***Guest Appearance
Credits to:
https://www.youtube.com/watch?v=hQUXwHjkT-0&t=250s
“How to Raise Private Money for Real Estate Deals (w/ Jay Conner) [TJP Ep29].”
https://www.youtube.com/@Thejourneypod/
On a recent episode of the Raising Private Money podcast, real estate investing heavyweight Jay Conner sat down with Leo Young for a wide-ranging discussion about the critical art of raising private money. Their conversation illuminated not just the mechanics of private funding in real estate, but also the mindsets and systems that lead to sustainable, scalable success. Whether you’re a seasoned investor or just getting started, this episode offered a masterclass in funding strategy.
Transforming Obstacles into Opportunity
Jay Conner has built an impressive reputation over two decades, rehabbing over 500 homes and transacting more than $100 million in deals. But his journey took a pivotal turn after the 2008 financial crash, when traditional banks pulled his credit lines, and he was forced to rethink his approach. This adversity led him to discover the power of private money—a strategy that allowed him, within just 90 days, to raise over $2 million in new capital, entirely free from the restrictions and demands of banks or credit.
For Jay, the transition to private money wasn’t just about survival; it became the defining catalyst for his long-term business growth and transformed the way he looked at real estate investing as a whole. He attributes his ability to consistently close deals—never missing out for lack of funds—to building and nurturing relationships with private lenders.
Debunking the Myth: “The Money Will Show Up”
A recurring theme in the conversation was Jay’s frustration with the tired real estate trope that if you lock down a good deal, the money will magically appear. Both Jay and Leo agreed that this advice is not only unhelpful but also sets up new investors for unnecessary stress. Instead, Jay advocates for flipping this narrative: get the capital lined up before you hunt for deals. This approach gives investors confidence, negotiating power, and the ability to make offers rapidly, which is crucial in competitive markets.
There’s more capital available—especially post-2020—than there are viable real estate deals. That means investors who proactively build relationships with private lenders hold a significant edge.
A Mindset Shift: From Borrower to Opportunity Provider
Jay discussed the crucial mental shift he made—and now teaches others—which is moving from a mentality of “asking for a loan” to “offering an opportunity.” For most people, the default is to assume that the person with the money makes all the rules. Jay turned this on its head by taking control: setting terms, acting as his own underwriter, and educating potential private lenders about the benefits and security they receive by investing in his projects.
He views his role as more of a teacher than a beggar or persuader. Most of his 47 private lenders didn’t even know what private lending was until he introduced them to the concept. His approach is methodical and based on service—helping regular people put their “lazy money” (funds sitting idle) to work at attractive, secured returns.
Separation of Offer and Deal
A key nuance in Jay’s approach is the importance of separating the conversation about the general private lending opportunity from discussing specific deals. He recommends educating potential lenders about the overall offering first. Once they’re on board, only then does he bring them individual deals that meet strict criteria—never asking them outright if they want to fund, but presenting the funding of the deal as the “good news” they’ve been waiting for. This method allows him to close with confidence and maintain strong relationships.
Systems and Automation for Scale
Jay’s business isn’t just about hustle; it’s about smart systems. With a lean team, he leverages automation and specialized software (like REI Software) to handle lead intake, communication, and deal management. From the AI-powered assistant that gathers property information to processes that feed leads smoothly to his acquisitions team, Jay has built an operation where the heavy lifting is shared across efficient tools and people.
Never Stop Growing Your Network
Jay outlined three main sources for private lenders: people you already know, referrals from your expanded warm network (including business networking groups like BNI), and existing private lenders found through self-directed IRA networking. For new investors, starting with their own contacts is key, but as you scale, tapping into broader circles becomes essential.
Servant Leadership Drives Results
The essence of Jay’s philosophy is building relationships and leading with value. Instead of chasing money, he positions himself as an educator, helping potential lenders see how they can benefit. This approach doesn’t just work—it opens doors and creates lasting partnerships.
For anyone looking to supercharge their real estate investing and break free from the constraints of traditional financing, the lessons from Jay Conner and Leo Young’s conversation are clear: shift your mindset, build your systems, lead as a teacher, and always have your capital lined up before you make your next move.
10 Discussion Questions from this Episode:
- Jay Conner emphasizes the importance of “lining up the money first” before finding real estate deals. How does this approach differ from the typical advice given to new investors, and what are the practical implications?
- What mindset shift does Jay Conner believe is crucial for successful private money raising, and how does he recommend new investors adopt this mindset?
- Jay Conner mentions that most of his private lenders never heard of private lending or self-directed IRAs before he educated them. What strategies does he use to teach potential lenders about these opportunities?
- How does Jay Conner recommend separating the conversation about the lending opportunity from specific deals, and why does he consider this separation important?
- In the episode, Jay Conner shares a script for the “good news phone call” when offering a deal to a private lender. How does this conversation structure help secure funding, and what key psychological elements are at play?
- Jay Conner talks about providing security to private lenders through asset-backed debt. What protections does he offer to his lenders, and how do these compare to other forms of real estate financing?
- The episode describes the use of automation and AI (Bailey, the AI assistant) in Jay Conner’s business. How does technology enhance efficiency in sourcing, managing, and closing real estate deals?
- Jay Conner divides private lender sources into three categories: people you know, your expanded network (like BNI), and existing private lenders. How should investors approach each of these groups differently?
- What are the potential risks or downsides of using private money for real estate investing, according to the episode? How does Jay Conner address or mitigate these risks?
- Jay Conner stresses not coming from a place of desperation and presenting private lending as a service and opportunity. How does this attitude affect investor-lender relationships, and what can other real estate professionals learn from this approach?
Fun facts that were revealed in the episode:
- Private Money Is Versatile
Jay Conner explains that private money isn’t just for single-family homes—it can be used for multifamily, mobile home parks, and even land deals, provided the structure fits the project’s needs. - He Raised $2 Million in 90 Days—Without Banks.
After the 2008 crash cut off his traditional lines of credit, Jay Conner discovered private money and raised over $2 million within just 90 days without using his credit, banks, or personal guarantees. - Desperation Has a Smell
A key lesson from Jay Conner: when seeking private money, it’s better to offer education about the opportunity rather than pitch both the deal and the money at once—otherwise, “desperation has a smell to it”.
Timestamps:
00:00 Discovering private money for deals
06:28 The pressure of quick investment decisions
07:16 Starting with the right mindset
10:19 Describing investment and lazy money
13:40 Private lending opportunity setup
18:12 Private lenders and loan modifications
22:26 Setting up a fund for investment
24:38 Hiring experts for the job
28:02 Property evaluation and repair budgeting
31:12 Effective strategy for raising money
35:38 Finding private real estate lenders
37:15 Balancing investor and personal goals
40:07 Raising more private money
43:02 Download Jay’s free money guide
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
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From Bank Rejection to Real Estate Success: Jay Conner’s Private Money System
Jay Conner [00:00:00]:
Private money can be used for any kind of real estate. It can be used for multifamily, which is a lot. It can be used for a single-family home. It can be used for mobile home parks. It can be used for land. Right? It’s all the same money. It’s just a matter of how you structure the deal.
Narrator [00:00:23]:
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.
Leo Young [00:00:50]:
For more than 20 years, Jay Conner has been a force in real estate. He’s rehabbed over 500 homes, completed over $100 million in transactions, and averages more than $80,000 in profit per deal. But it wasn’t always that way. After the 2008 crash, his bank cut him off, forcing him to reinvent how he financed deals. What he discovered was private money, and within 90 days, he raised over $2 million without relying on credit, banks, or personal guarantees. Today, he’s known as the private money authority, working less than 10 hours a week while teaching thousands of investors how to raise capital the smart way. Jay, welcome to the podcast.
Jay Conner [00:01:34]:
Leo, thank you so much for inviting me to come along and talk about what I’m so excited about, and that’s private money. The reason I’m so excited about it is because of all the strategies that we use in our real estate investing business, private money has had the biggest impact, has had the biggest change on everything we do in our business. You know, when I started raising private money all the way back in 2009, Leo, I have never missed out on a deal, a real estate deal, for not having the funding very, very quickly to close. And, you know, I know what it feels like. I know what it feels like to miss out on a deal because prior to 2009, I was using lines of credit, you know, from the bank and mortgage companies, and I would have to pass up on deals because I didn’t have the funding. But because of private money, you never miss out on a deal.
Leo Young [00:02:37]:
Wow, that’s really great because financing is always a tough piece of the puzzle to put together, right? I mean, it’s like, like getting together loan packages and, like, raising capital and all that stuff. I, I mean, like, doing many deals myself. I know it’s not easy. So, kudos to you, too. To make that happen.
Jay Conner [00:02:55]:
Wow. You know, what you just said reminded me of this. Leo, I’m gonna take a little risk, okay? I’m gonna take a little risk. I’m gonna ask you a question. I think I know the answer, but we’re getting ready to find out. So let me ask you a question. Have you ever heard the guru on stage teaching real estate investors, you know, real estate investing, single-family houses, whatever, and the goo. And the guru says, just get the deal under contract, the money will show up.
Jay Conner [00:03:34]:
Have you ever heard that?
Leo Young [00:03:35]:
Well, yeah, yeah. They. They say if you have a good deal, the money will come. But that’s so far from the truth because there’s. That’s one piece of the puzzle. First off, like, how do you know if it’s a good deal or not? Right? I mean, chances are if it’s like, if you’re starting, you’re like, who knows? Like, you’re. You’re missing out on a lot of things when it comes to underwriting. And then the second is like, do banks trust you? Where’s your track record? Do investors trust you? Like, what, you know, what.
Leo Young [00:04:00]:
What surety do you have on execution for them?
Jay Conner [00:04:02]:
Right? You know, and in addition to that, the guru may also say sort of what you just said. Money finds good deals, you know, and you. You know, Leo, that’s like. That’s the most stupid thing in the world I’ve heard. Ever heard in my life. It’s like, you know, you get a deal on a contract. And I’ve heard this from so many new real estate investors who followed that advice. They went and found a deal they got under contract.
Jay Conner [00:04:30]:
I mean, just imagine how stressful it is to go and try to find the funding. You got a contract on the deal, and you don’t know where it’s coming from. So I practice. I mean, I mean, what’s going to happen is like a drone going to fly over your house and drop a bag of money on your front porch because you got a deal under contract. Of course not. It just seems, Leo, to make so much more sense to me to get the money lined up first. I teach, I practice, I coach my community. Get the money lined up first.
Jay Conner [00:05:09]:
Look, look, look, there’s always going to be deals. There’s always going to be deals. And the fact of the matter is, there’s more money than there are deals. Really?
Leo Young [00:05:20]:
Definitely.
Jay Conner [00:05:21]:
Before COVID, there was $18 trillion in cash just sitting on the sidelines. Since COVID-2020, there’s 31 trillion sitting on the sidelines. So there’s so much money. And so I focus, I teach, I practice, I coach, and get the money lined up first. And then, I mean, just think about it. How much more confident, how many more offers are you going to make when you have 500,000 or a million dollars burning a hole in your pocket? Of course you are. Of course, you’re going to make more offers, right? So don’t listen to the stupidity, is what I say. Use common sense.
Jay Conner [00:06:15]:
Let’s get the money verbally pledged, ready to go. You got it ready to go in my lands. Go make your offers. I made my seven days, right?
Leo Young [00:06:28]:
Because when you’re looking at a deal, there’s the common saying that commit now, figure it out later. To some extent, that is right. But it does put a lot of pressure on you to figure things out in a short period of time, which may not always work in favor of everyone. Because if you’re thinking from an investor’s perspective, right, if they have like 30 days to make a decision on if they want to invest, that’s, that’s like pressure for no reason. To the extent that you can set people up ahead, tell them what you’re about, the product that you offer, and get them to buy in, then that’s great. Because then you can go to a broker or a bank to let them know, like, hey, these funds are ready to go. I can close on this deal. Brokers want charity of closing, not some guy just running around like his head’s on fire to try to figure this thing out.
Leo Young [00:07:15]:
I’ve definitely been there.
Jay Conner [00:07:16]:
So, yeah, one question that I get, Leo, from real estate investors that are either seasoned or brand new. They’ll say, Jay, how do I start? How do I start raising private money? And my answer is, the first thing you’ve got to do is own the real estate between your ears, meaning get the right mindset. So, you know, 99.99999% of people walking around, when it comes to borrowing money, they think, and I did this as well until 2009, they think that whoever’s got the money to loan is the underwriter. They think whoever’s got the money to loan makes the rules. That’s all we knew. That’s all we know. You go to the bank, you go to the mortgage company, you go to the hard money lender. By the way, private money is not hard money.
Jay Conner [00:08:18]:
Very different. Hard money is typically a broker that has raised private money and then loans it out. And now they make the rules. High interest rates, origination fees, etcetera and so that’s our, that’s our thinking. That’s, that’s all we know. But when I learned about private money, I turned it upside down, and I went the opposite direction. Instead of thinking that whoever’s got the money sets the interest rate, sets the frequency of payments, sets the length of the note, et cetera, guess what? Now we, as the borrower, are our own underwriter instead of applying for a mortgage. Look, if you’re listening to this show, I’ve got great news for you.
Jay Conner [00:09:11]:
You are already approved. There’s no approval process. There’s no application process. What are you doing? You are offering an opportunity. That’s what you’re doing. Instead of someone, you know, instead of someone trying to, you know, match or make the criteria that the lenders make. And you’re just offering an opportunity, right? And so here’s the mindset. Here’s the mindset.
Jay Conner [00:09:42]:
Put on your teacher hat. Think of yourself as a teacher. My teacher hat says private money, teacher. That’s what my hat says. That’s my thinking. You see, I’ve got 47 that are funding my real estate deals. And you know what’s interesting? Not one of them ever heard of private money or private lending until I taught them about it. None of them ever heard about self-directed IRAs, how they could use the retirement funds that they already have, move over to a self-directed IRA company, and then loan that money out to us.
Jay Conner [00:10:19]:
And the interest that I pay them is either tax-deferred or tax-free, depending on the type of retirement fund they have. So there’s no chasing, there’s no begging, there’s no selling, there’s no persuading. It’s all about serving. It’s all about exposing people to the opportunity you have. And another big secret sauce, Leo, is separating conversations between the opportunity and then having a deal for them to fund. You know, if you are talking to, and by the way, all these people are ordinary people. We’re not looking for rich people, we’re just looking for ordinary people who have lazy money. Well, what is lazy money? Lazy money is money that is not working for the owner of that money.
Jay Conner [00:11:14]:
We’re going to pay him a higher rate of return safely and securely. And so separating the conversations is so important. You know, if I were to talk to somebody in my own network and all 47 of these private lenders that I have, I already either knew them or they were referred to me, somebody that they knew. And you know, here’s a quote. Desperation has a smell to it.
Leo Young [00:11:40]:
Sure does.
Jay Conner [00:11:41]:
Desperation has a smell to it. So, I separate the conversation into two parts: here’s the opportunity, and here’s what I pay. I’ve been paying my private lenders 8% ever since 2009. They love it. And you know, I put them on the insurance policies, the mortgagee, we don’t borrow unsecured money. It’s all asset-backed debt. We give them a deed of trust here in North Carolina. Most states call it a mortgage.
Jay Conner [00:12:15]:
And so we take, we share what the opportunity is without having a deal yet for them to do. Because if you talk about the opportunity and the deal, two things are happening. Number one, you’re asking them to make too many decisions. The opportunity and the deal. The second thing is, you already sound desperate without even trying to sound desperate if you’re talking about the opportunity and a deal. So we separate that. Just talk about the opportunity. And then when they love it, and they do say, look, I’ll put your money to work for you just as soon as possible and I’ll let you know.
Jay Conner [00:12:59]:
And then Leo, you know what I do, they love the opportunity. And then I call them up with the good news, a phone call. I want to share with you, Leo, and your audience right now. And then I’m going to hand it back to you. The exact script, exactly what I say, and I get my deals funded 100% of the time, every time, all these years. So here’s the script and here’s the setup. So Leah, so there’s a, there’s a, there’s a couple of assumptions that we need to do. So first of all, let’s assume you and I have known each other for a while.
Jay Conner [00:13:40]:
We like each other, we know each other, we trust each other. Let’s say we, let’s say we go to church together, whatever. And let’s say I’ve shared with you my private lending opportunity. You love the 8% because you’re sick and tired of only making 3% or less at the local bank. And let’s also assume that you’ve got a 401 retirement fund at an employer where you’re no longer there, you’ve left the employer, that 4K is still there, and you’re not liking the returns or the volatility. Let’s also assume I have introduced you to a self-directed IRA company that you can move that one over to with no tax effect, no penalty, and the interest I would pay you is tax deferred. So let’s assume you’ve moved that over. Let’s assume you got $150,000 in that retirement fund and you’ve moved it over.
Jay Conner [00:14:40]:
So that’s happened. That’s, that’s the backdrop. Now here is the good news phone call, exact script. I call you up, we have a little chit chat, and then here’s exactly what I say. Leo, I’ve got great news for you. I can now put your money to work. I’ve got a house in Newport, North Carolina, under contract to purchase for $200,000. That’s the after-repaired value.
Jay Conner [00:15:12]:
Now the funding required for this deal is $150,000, which matches up to what you have at the self-directed IRA company. Now, closing is going to be next Friday. I’ll need you to wire your funds to my real estate attorney’s trust account next Thursday, the day before closing. I’m going to have my real estate attorney email you the wiring instructions. That’s the end of the conversation. Now, the most stupid thing I could say is, Leo, do you want to do the deal? Of course, Leo wants to do the deal. And here are three big reasons why Leo wants to fund my deal. Number one, for goodness ‘ sake, Leo trusted me to move his $150,000 over to the Self-Directed IRA company.
Jay Conner [00:16:07]:
He did that. Number two, Leo knows I’m not going to bring a deal for him to fund that doesn’t match the criteria of the underwriting that I already taught him. One thing I would have already taught Leo is that I’m not going to borrow more than 75% of the after-repaired value. I told him in the phone call that the after-repaired value is 200,000. The funding required for the deal is 150,000. That is 75%, by the way, caveat. I bought that house for 100,000. I’m bringing home a $50,000 check when I buy without taking any of my own money to the closing table.
Jay Conner [00:16:54]:
But Leo’s going to be protected because when I renovate that house, there’s a 25% equity cushion. Now, the third reason Leo is so excited to fund my deal is that he’s not making any money in his retirement account over at the self-directed IRA company until I put his money to work. That’s why the good news phone call script gets your deals funded 100% of the time.
Leo Young [00:17:24]:
I like that. Appreciate you walking it through, Jay. So how long are the cycles like with the homes, like when you repair
Jay Conner [00:17:32]:
It’s close to like it depends on the disposition. It depends on the exit strategy. So if I renovate it and rehab it and turn it into a brand new, beautiful home. Then that’s going to be about 9 months to 12 months from start to finish. Buy it. It might sit there for 90 days before my contractors get there to renovate it. And then it might take three months, depending on the renovation, to get it brand new, and put it on the market in the multiple listing service. It just, it depends on how fast your market’s moving.
Jay Conner [00:18:12]:
On the other hand, if I sell it on lease, purchase, or rent to own, then that might take 18 months to two years. So the length of my notes is mostly two years. But here’s the interesting thing, Leo. The private lenders don’t want their money back. As I call them up, I tell them I’m cashing out on a deal, and they say, ” Can’t you just keep the money? No, I can’t keep the money unless I’ve got a property that can collateralize that note. Now I do a lot of substitutions of collateral, also known as a loan modification. Now, if I’ve got another deal I’m on close on within the next week, or I have another property that’s got a lot of equity, I’ll keep the private lender’s note open and keep them earning interest,t and then I just substitute the property that is collateralizing the note. But yeah, they don’t want their money back.
Leo Young [00:19:19]:
Interesting. So the way that you do it is not directly, so they’re not on the deed. They’re like, they’re lending the funds to your company, which then purchases the property, and then the note that’s like on the insurance is paying like 8%.
Jay Conner [00:19:36]:
So think of the private lenders as the bank. The private lender is the bank. We give them the same protection, the same security as if we were going to the local bank or a mortgage company. So the private lender does not own any of the property. We’re not doing partnership equity. We’re not sharing in the profits. We’re paying a straight 8% interest to the private lender. So it’s our company that owns the property, and the private lender is the bank.
Leo Young [00:20:13]:
Got you. Okay. Yeah. I think that that actually is a pretty compelling win-win. I mean, they get to be the bank, you get to save on closing costs. Right. I mean, the diligence isn’t as crazy with like private investors as opposed to like a bank that wants all these third parties and stuff like that.
Jay Conner [00:20:30]:
That’s right.
Leo Young [00:20:31]:
Makes sense. And do you mostly do it for single-family homes, or like, do you do it for other types of properties? As well.
Jay Conner [00:20:38]:
That’s a great question. Private money can be used for any kind of real estate. It can be used for multifamily, which is a lot. It can be used for single-family, it can be used for mobile home parks, and it can be used for land. Right. It’s all the same money. It’s just a matter of how you structure the deal. So, for example, if you’re going to do multifamily, then you’re going to get a private placement memorandum by PPM and private lenders, or investors will invest in the fund in single-family.
Jay Conner [00:21:16]:
There is no fund in single-family. It’s all what we call asset-backed bond debt. Have a private lender or maybe two or three; they have their own promissory notes, their own deed of trust or mortgage, and the property is collateralizing the note. Right. That’s why the SEC does not regulate what we do with single-family houses, because it’s an asset with debt.
Leo Young [00:21:51]:
Mm.
Jay Conner [00:21:52]:
Not raising money for a fund. Don’t have to have 1, 2, 3, 4, 5 touches, what all the different gurus teach to pitch them on your opportunity. In this world of single-family houses, as I just went over, there’s no pitching. Yeah, but it doesn’t matter what your relationship is or was with the private lender, because it is asset-backed debt.
Leo Young [00:22:18]:
Interesting. And I mean, let’s just say like you were to do it for a mobile home park or like a commercial property, like, how would you go about setting that up?
Jay Conner [00:22:26]:
I would set up a fund. Right. I get an SEC attorney. Now, a lot of people out there say it’s going to cost 15,000 or $30,000 to get a private placement memorandum. I got an SEC attorney who can put your private placement memorandum together for $6,500. But anyway, you’re going to need, at my recommendation, by the way, I’m not an attorney. I never played an attorney on TV. I’m just telling you from my experience and what I know that you would get a private placement memorandum and get investors to invest in that fund, and then you would use that money for your mobile home park project.
Leo Young [00:23:13]:
Got it? Yeah.
Jay Conner [00:23:14]:
That.
Leo Young [00:23:14]:
That is interesting. And Jay, walk us through like your sort of operations now. So you, you have this method of getting sort of private lenders, so to speak, to fund your single-family renovations. So do you, do you do the renovations yourself? Is it like another operating partner? Like, how is your team set up?
Jay Conner [00:23:33]:
Yeah, so that’s a great question. So when I started years ago, I got my own crew. I still have them. I got six guys. Depending on the magnitude of the renovation, they’ll either be working on one house or two houses simultaneously. And then I have two other general contractors. And each of those general contractors can be working on three houses simultaneously. So I can have seven or eight renovations going on simultaneously.
Jay Conner [00:24:11]:
You know, if I am renovating them to turn them into a brand new property, you know, looking fantastic. And so I use. So my advice to someone who is starting in this is to use a general contractor. Right. I was very fortunate in being introduced to the guys that I use on my own team. But for general contractors starting, that’s the best way to go.
Leo Young [00:24:38]:
Yeah, definitely. I mean, when you don’t have that sort of domain experience. You want to just hire experts; you want to do the job right. That way, you can have more jobs to come. Right? So spend it until you know how to do it. You learn from every vendor conversation anyway. But I think to the extent that for you specifically, Jay, I mean, you want to, you want to be finding deals and making deals. You don’t want to get into the nitty-gritty, and like planning all this stuff, like the delivery, the operations, is like, you have to get it right, but it doesn’t drive a lot of value.
Leo Young [00:25:09]:
Right.
Jay Conner [00:25:10]:
Well, I was speaking at a real estate investing event a few years ago, and one of the attendees said, ” Jay, I just love doing the rehab myself. I love doing the work, I love doing the renovation. And I looked at him, and I said, from my perspective, here’s what they told me. They said, it’s like therapy to me. Doing my own renovation is like therapy. And I looked at him, and I said, ” You know what? From my perspective, anybody who does their own renovations and rehabs needs therapy.
Leo Young [00:25:45]:
That’s great. I love it. So I think, I do think a lot of people, they sort of fall into that trap, right? You know, they. They want to do things themselves to make sure that things are done right. That ends up taking them more time. Maybe there are costly mistakes as well that they’d be on the hook for. So, I mean, the smart move is to get a good team in place and just to run everything with good systems in place, right?
Jay Conner [00:26:07]:
Yes, 100% for sure.
Leo Young [00:26:09]:
And how do you set up your systems to manage everything?
Jay Conner [00:26:12]:
Well, that’s a great question. Automation. So when I started all the way back in 2003, I tell you, Leo, I was the most disorganized mess in the world. I was trying to do everything myself. I ran this company off of Post-it Notes. I had a problem. I had Post-its everywhere. And so the’m glada, great CRM, customer relation management software.
Jay Conner [00:26:48]:
And so now, like, I’ve had the same acquisitionist, Kim Burnett, for 20 years. 20 years. And she talks to all of the motivated sellers. Kim and I never talk. We never talk. It’s all in the software. So when, like, for example, the lead comes in, maybe it’s a Google lead. I have seven different vendors that have Google Ads running all the time, and somebody goes on Google, and they’re looking to sell their house fast or quickly for whatever reason, then the lead comes in.
Jay Conner [00:27:26]:
It automatically goes into our software. And then we got AI. Thank goodness for AI. His name is Bailey. My AI assistant is named Bailey. And when that lead comes in, Bailey immediately texts them and says, ” Hey, I’m Bailey. Jay Conners, AI Assistant. May I ask you a few questions about your property? And so the AI, Bailey, gets all the answers to the questions, and. And then that is automatically notified to Kim, my acquisitionist.
Jay Conner [00:28:02]:
So then Kim calls them up, gets them on the phone, and now Kim confirms all the information. And then I get a notification of how much they’re asking for the property. Then I go into the software. I automatically send it to our realtor, one of our realtors, to give us the opinion of the after-repaired value. That comes back automatically notified. Then I decide if I want the team to go look at the property and give me a budget sheet on repairing the property. They go out and look at it. Now the repair budget sheet is sent to Kim.
Jay Conner [00:28:40]:
She puts it in the software. I look at it. Now I’ve got all the information I know as to what offer I want to make. I got the after-repaired value from my Realtor. I’ve got the prepared renovation budget sheet. I use my formula, my calculation, for my maximum allowable offer. I put that in the software that goes to Kim. Now Kim negotiates it with the.
Jay Conner [00:29:05]:
With the seller. So the system is all wrapped around the software that we use, communicating with each other.
Leo Young [00:29:15]:
That’s interesting. So what. What software do you use for the AI?
Jay Conner [00:29:19]:
So Marla Harmon is the owner. It’s a small boutique company called REI Software. And I plug all of my mastermind members that are in my mastermind group into using Marla because she and her software are amazing.
Leo Young [00:29:38]:
Okay, and is that specifically, like, single-family, or could it just be like a general sort of like inbound lead responder?
Jay Conner [00:29:47]:
Oh, yeah. She customizes it to whatever business that you’re doing, okay.
Leo Young [00:29:52]:
Very cool. Very cool. Yeah. I think it’s super important to use AI, especially for small businesses like us. Right. It allows us to just compete at a much higher level and do much more with our time while keeping the team very lean.
Jay Conner [00:30:04]:
Oh, yeah. I mean, my entire team, I’ve only got 1, 2, 3, 4, 5 people on W2. Right. I’ve got me and my wife,e Carol Joy, on W2. I got Brenda, my office manager, on W2. I’ve got Ashley, my executive assistant, on W2, and I’ve got Kim, my acquisitionist, on W2. All the other team members, well, I mean, we use virtual assistants. I mean, my lead manager, who makes sure none of our leads fall through the cracks.
Jay Conner [00:30:38]:
Her name is Trixie. She’s been with me for seven years. She’s on 1099. And so it’s a very lean team making things happen.
Leo Young [00:30:51]:
Very interesting. So you use this system to basically raise millions of dollars. Right? I mean, you’ve raised like 2 million in just a few short months. So what do you think has been the most effective part of your system? That. That was like an aha moment when you’re setting this up, that you’re like, other people were doing this wrong.
Jay Conner [00:31:12]:
The most effective strategy in raising private money is not asking for money, which is so counterintuitive. Right? You think you have to ask for money. You think you have to pitch deals, but it all comes from being a servant, having a servant’s heart. My 47 private lenders had never heard of this world until I shared it with them. And you know, one thing that real estate investors think, or they say to me, they’ll say, Jay, you know, I got a fear of rejection. And I answer that with a question. How can you be rejected if you’re not asking anybody for anything? You’re simply sharing an opportunity. You’re sharing a world that they haven’t heard about.
Jay Conner [00:32:04]:
And when I go into a conversation with a new potential private lender, I’ve only got one intention, I’ve got one goal, and that is to leave them more educated, giving them more knowledge than they had before we started the conversation. And that’s it. That’s it. There’s. There’s no stance of coming from desperation, right? You are giving value to the people that you talk with.
Leo Young [00:32:37]:
Yeah, definitely. I think it’s a. It’s a fundamental shift, I think a lot of people go through. I mean, I’ve gone through it myself. You know, initially, you’re like, hey, you know, when I have this deal, how do I put it together, right? How do I piece together the capital? Like, and asking people for money, but rather, I think when you’re into it for a long time, you’ve made some sales purchases, you, you know the process. You’re offering opportunities to people. You’re like, hey, look, I’ve been crushing it with my deals. I’ve made my investors a lot of money.
Leo Young [00:33:06]:
I mean, you’re welcome to join if you want to, if it makes sense. And here’s sort of the, the high levels of it.
Jay Conner [00:33:12]:
Yeah, that’s it.
Leo Young [00:33:15]:
I love it. So, how do you find most of your investors? I know you; you mentioned it’s through referrals. Like, do you reach out to people? Like, what’s your system like?
Jay Conner [00:33:24]:
There are three categories of where you find private lenders. The first category is people that you already know. Then your cell phone, right? They’re your contacts. I call it your warm market. Those are people that you go to church with, you play golf with, you play poker with. Who are the people that you regularly see every week? Your coworkers, you know, that’s your warm market. The second category is what I call your expanded warm market. So if you want to scale your business, you’re going to run out of your own contacts sooner or later.
Jay Conner [00:34:09]:
So how do you grow your network? I mean, of course, we all know there’s a direct correlation between your network and your net worth. We know that. So how can you grow that? A highly endorsed Business Networking International BNI. Even in little old Morehead City, North Carolina, with a population of 8,000. We started a BNI all the way back in 2006. And so the way BNI works is it is a referral organization. All the members in the chapter refer to each other. So I’ve gotten millions of dollars from my fellow BNI members referring potential private lenders to me.
Jay Conner [00:34:56]:
The third category of where you get private money is in what I call existing private lenders. Existing private lenders. These are, by the way, when I talk about private lending, I’m talking about ordinary people. We’re not, we’re not looking for rich people. We’re looking for ordinary people like you and me who have investment capital or retirement funds that they’re just not happy with. I mean, I got a retired school teacher who taught school for 30 years, and she’s got $1,200,000 with me. Wow. In retirement funds.
Jay Conner [00:35:38]:
She’s an ordinary, you know, person. But anyway, the third category is existing private lenders. Now existing Private lenders are different. First of all, where do you find them? Well, did you know 70% of account holders of self-directed IRAs want to loan you money? They want to loan money to real estate investors. They want to be a passive investor. So self-directed IRA companies have networking events on Zoom and in person, and you can go to those networking events. But there’s a very, very important caveat that I must mention about having a conversation with an existing private lender. You are not going to put on your teacher hat to an existing private lender.
Jay Conner [00:36:33]:
They already know what private money is. They’re already loaning it out. And so what are you going to have is a negotiation conversation with existing private lenders? You’re not going to be offering an opportunity. They already know what it is. Some existing private lenders are happy at 8%, some are happy at 10%, and some won’t even consider anything less than 12, 14, or 15%. I’m not talking to them, people. So that’s why I much prefer to offer the opportunity to people who have never heard about this world.
Leo Young [00:37:15]:
I, I agree. I think there’s, there’s a balance between what works for, quote, unquote, the marketplace versus what works for you. I think the world is huge, right? I mean, you have these big funds; they have to be competitive by offering these crazy terms. But for you, you don’t need that much, and you need to make sure that you’re taken care of as well. I think there’s a counterintuitive point that, you know, investors, like, experienced investors, like, they typically like to negotiate and stuff, but they have to, they forget to ask, is this worth your while? Will you take care of their investment? And they just focus on the other things, and they miss out on that. That’s why they get into some bad deals that just, you know, they get the best terms, and then look, the person doing the deal, they’re not invested in it. They don’t care. So I agree.
Leo Young [00:38:05]:
It’s, it’s definitely an interesting system. So when you’re, when you’re talking to these investors, you know, you’re reaching out to them. Like, how do you, how do you, you know, stay top of mind? How do you keep them warm? That way, when the conversation comes, they’re like,” Jayy, so nice to hear from you. I love this great news. Let’s do it.
Jay Conner [00:38:22]:
Well, when I get a new private lender that hasn’t done business with me before, they go to the top of the list, right? So I have this thing called the Q now. The minimum investment that I allow or do business with is $50,000. And I don’t even like that that much. I would much rather have a minimum of 100,000, but I’ll accept 50,000. So that’s one of the first things as a new capital raiser. You’ve got to decide because they’re going to ask you, they’re going to ask you, what’s your minimum to start. They want to get their feet wet, right, and see how it goes. So you’ve got to decide what your minimum is.
Jay Conner [00:39:06]:
But when I have a new private lender, I put them at the top of the list, so that when my next deal comes along, I’m going to put their money to work. I want to show them right away that I can deliver, that I can, you know, invest their money. So in addition to that, the other investors, it just depends on how much money they have to work with, you know, people. I mean, I’ve, I’ve, I’ve got, I’ve got some private lenders that have $50,000. I have some private lenders who have over a million. So it just depends on the deal that comes along as to what I match them up with as far as the funding and the deal.
Leo Young [00:39:49]:
Gotcha. Yeah, very cool. I, I do, I do agree, like, a lot of people, they, they want to just test the water, see, you know, have like an appetizer before they, they decide to go more, you know, initially, they’ll, they’ll go like the minimum just to, to test it out. And sometimes you, you really just don’t know. Like, are they just gonna be in it for the minimum? Is this a lot of money for
Jay Conner [00:40:07]:
Them versus well, Leah, what you just said reminds me of this. And here’s a fact. Yeah, they always have more than they tell you. Yeah, they always have more than they tell you. And I’ll tell you. Let me give a, Let me share a strategy right now on how to easily and effortlessly raise more private money. When you pay off one of your private lenders, let’s say you cash out on a deal, when you pay them off, you call them up, you say, ” Hey, I’m getting ready to cash out on 411 Chatham street, you’re going to have your payoff check coming to you along with your interim interest. When you get the check and you deposit it, would you like to add any more investment capital to that for your next deal? Very simple question.
Jay Conner [00:40:57]:
Because they, you’ve already proven to them that you’re paying them the interest. They like the returns. And that’s one of the best times to ask, would they like to add any more investment capital to their, you know, to do deals with you when you’re paying them off?
Leo Young [00:41:15]:
Absolutely. Well, Jay, thank you so much for all your, your wisdom so far. I think your, your system, your ideas make a lot of sense and bring value to a lot of people. How, how can folks get in, get in touch with you? What, what kind of people are you looking to meet? How can we help you?
Jay Conner [00:41:32]:
Yes. Thank you so much, Leo. So I’m, I’m looking to make an impact. I’m looking to make a difference and share with real estate investors. Real estate investors. Maybe you’re brand new. Maybe you want to get into real estate investing. And one of the most popular questions, Leo, that I get is how do I start conversations? How do I start a conversation with a potential private lender? And so I have recently written and boiled down 11 different scripts, Private money scripts.
Jay Conner [00:42:04]:
I call it my million-dollar private money script conversations or scripts. And I’d love to give your audience the very first script, which is called the Curiosity Opener. The Curiosity Opener script. And your audience can download it. It’s a PDF. It’s, it’s absolutely free. You can download it at www.JayConner.com/Scripts, and I’m an er not a or so www.JayConner.com/Scripts, and that’s plural www.JayConner.com/Scripts. And that will give you the very first script of the collection right there in your email.
Jay Conner [00:42:47]:
So do take advantage of that,t and then you’ll be in my world to learn all of the kinds of things about private money.
Leo Young [00:42:54]:
Excellent. Jay, thank you for all your wisdom again, and I appreciate you joining us.
Jay Conner [00:42:59]:
Leo, thank you for having me.
Narrator [00:43:02]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide, that’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business. Right now, again, that’s www.JayConner.com/MoneyGuide. To get your free guide, we’ll see you next time on Raising Private Money with Jay Conner.