:
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book, Where to Get the Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner
YouTube Channel
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Winning Big in Small Markets with Jay Conner’s Private Money Playbook
Jay Conner [00:00:00]:
So the point of my story is you don’t have to be in a big market, you know, to make big money.
Narrator [00:00:07]:
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.
Ian Brown [00:00:37]:
This is the Yield Coach Show, episode 37. Hey everybody, this is your coach, Ian Brown. Few announcements: Yield Coach Capital has opened its doors to investors looking to multiply their money while working with yours truly and our varsity investment team. We recently closed our 170-acre Gainesville, Florida, industrial tract, and our limited partner investors are on pace to make 2.5 times or more on their money. That opportunity is gone, but don’t miss the next one. Be sure to join our investor list and never miss a deal again. You can join our investor list through the portal, which is in the show notes of this podcast. It’s in our Instagram bio link, and you can also do it at yield-coach.com.
Ian Brown [00:01:25]:
If you join our investor list, we will get you the gift, 107 Questions to Ask a Deal Sponsor, and a discount to our Employee to Entrepreneur video course, which is packed full of information and case studies to kickstart your investment success. Now is your time to take the field. I am your host, Ian Brown. Every episode, we bring you dynamic entrepreneurs, real estate investors, thought leaders, and inspirational guests ready to open up, share their story— the good, the bad, the ugly-so you can learn lessons, gain advantages, and accelerate your own success. I’m very excited about Mr. Jay Conner, our guest today. Jay has 20 years in real estate, and he’s going to bring us a lot of wisdom today. He learned how to buy properties with creative financing, including subject-to, private money, and lease options.
Ian Brown [00:02:16]:
He got through that market crash in ’08. I’m sure we can talk about that a little bit. Developed his own system for gathering millions of dollars for his real estate deals without using traditional banks. In just a few short months of using his systems, he raised over $2 million in private money, and he has the freedom to work less than 10 hours per week in his real estate investing business by leveraging the power of automation. I like all this. Jay, welcome to the show.
Jay Conner [00:02:41]:
Hey, Ian, thank you so much for having me come on to talk about the subject that I’m most passionate about, which has had the biggest impact on my business, and that is private money for sure. Awesome.
Ian Brown [00:02:54]:
Awesome. Well, in 20 years, we probably won’t be able to touch on every facet of your 20-year experience. We’ll tease out some nuggets of wisdom. Let’s— but let’s— I do like to start a little bit earlier in the journey. How did you get into real estate and/or lending? I know there’s been evolution in your path, but take us back a little bit.
Jay Conner [00:03:13]:
Sure. Well, I was actually raised in the housing industry. My dad, at one time in the late 1980s,s had the largest retailing company of manufactured houses or mobile homes in the nation. And all the financing for that product, the consumer finance, went away. So I knew if I ever got out of mobile homes, I wanted to get into single-family houses because friends of ours made $30,000 on a flip, the first one they did back in 1993. And I was trying to make $3,000 on a single wide. For those of the audience who know what a single wide mobile home trailer is, but anyway, so yeah, we started in 2003. In my first year, I only did 3 houses because I just wanted to make sure I understood what I was doing.
Jay Conner [00:04:00]:
And so yeah, those first 6 years we relied on the local bank to fund our deals. That was from 2003 until January of 2009. And then that’s when everything changed, thankfully for the better. I just didn’t know it was for the better while I was going through it.
Ian Brown [00:04:21]:
Right. And when you were doing your single-wide deals, were you, were you acting— where were you making your money? Were you making it by selling them, financing, or were you actually rehabbing single-family?
Jay Conner [00:04:33]:
No, we had retail. Yeah, we had retail sales centers. I didn’t get into rehabbing of anything until 2003, when we started flipping houses.
Ian Brown [00:04:44]:
Awesome. And so that first year you flipped 3, which I actually think that’s, that’s not a bad number. I think the first 7 years ago— so I’ve been in real estate 17 years, but 7 years ago I decided to stick my neck out there. And, um, maybe I watched too much HGTV, but I went out and flipped a house. And, um, it— I mean, we made money, it worked out fine, but it took me every bit of a year. Um, I really liked one buyer. Thank God he bought it. And I 1031’d into an apartment and never went back to single-family.
Ian Brown [00:05:15]:
However, I think people underestimate, um, funding them now has changed a little bit. I do— I know we’re going to talk about funding, but I know when I did it, I didn’t— you know, 7 years ago, it didn’t seem like there was like a plethora of options. I wasn’t sure how to fund the rehab, so I ended up doing the rehab on Home Depot, Lumber Liquidators, and Lowe’s credit cards. Um, not the— I mean, not the way to do it, um, but I didn’t know any better. And so it took a long time. I didn’t know it had septic, so I had to put in a new septic field. Uh, the inspector missed some foundation issues, so I had to put in this 16-foot metal beam to get the foundation right. But it’s not all about my flip.
Ian Brown [00:05:52]:
My point is, you know, you’re doing 3 in your first year without a big team, I presume, that actually sounds pretty ambitious.
Jay Conner [00:06:01]:
Yeah, I had no team.
Ian Brown [00:06:03]:
Army of one.
Jay Conner [00:06:05]:
I was the team. But anyway, yeah, we got a team today, I promise you. I mean, you know, and we live here in a really, really small area. Our total population that I focus on and invest in houses is only 40,000 people. Well, that first year I did 3. Today we do 2 to 3 a month here, just in our local area— we’ve rehabbed about 475 houses now to date. But here’s the deal. Even in this small market, when someone knows how to buy them right and how to find them and buy them at the discounted prices, my average profit right now per flip is $78,000.
Jay Conner [00:06:51]:
$78,000. That’s with a median price of about $325,000 after repair value. But the only way that works is for me to have all the cash available. I have 47 private lenders right now funding our deals, and those private lenders have anywhere from $25,000 to $750,000 each to fund our deals. We got about $8.5 million. And so we just churn the money, you know, from all the different projects that are going on. But the point of my story is you don’t have to be in a big market, you know, to make big money.
Ian Brown [00:07:28]:
Hmm. I think that’s a really good takeaway. I think a lot of people are in a small market and think they can’t get started, or maybe they’re in a big market, you know, Chicago, New York, San Francisco, LA, Miami, even Tampa now in Florida. So, you know, you’re like, well, I can’t find a deal in my, in my local big market. And here you are in a tertiary market, maybe a subtertiary market, cleaning house. Those are really good margins. And, I think any house flipper would be happy to do that, certainly at scale. That’s awesome.
Jay Conner [00:07:58]:
Absolutely. Well, and I think, you know, being in a smaller market brings you a lot of advantages. I mean, you can dominate your market. Right. I’ve been dominating this market, you know, since 2003. That doesn’t mean there aren’t other real estate investors around, but it’s not like being in some big city where, you know, you’re competing with, you know, 100 other real estate investors or wholesalers or whoever, you know. You know what’s funny? We don’t even have a wholesaler in this market. We don’t have a wholesaler.
Jay Conner [00:08:30]:
And look, I’ve never wholesaled a house in my life because I ain’t got nobody to wholesale it to.
Ian Brown [00:08:35]:
That’s funny. Yeah. You’re the guy.
Jay Conner [00:08:38]:
That’s right.
Ian Brown [00:08:39]:
You can’t wholesale to yourself. That’s funny. Well, a lot of people talk about it just to say it super, super plainly, you’ve got to have deals and money. And, you know, you know, you’re the private money authority. So I know we’re going to— I know we’re going to unpack that a little bit more on the deal side. You know, part of it’s chicken or the egg. You know, it doesn’t do you a lot of good to have deals without ways to fund them or close them. But how are you going about dominating your market? I mean, now you have momentum and reputation, but when you break into a new market for the audience, do you have any tips on getting your deal flow going? Some actionable items?
Jay Conner [00:09:16]:
Absolutely. So you just, you know, you just brought up an interesting point, and I’ll answer your question with some specifics as to how we actually have consistent deal flow coming in every day. But, you know, the chicken or the egg, which comes first, the deal or the money? Now, Ian, I’m getting ready to say something that I know you’ve heard 100 other people say. And I’m sorry, I think it’s the most stupid advice I’ve ever heard in my life. And here’s what I’ve heard. Get the deal under contract. The money will show up. The money follows the deals.
Jay Conner [00:09:48]:
You’ve heard it, right? Oh, yeah. And I want to go, where is the money going to show up from? Is it just like going to come out of the clouds or something? You know, so there’s always going to be deals. There’s always going to be deals. So I say get the money lined up first. Now I’m talking about single-family houses. You know, you’re doing syndication. I just heard you talk in the intro about a large, you know, cap fund that you were raising for a commercial deal. That’s, that’s a, that’s a different conversation.
Jay Conner [00:10:15]:
Yes, you’ve got a large project there that you’re raising money for that particular project. But in the world of single-family houses, I say get the money lined up first, get $250,000, get $500,000 from a private lender or a few private lenders that say, ” Hey, I love your program, I love what you’re offering, what you’re paying. You know, the traditional way to borrow money is— I’m talking about on a single-family house. You go to the bank, you get on your hands and knees, and you put your hand underneath your chin. You say, please fund my deal. Please fund my deal. Not in this world that I’m talking about. We’re not asking for a mortgage.
Jay Conner [00:10:53]:
We’re offering a mortgage. You know what’s funny, Ian? I’ve never asked anybody for money. And they say, Jay, how do you have $8.5 million? How are you getting these deals funded? And you never ask anybody for money. The answer is very simple. I put on my teacher hat, and I start teaching people what private money is, what self-directed IRAs are, how they can get tax-deferred or tax-free income on their retirement funds by using a self-directed IRA company, etc. So I put on my teacher hat,t and then now the money is chasing me instead of me chasing the money. Now, let me answer your question. How do we have the deal flow coming in consistently? Well, here’s how I dominate the market.
Jay Conner [00:11:32]:
Number 1, pay-per-click, Google Ads pay-per-click. So I’ve got 3 different vendors, 3 different done-for-you services that run Google Ads for me right here in my market. And look, it looks like I’m competing with myself, but I’m all 3 guys under 3 different names, right? So when somebody says buy my house or sell my house fast, well, the top 3 that come up on the page, they’re all me.
Ian Brown [00:12:03]:
I love it.
Jay Conner [00:12:05]:
Right. So, Google Ads right now, each of those leads costs me $150. But who cares? All I need is 7 leads to buy a house, right? So we got Google Ad leads. Secondly, we have Facebook ads. I have paid for Facebook ads, not Facebook posts, but paid sponsored Facebook ads. So I have two different kinds of Facebook ads running every day in my market. I’ve got a done-for-you service that I hire to do that for me. Now, Facebook ads, I get more of those, but those are not as qualified because, you know, those ads are just showing up in the newsfeed.
Jay Conner [00:12:46]:
Somebody sees it and says, ” Oh, well, let me see what they’ll give me for my house. So I need 20 of those leads to buy a house, but the cost of those leads are only about $50 apiece for each of those leads. And then, in addition to Google leads and Facebook ads, since 2004, the second year we started investing in single-family houses, my wife Carol Joy and I put together our foreclosure system. And what’s the foreclosure system? We track— there are two parts to it, the tracking and the marketing. We track every open foreclosure file physically at the courthouse from the time of the notice of default, and all the way through the sale. And we have 8 cumulative letters, sequential letters that get over a 50% response rate, which, if anybody knows anything about direct mail, that’s stupid, crazy percentages. But the reason it’s such a high percentage is that my message to the market is a perfect match. So we track every foreclosure, right? And I tell you, that whole process is about serving other people.
Jay Conner [00:13:56]:
I’m not out here looking to take advantage of anybody. I’m looking to bring win-win solutions. And in fact, when these people call up, I mean, they’re in distress. One of the first things we ask them is, do you want to keep your house? Do you want to keep your property? And if they say yes and we give them, you know, some tip or an idea as to how they can keep their houses, a loan modification, deferment program, etc., and they’re able to keep their house, guess what? There’s nothing in that for my team and me. But you know what? It ain’t about reaping. It’s all about sowing. It’s all about serving that other person first. And if I help enough other people, I’m not going to have to worry about my team and me.
Jay Conner [00:14:37]:
Unfortunately, most people cannot qualify, you know, for the loan modification. And guess what? When they tell us they’ll sell it to us for what they owe, we still put thousands of dollars of money in their pocket to help them back on their feet. I mean, for goodness ‘ sake, if I’m going to average $78,000 in profit, can I not help those people out? So, in addition to that, probates, pre-probates, rather, we direct mail all pre-probates in our local market as well. We do other things. I see a new Bandit sign pop up. We call them and say, ” Hey, if you wholesale a deal and you want to get an assignment fee, I’ve got cash burning a hole in my pocket. So we do other things, but those are the main things we do to have consistent deal flow coming in every day, every week.
Ian Brown [00:15:21]:
Jay, I want to stop you for just a second. Thank you. That was actually a lot, and you went ahead and told us how you’re prospecting, which is an area that some people keep under a bushel basket. And, um, I think what’s interesting is And tell me if I’m wrong. I didn’t have you on to, like, you know, coach me through marketing. However, it sounds like I don’t, I don’t do any social media marketing or pay-per-click. A lot of my commercial deals come through being in the same market for 17 years, and I’m a broker, attorney, and appraiser. At the moment, I’m really just a full-time thought leader and investor, but I still keep all those licenses.
Ian Brown [00:15:57]:
So my network is a blend of valuation experts, real estate attorneys, and commercial brokers. So a lot of my stuff just comes through channels that never hit CoStar, LoopNet, CREXi, whatever, just off-market stuff or brokers. Like, I found a great deal. I’m not an investor. I don’t want to just put it out in the market. Can we work on it together? So I’ll get deals like that. But the way you’re— what I like about guys like you and kind of more of the residential model that I think the commercial guys, the commercial guys a lot of times rely on humans to feed them deals. And it— I’m saying it very plainly for the audience, whereas— and that’s the way I, for the most part, am.
Ian Brown [00:16:34]:
I mean, I’ll knock on a stranger’s door, but if I’m not buying residential, there’s not a lot of physical doors I’m knocking on. Um, but with you, like the pay-per-click, the Facebook, the marketing, the probates, the foreclosures— and I think you’re in a deed of trust state, aren’t you?
Jay Conner [00:16:48]:
Um, I am, yeah.
Ian Brown [00:16:49]:
So I’m in a judicial foreclosure state, and so there are pros and cons. That’s not the point of this show. But, you know, your foreclosure— for the audience, the foreclosure process in a deed of trust state is like a micro fraction of the time for foreclosure in a judicial foreclosure state like Florida. I mean, Florida, we were in the last cycle, which has now been a little while, but we had commercial foreclosures exceeding 3 years. So those owners don’t necessarily feel distressed when they aren’t displaced quickly. But anyways, on the marketing side, would it be fair to say if, you know, as a small operation, if I wanted to pay for a session, say a lot, $150, $200, it’s a fair amount of money for a click for the Google ads. If you have a small team that’s not ready to field a lot of calls, but you want maybe more qualified leads, that might be a way to approach it, versus if you start to run higher volume Facebook ads. As you said, it might be that 20 to 1 ratio, but you need to have somebody ready to field 20 20 inquiries.
Ian Brown [00:17:48]:
So if you’re kind of like a skeleton crew commercial syndicator investor type, it sounds like maybe a pay-per-click might be a fit. I’ve always been a fan of very intentional direct marketing. Never tried more of the broad-based marketing on Facebook ads. So I just wanted to get your thoughts on that. If you’re running lean and mean, maybe a pay-per-click at a high, high-ticket amount.
Jay Conner [00:18:09]:
Yeah. Well, you know, you said something very, very important. And that is you want to have somebody on the ready to respond to when a prospect comes in and responds to, you know, one of the, one of the ads on the internet. So, for example, on pay-per-click, the services that I use, when someone gives their information who wants to sell their property, and they hit submit, it immediately calls my assistant. Call the cell phone and send a text and an email. When that call comes in, my assistant can hit 1 on her phone, and it’s calling that person immediately right now. So here’s a marketing principle, Ian, that I’m sure you’re very familiar with, and that is I call it the older, the colder, which means the more time that goes by from when a prospect raises their hand and says, I’m interested in hearing more about what you’ve got. And until the time that somebody is on the phone with them, the less likely you’ll ever do business because an hour or 2 hours from now, they don’t even remember they hit submit on the laptop.
Jay Conner [00:19:21]:
Right. So you want to get them on ASAP. The other piece of advice is, don’t invest money in Google Ads, Facebook, and all that until you have someone who is ready to take those calls immediately. But in addition to that, they know how to take the call. I mean, I’ve seen people waste money on marketing because they’re not prepared. They’re not educated on that closing call, on that initial building rapport call kind of thing. And so, you know, what’s the best way to get good at doing anything is to do a lot of it. So, you know, people that I coach and work with, I tell them, I say, go on Craigslist and go on Zillow and call them for sale by owners that live in another state, and you’re not going to even do business with them and go screw up on them.
Jay Conner [00:20:13]:
Those are free leads and practice negotiating, practice getting your property lead sheets filled out, etc. And then when you have done 100 of those calls, you’re ready to invest money in leads coming in.
Ian Brown [00:20:28]:
Hmm. That is just tremendous advice. And that is actually— there is a way to do that commercially as well. It’s a little more filtering, a little more nuance. But what Jay is talking about, I think, is practicing those scripts, and I wouldn’t, you know, unless you have a coach like Jay or some guidance, it is risky. I’ve done mailers before. I wasn’t a huge volume, but I would— I did mailers in Jax Beach, multifamily of a certain size, absentee owners. And I got some calls back, and I was like, I didn’t really think about when the mailers were going to hit.
Ian Brown [00:20:58]:
And I was about to take a trip, and it’s just me and Sam, the show producer, in the office. And so I was like, oh, and so some of those older ones got colder. And by the time I got to them, you know, they’re like, well, I don’t know why it took you so long to call me back. I just want to know what you can offer on my property. And so it was hard to build the rapport. They were out of the honeymoon phase. So I totally understand what you’re saying, Jay. Yeah.
Jay Conner [00:21:22]:
And, you know, I mean, when those Google ads come in, and you hit on,e, and it dials them right back, most of the time they answer the phone because, you know, if you get a call from an unknown number, you’re not going to answer the phone. But when somebody hits submit and within 20 seconds their phone is ringing, they pick it up, you know, they’re available. They’re sitting right there. You know, either they’re holding their phone in their hand, or they’re on their laptop,p and you know they’re available. So boom, most of those people answer. And I tell you what, they are astonished. They are amazed. I mean, talk about a wow first impression.
Jay Conner [00:22:01]:
I just submitted my information, asking somebody to contact me,e and you’re calling me in 20 seconds. That’s amazing. All right.
Ian Brown [00:22:09]:
Well, in the interest of efficiency, we’ve talked about the prospecting side. You know, it’s a deals and money game, and you have an incredible machine. You shared a lot on the filling of the pipeline deal side. How are we going to take these bad boys down? How are we going to fund them? Jay, what have you evolved to do in your investing career?
Jay Conner [00:22:26]:
Well, I tell you, and let me tell you how I got involved in private money and how it impacted our business more than anything else. Believe it or not, Ian, here in North Carolina, we still have these things called landlines and handsets with cords attached to them, if you can believe it. But anyway, I remember that.
Ian Brown [00:22:44]:
Come from a museum, Jay?
Jay Conner [00:22:45]:
And that was actually— it still works.
Ian Brown [00:22:47]:
Oh, it still works.
Jay Conner [00:22:48]:
We actually still intercom each other here in the office. But anyway, I remember it like it was yesterday. You know, I mentioned earlier here on the show, from 2003 to January 2009, I relied on the local bank. That’s all I knew to do. I’d never heard of hard money lending. I’d never heard of private money. I’d never heard of creative financing. I’d never heard of buying subject to the existing note and all that stuff.
Jay Conner [00:23:14]:
I just thought from my mobile home days, you know, you had to go to the bank and, you know, get your deal funded. So I had a line of credit there, and I had one in January. So I’ve been doing business with this same bank for 6 years. Great, great history, great relationship. And I call up my banker. I had 2 houses under contract. Each of these houses represented over $100,000 in profit. And I called up my banker to tell him about the deals that were under contract and the funding that was required for the deals.
Jay Conner [00:23:48]:
And so I learned very quickly on that phone call that I didn’t have any funding. I didn’t have a line of credit anymore at the bank. And my first thought was, you know, it’d been nice if somebody had picked up one of those handsets and called me and said, sorry, Jay, we gotta close your line of credit. Well, I didn’t know there was a global financial crisis going on. Until now, I have been in a crisis.
Ian Brown [00:24:13]:
Now it’s a crisis.
Jay Conner [00:24:15]:
Now it’s a crisis, right? And so anyway, it’s a pretty funny story as to how this came about, but I won’t take the time to go into it. I’ll just give the bottom line. So I learned in less than 2 weeks about private money, what it is, and I put my program together. Now, in this world of private money, we make the rules. Remember, we’re not asking for a mortgage. We’re offering a mortgage. So I put my program together. What interest rate am I going to pay these private lenders? 8%.
Jay Conner [00:24:44]:
And I still pay them the same thing after all this time, since 2009. 8%. No points, no origination fee. And so I started teaching people, first of all, here in our local market, the people I go to church with, people in the Rotary Club, people in Business Networking International, my connections. I started teaching them my program. And look, here’s a really, really important lesson. Really, really important lesson. Do not teach people about private money and how they can make high rates of return safely and securely.
Jay Conner [00:25:19]:
And in the same initial conversation, tell them about the deal you got under contract that you need funding for. You already sound like you’re begging and chasing the money, and you’re not even trying to, right?
Ian Brown [00:25:30]:
Yeah.
Jay Conner [00:25:31]:
I mean, I’ve never pitched a deal in my life. Now, I’ve never raised large syndication money either, but I’ve never pitched a single-family house that needs funding. Here’s how it works. I get them, I got the money lined up. I got to— I raised $2,150,000 in less than 90 days. And then once someone tells me, I love the program, I mean, let’s say they got retirement funds and they want to transfer those over to a self-directed IRA that I’ve told them about. So that they can loan money out from their retirement money. I mean, they’re either loaning me money from investment capital or and/or retirement funds.
Jay Conner [00:26:08]:
So they’re all set up to go. Now, here’s how I don’t ask if they want to fund the deal. That’s the most stupid question in the world I could ask them, anyway. So they’ve told me how much money they got. So let me do a quick little role play here. Let’s say, Ian, that you’re one of my private lenders and you’ve got $150,000 that you’ve told me that, you know, you want to put to work. You’re happy with the 8%. So I call you up on the phone, have a little chitchat, and I’ll say— and here’s the exact script.
Jay Conner [00:26:36]:
Here is the exact script. I say, Ian, I’ve got great news for you. I can now put your $150,000 to work for you. I have a house under contract in Newport. Notice I didn’t say the physical address. You couldn’t care less. I got a house under contract here in Newport. The after-repaired value is $200,000, and the funding required is $150,000.
Jay Conner [00:27:02]:
See, I don’t borrow more than 75% of the after-repaired value. The funding required is $150,000. Closing is next Wednesday, so you’ll need to have your funds wired to my real estate attorney’s trust account by next Tuesday. I’m going to have my attorney email you the wiring instructions. Now that’s the end of the conversation. You are going to— you’re not going to— I didn’t ask you if you want to do the deal. Now you’re going to think, well, I don’t know, do I want to do the deal? Maybe I don’t want to do the deal. Should I do the deal? Of course,e you want to do the deal.
Jay Conner [00:27:33]:
I’m not bringing you a deal to fund that doesn’t meet the criteria of the program that I’ve already taught you. You’ve been waiting for the phone call, and I particularly introduced you to the self-directed IRA company that I recommend to all my private lenders. If you have moved your retirement funds or a portion of them over to the self-directed IRA company, you’re not earning any money until you put that money to work. And you’re looking to me to put it to work for you. That’s why you moved it over there, right? You’re just— you’re sitting by the phone waiting. How soon can I, you know, start making money on my money? So again, the most important thing up front about private money is the mindset, right? You’re not chasing, you’re not begging, you’re not selling, you’re not persuading. You are offering, and you’re teaching, and you’re serving. And you know, when you take that approach, I mean, just copy my private lending program, which I’ll offer everybody here in a minute.
Jay Conner [00:28:33]:
You know, teach the people. And I’ve never asked them if they, you know, after I teach them the program, Well, do you want to sign up? I just teach them the program and shut up. You know, believe it or not, I know how to shut up. And so I shut up, you know, and then they’re saying to me, well, what do I do? I mean, what do I do, write you a check? No, you don’t write me a check. You just tell me how much you want me to put to work. I’ll put your money to work for you as soon as possible. And then you wire funds to my real estate attorney for closing. You don’t give me any money directly.
Jay Conner [00:29:04]:
But, you know, Ian, I love private money. No credit check, no appraisals. I always bring money home. In the form of a big check when I buy, because I always borrow more than I need to purchase. But that only works if I’m buying at a discount, right? If I’m not going to borrow more than 75% of the after-repaired value, I buy these distressed properties all the time at 30, 40, and 50% of the after-repaired value. So if I’ve got like a $50,000 rehab— excuse me, if I’ve got like a $35,000 rehab, I’ll bring home a $50,000 check. I love my real estate attorney’s check stub. It says excess cash to close. I love me some excess cash.
Jay Conner [00:29:44]:
So I don’t bring in this word of private money. I don’t take any of my own money to the closing table,e and I bring home a big check when I buy. But here’s the catch. These private lenders are counting on you to take care of them. There’s a 5-letter word that starts with a capital T, and that is trust. Even though they get a deed of trust, they get a deed of trust. I mean, I don’t borrow any unsecured money. They’re getting a deed of trust in addition to the promissory note.
Jay Conner [00:30:11]:
They’re named as the mortgagee on the insurance policy, so they’re protected that way. They’re named as an additional insured on the title policy. But these people are looking to you to protect them and take care of them.
Ian Brown [00:30:25]:
Quick nuance question that came to mind. So let’s say you have that guy in your example. He’s ready to direct $150,000 out of his IRA. Do you ever have a challenge sizing people’s commitments to your deals? If you’re doing secured transactions with mortgages, do you ever pool these investors? And if so, would you put them in, like,e maybe an LLC together to then be the mortgagee on a deal? I know that’s a little narrow, but like in my syndication world, a lot of times you’re like sizing debts and sizing commitments. So how does it— how is it going to work in your private lending recorded mortgage world?
Jay Conner [00:30:59]:
Yeah, everything we do is what’s called a one-off. Everything’s a one-off instead of a— so I don’t— I could raise money, I could pull the funds and have them invest in a fund, but everything is one-off. So it’s always— it’s been a juggling act since 2009, right? Most of the time, including today, I’ve got more money than I can put to work, right? Because I’m matching that money up with the collateral. Now I can sell. I’ve got some private lenders who have only got $25,000 with me, you know, some people in their 20s. And so I will put more than one private lender as long as there’s— so then we have total loan to value. You know, let’s say that $200,000 after the repaired value of the house that I just talked about, I can have a private lender in first position at $100,000. I could have a second private lender in the second position at $50,000.
Jay Conner [00:31:53]:
They each have their own promissory notes and their own deeds of trust.
Ian Brown [00:31:58]:
Okay. So it makes total sense to me. So you’ll just have subordinate mortgages, correct? Okay. And they all— do they all get the same rate? I know this is very nuanced. They all get the same rate of return, or do you change rates if it’s— if there’s subordinate financing?
Jay Conner [00:32:12]:
Right. Quite frankly, they would all be happy at 8%.
Ian Brown [00:32:15]:
Okay.
Jay Conner [00:32:15]:
But again, I look after them. First position gets 8%. Any junior lien gets 10%.
Ian Brown [00:32:21]:
Okay. Thanks for sharing that.
Jay Conner [00:32:23]:
And typically, the junior liens— not typically, always— the junior liens are going to be smaller amounts of money, like, you know, $25,000, $30,000, maybe $50,000. And I don’t mind paying 10% on smaller amounts of money, but I don’t want to pay 10% on, you know, $300,000. I’m happy at 8%, and they are too, quite frankly.
Ian Brown [00:32:45]:
So in a perfect world, you have one investor, one property, and you just line it up and go. If you need to start stacking juniors at 10%, then you will.
Jay Conner [00:32:55]:
That’s right.
Ian Brown [00:32:55]:
Okay. You know, you talk about automation. I feel like we got into that a lot early on the marketing side, and it sounds like you have some automation in the private money side, too. So are most of your private lenders, are they just regular old high net worth, or, you know, maybe not? They don’t have to be accredited in your world, but what’s like the profile of, of, of like a private lender for you?
Jay Conner [00:33:17]:
You know, it’s funny, none of them walking around would you think was a private lender. They are regular folks, just like I say, just like us. They’re regular folks. So I’ve got nieces and nephews. I’ve got probably about 10 different people that we go to church with. I’ve got them in different states, right? Friends, you know, across the nation. I’ve got a lot of them— I say a lot of them, probably half, over half of them are retired. By the way, the way you start attracting private money is to make your list, right? I got 5 steps to get private money very, very quickly, and start with the people in your cell phone that are retired, right? There’s a good chance they got retirement funds, and now you can teach them about, you know, self-directed IRAs and, you know, and if you’re going to attract a lot of private money, you want to learn how self-directed IRAs work.
Jay Conner [00:34:18]:
And of course, I got you covered in that as well. But yeah, I mean, these are, these are, these are not like— okay, here’s the answer to your question in a, in a, in a weird kind of way. And these 47 private lenders that we have, not one of them had ever heard of private money until I told them about it. And not one of them had ever heard about self-directed IRAs until I told them about it. So in my world, regular people looking for a higher rate of return, who, you know, are sick and tired of getting a little over 1% in a 12-month CD.
Ian Brown [00:34:55]:
Oh, certainly. And even with today’s high, high— well, increasingly high CD rates, you’re still, you know, double or nearly double outperforming a lot of them. I’m just thinking through just the differences in how we approach, you know, we’re working in different asset classes, and I’m probably pulling from a slightly different, slightly different profile of investor. However, I did it just as an anecdote. I did a deal last year, and it was a 4-unit conversion from office to Airbnb down by the ocean. And that was, that was a single high net worth individual, privately funded deal with a mortgage note and mortgage first position, one lender. I funded rehab, he funded acquisition, and it was a bigger— I mean, it was $650,000. So, I mean, it was a pretty meaningful, pretty meaningful check. And we did, we did a fixed rate interest only.
Ian Brown [00:35:48]:
We wrote it as a 5%, so up to, up to a 5%. I think his preference is probably a 36-month. What’s the typical deal cycle? And if you’re using it for flipping houses, I kind of already have an idea, but can we talk about, like, your exit strategies and deal cycles and kind of what you like to do? I’m thinking you probably don’t hold a lot of these. It sounds like it’s mostly a full disposition fee simple sale.
Jay Conner [00:36:10]:
Yeah, well, I learned a lesson the hard way. In fact, most of my most important lessons I learned the hard way, which means I spent a lot of money that I didn’t intend to. But anyway, so what I used to do is I would— I’d acquire property, a house, and rehab it. Absolutely beautiful. And then I’d list it in the Multiple Listing Service, and I would simultaneously market it for rent-to-own. Now, what’s different about our rent-to-own program is that we actually help people get a mortgage. We force them into credit repair. So about 80% of those rent-to-own cash out.
Jay Conner [00:36:46]:
But those other 20% that didn’t cash out cost me money. I got tired of rehabbing a house more than once, right? So here’s my, here’s my rule of thumb. When I pay all cash with private money, I’m on cash out. I’m not going to leave the money buried in there. Right. But if I buy a house on terms such as with seller financing or I buy subject to the existing note, well, I’m getting mortgage interest rates there that I’m taking over at, you know, 3%, 3.5%, 4%, 4.5%. Well, I don’t want to flip those. I buy it on terms, and then I sell it on rent-to-own.
Jay Conner [00:37:23]:
Right. And most of the time when I buy a house on terms, there’s not a major rehab involved anyway. Right. Much, much, much smaller. So that’s my rule of thumb. Buy with cash, cash out, buy on terms, sell on terms. But my— the term from the private lender, if they’re loaning me investment capital, then I set the— I set the length of the note for 2 years. Right.
Jay Conner [00:37:49]:
So even if I’m flipping a house, you know, there’s no inventory. And I use 3 different general contractors, right, for that I do business with. Well, I may have a house sit there for 3 or 4 or 5 months before they could even start working on it because I got so many projects going, right? So they’ll start on it maybe 3 or 4 months down the road. And then if it’s a major rehab, I mean, I’ve got a rehab I’m finishing right now. Just the rehab’s $200,000. That’s very out of the ordinary. My average rehab now is about $50,000. So by the time they get to it, we get the rehab finished, we get it on the market.
Jay Conner [00:38:29]:
You know, hopefully I’m going to be in and out in less than a year, but I just don’t want to have to go through the hassle of extending a note. So, you know, with the private lender, we just set it for 2 years. And then, quite frankly, if they’re loaning money from their retirement funds after they’ve switched it over to a self-directed IRA, I just set the note for 5 years. Now, one thing that we do is a lot of substitutions of collateral or loan modifications because if somebody is loaning me, like $25,000 or $30,000 for rehab money, well, I’m all the time having a rehab come up. Well, they don’t want their money back. They never want their money back. Right. They want to keep earning their money.
Jay Conner [00:39:11]:
Right. And so on, a large loan, I’ll pay that off. Because it’s got to be collateral. It doesn’t have to be collateralized, but I’m not going to borrow money that is not backed by, you know, that real estate. And so, but the smaller amount of money, $25,000, $30,000, if I’ve got another rehab coming up and there’s plenty of equity in the property, and of course there always is, then instead of paying off that $30,000 small note, I’ll keep their note open and earning them money and we’ll do a substitution of collateral and we’ll just re-collateralize that note. For them.
Ian Brown [00:39:45]:
That makes perfect sense to me. A little nuanced question as well. Are you always— I assume these are interest-only format distributions monthly, or do some of them wait for an accrual and a pop at sale?
Jay Conner [00:39:58]:
Yeah, I let the private lender decide. We’ve got some seniors who are actually relying on the monthly income to live off of. I got one private lender, we paid them $72,000 just last year in interest, so they are paid monthly. But I’ve got other private lenders that, I mean, they just want the return. They don’t need the money to live off of. So we’ll just let the interest accrue, make no payments. And then when we cash out and, you know, 6 or 9 months or whatever, we’ll pay all the principal back along with the accrued interest. And then if they’re loaning us money from their retirement accounts, we’re typically going to pay that either quarterly or semi-annually back to their self-directed IRA company.
Jay Conner [00:40:41]:
Because the returns are not coming directly to them. It’s going to their retirement, to the self-directed IRA company. So in answer to your question, it depends. It depends on the private lender’s objectives and where they’re loaning the money from.
Ian Brown [00:40:54]:
Well, it’s interesting you’re willing to tailor that to the investor. You know, it’s not just a black-letter thing. It’s going to accrue, or you’re going to pay. And the money that I’ve taken, I’ve done it, but private money, not the syndication LP stuff. But I’ve done both, where it just accrued to the payoff, and then I have the one that I just mentioned with the private individual, he expected ACH, not just payments, ACH transfers every month. So yeah.
Jay Conner [00:41:18]:
All right.
Ian Brown [00:41:19]:
Well, I’m going to jump into— I want you to talk about your program.
Jay Conner [00:41:25]:
Sure.
Ian Brown [00:41:25]:
And in the sake of time, so tell us a little bit about it, where can people find it? I know you have a free resource for the audience.
Jay Conner [00:41:33]:
Absolutely. So, a great way to get started in private money, or if you’re a seasoned real estate investor, and you want to get in control of your funding, right, where you’re making the rules. So I’ve written this private money guide, which is called 7 Reasons Why Private Money Will Skyrocket Your Real Estate Business and Help You Build Incredible Wealth. This will get you on the fast track to private money. It’s free. You can download it. And here’s the URL to download this private money guide: www.jayConner.com. And I’m an E-R, not an O-R.
Jay Conner [00:42:08]:
So Jay Conner, www.JayConner.com/MoneyGuide. Again, that’s www.JayConner.com/MoneyGuide. Download it, get on the fast track to private money. Wonderful.
Ian Brown [00:42:25]:
And I do encourage, I do encourage people to do that. There are a lot of different strategies and funding from lease options, subject-to, management contracts, private lending, and syndication, and all these different things. And I’ve talked about a lot of them off and on on the show, and they’re in my online course, but the stuff Jay’s talking about is very powerful. I mean, to be able to, to be able to find deals and know you can close them because we spend so much time as professionals learning to underwrite and identify and market all the stuff we talked about in the first 10, 15 minutes. Well, if you find these deals, it’s worthless. It’s nothing. It’s less than worthless. You’re in the hole now because you spent money on those clicks if you can’t fund it.
Ian Brown [00:43:03]:
So you must have a strategy. If you’re going to take the time to learn how to identify and underwrite and take down assets, you had better spend at least as much time to make sure you know how to fund it. And I tend to agree with Jay. I have a little bit of a deal-first mindset, but I don’t disagree with what you said because I have seen deals nearly slip through my fingers and I’ve seen friends lose deals because they couldn’t, they couldn’t fund them. What ends up happening is the second guy makes all the money or they have to chop themselves down to such a small interest it, you know, wasn’t even— I’ve seen guys begging just to get like a finder’s fee on a deal that they were once going to make, you know, $50,000 to $100,000 on because they just couldn’t fund it themselves.
Jay Conner [00:43:41]:
Absolutely. Absolutely. You know, and another big benefit of private money is that you can close quickly. I get offers accepted with lower offers than, say, a competing offer because I can close in 7 days. 7 days. I’ll buy the house. And let them stay in it. Like, I bought a house last month.
Jay Conner [00:44:01]:
I’m letting them stay in it for free till August. They didn’t want to sell till August. Well, time kills deals, so we locked it up. I bought the house. They’re living rent-free till August. I hope I don’t have trouble getting them out.
Ian Brown [00:44:13]:
Yeah, I don’t know your landlord-tenant laws in North Carolina, but all right. Well, this has been great. Any other resources you want to leave the audience with before I bring it home?
Jay Conner [00:44:25]:
I know. I think that’s good.
Ian Brown [00:44:26]:
Wonderful.
Jay Conner [00:44:26]:
jconner.com/moneyguide. And of course, you can just go to jconner.com and find other resources as well. Awesome.
Ian Brown [00:44:33]:
You’ve been a really— you’ve been a really fun guest. And I love the accent.
Jay Conner [00:44:37]:
Yeah, it’s sort of hard to hide, that’s for sure.
Ian Brown [00:44:41]:
Yeah. I mean, I live in Florida, and there’s like a little accent in North Florida, but nothing like you Carolina boys. I love it.
Jay Conner [00:44:47]:
All right, guys, for having me on. And thank you so much.
Ian Brown [00:44:51]:
Certainly. All right, everybody, this has been a great interview with Jay Conner. Share it with a friend if you enjoyed it. I think there’s a lot of good takeaways, so I really encourage you to take that link, share it with a friend, and give us a rate and review. It makes a huge difference for us in our ability to generate more content. So don’t, don’t be lazy on me. Give me that little rate and review. Write a little, uh, write me up.
Ian Brown [00:45:10]:
If you’re into socials, we’re on Insta, Facebook, and YouTube. You can see this video on Spotify as well these days. Let’s go ahead and call it a wrap. I’m your coach, Ian Brown, signing off and reminding everybody to lace up and leave it all on the field. Field Coach out.
Narrator [00:45:35]:
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.