In the ever-evolving world of real estate investing, understanding the nuances of private money lending can make the difference between success and costly mistakes. In a recent episode of Raising Private Money, Jay Conner, together with his Mastermind members, unpacked core principles and practical strategies for leveraging private capital, staying compliant, and scaling investment projects.
Asset-Backed Debt: Your Shield Against Regulatory Headaches
A foundational concept for private lenders is asset-backed debt. Crystal Baker clarified what this means: every deal is collateralized against a specific property, giving each private lender a direct secured interest in physical real estate. This method distinctly separates private lending from unsecured debt, which typically draws the attention of the SEC. By structuring all deals as asset-backed, investors effectively avoid complex SEC rules, such as requirements for multiple “touches” or long-standing relationships with lenders.
Chaffee-Thanh Nguyen added that it’s possible to have multiple private lenders on a single property, provided each maintains a clear lien position—as banks do with first and second mortgages. Because there’s no commingling of funds, and each note is secured and discrete, these arrangements remain outside stringent SEC regulations.
Mastering Loan-to-Value and Protecting Your Lenders
Crystal Baker also emphasized the importance of total loan-to-value (LTV). When evaluating a potential deal, investors must calculate the LTV based on the after-repaired value of the property, never collateralizing more than 75%. For example, on a property worth $200,000 after repairs, combined private loans should never exceed $150,000. This creates an essential equity cushion, significantly reducing risk for both the lender and investor, and ensuring everyone’s interests remain protected.
The Importance of Proper Due Diligence
Both Chaffee-Thanh Nguyen and Jay Conner underscored the critical role of title searches when bidding on foreclosed properties. Relying solely on the surface value of a property can backfire if hidden liens or outstanding mortgages are discovered after the purchase. Jay shared a real-life example of an investor who purchased a property at a seemingly bargain price, only to receive a foreclosure notice linked to a preexisting $100,000 mortgage. The lesson is clear: never skip a thorough title search before closing any foreclosure deal.
Unique Advantages of Private Lending
Jeffrey Jackson illuminated a key advantage for investors using private money—they can “get paid to buy houses.” By structuring the transaction so rehab and acquisition costs are funded upfront through closing, investors often receive surplus funds to finance renovations without out-of-pocket spending or laborious construction draws. Unlike institutional loans, private capital typically doesn’t scrutinize credit scores or require personal guarantees. As Crystal Baker noted, the security and trust come from the collateral itself and strong equity positions, not the borrower’s creditworthiness.
The Power of Networking to Serve, Not Just Profit
Networking remains one of the most powerful growth strategies for real estate investors. Chaffee-Thanh Nguyen encouraged attendees to shift their networking mindset from “what can I get” to “how can I serve.” Real relationships form when investors focus on helping others—whether by sharing knowledge, making connections, or supporting new members in professional groups. Crystal Baker echoed this approach, crediting networking for her business’s success and growth. The panel agreed that volunteering, welcoming newcomers, and focusing on connection over transactions create the relationships and trust needed to thrive.
Compliance and Best Practices
To safeguard everyone involved, transactions should always route funds directly from private lenders to closing agents or attorneys—never to individual investors. This protects both parties and keeps everything above board. Crystal reassured investors that private lenders can reside in any state; the only legal requirement is that the deal is properly handled by an attorney in the property’s state.
Final Thoughts
Through clear strategies and adherence to best practices, private money lending opens doors to financial freedom in real estate. By focusing on asset-backed security, maintaining healthy loan-to-value ratios, conducting precise due diligence, and always leading with service, investors can build robust, mutually beneficial networks and scale their businesses for long-term success.
10 Discussion Questions from this Episode
- What are the key differences between asset-backed debt and unsecured debt, and why does asset-backed debt keep the SEC away, according to Crystal?
- How does having multiple private lenders on a single property work without violating SEC regulations, as discussed by Jay Conner and others?
- Crystal explains the concept of “total loan to value.” How does this concept protect both the investor and the private lender, and what is the recommended threshold?
- Why is it crucial to perform a title search before bidding on a foreclosure property, and what real-life consequences can occur if you skip this step?
- In what ways can real estate investors “get paid to buy houses,” and how does private funding enable this strategy?
- What are the benefits of using private money for rehabs compared to institutional or hard money, especially regarding construction draws and credit checks?
- Why do private lenders typically not require personal guarantees or credit checks, and what protections do they have instead?
- Who is “Murphy” in the context of real estate investing, and what are some concrete strategies Crystal recommends for preparing for unexpected setbacks?
- The concept of “networking to serve” is emphasized throughout the episode. How does this approach differ from conventional networking, and what advantages does it bring to raising private money?
- What are the pitfalls of relying on national foreclosure reporting services for lead generation, and what alternative methods does Crystal recommend for obtaining up-to-date and exclusive foreclosure data?
Fun facts that were revealed in the episode:
- No Credit Checks Needed: Crystal shared that when working with private lenders, there’s typically no need to run credit checks on borrowers. Private lenders rely on the property’s collateral and the built-in equity cushion to secure their investment, making credit scores mostly irrelevant.
- You Can Have Multiple Private Lenders on One Property: The episode explained that, similar to how a house can have both a first and second mortgage with different banks, you can structure deals with more than one private lender per property—as long as all liens combined stay within the recommended 75% loan-to-value threshold.
- Networking to Serve, Not Sell: Jay Conner and Crystal emphasized that successful investors should network with the mindset of serving others rather than just handing out business cards or pitching deals. Approaching events with curiosity and a desire to help builds more meaningful and productive relationships.
Timestamps:
00:00 Using multiple private lenders
05:43 Understanding the loan-to-value ratio
07:31 Pitfalls of bidding at auctions
12:33 Navigating the property closing process
14:45 Understanding collateral and equity cushion
16:36 Explaining personal guarantees basics
21:41 Networking with a servant’s heart
24:26 Importance of networking skills
26:54 Embracing the Connector Mindset
32:39 Setting up a protected lending system
34:41 New private lending regulations
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How to Protect Yourself With Asset-Backed Debt and Win at Real Estate Networking
Jay Conner [00:00:00]:
When you take your attention off yourself and focus it on the other person.
Jay Conner [00:00:07]:
Talk about a total shift, as I said, takes all the stress off. And I guarantee you you’re going to be different than most other people at the networking event, whether it’s a chamber of commerce or whether it’s rotary or, you know, any event that you’re at.
Narrator [00:00:27]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place to raise private money. We’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money. Because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:00:54]:
All right, well, we got from the live event 39 unique aha moments and 15 questions. We’re not going to get to all of them, but I’ve gone through and highlighted a few that I think would bring value to everyone here. So, Crystal and Chaffee, I’ll, I’ll, I’ll choose who I think would provide the most entertainment while answering these questions. No, I’m just kidding. So, ladies first. Crystal, I’ll start with you. Asset-backed debt keeps the SEC away. So let’s unpack that.
Jay Conner [00:01:37]:
You know, first of all, what does it mean that all the deals that we do are asset-backed debt? What in the world does that phrase mean?
Crystal Baker [00:01:49]:
Because they are backed by real property. So they are collateralized by real property. So every single lender has a collateralized interest in a specific property, a real property. So that’s the asset back.
Jay Conner [00:02:07]:
So the opposite of that means that we are not borrowing what kind of debt?
Crystal Baker [00:02:14]:
Unsecured.
Jay Conner [00:02:15]:
Right now. Now that’s when the SEC does get involved, and they don’t like that at all. So as Crystal said, we’re not borrowing unsecured debt. The promissory note is backed by the real estate from the private lender that we are borrowing the money from. And you know, there’s a misconception out there when it comes to asset-backed debt that you have to follow SEC rules. And is that true, Crystal?
Crystal Baker [00:02:52]:
No.
Jay Conner [00:02:53]:
No.
Crystal Baker [00:02:54]:
Because they don’t have any legal interest in that type of transaction.
Jay Conner [00:02:59]:
Right. So if any of you are thinking, well, I got to have three touches, I got to have five touches, I’ve got to have a long-term relationship with this potential private lender, then that doesn’t come into play here. When you’ve got asset-backed debts, I learned you can have more than one private lender funding a property. So Jaffe, how in the world can you have more than one private lender that’s funding the same project or the same property without having this notion of commingling funds or whatever?
Chaffee-Thanh Nguyen [00:03:46]:
So, you know, it’s just what we teach people and what we tell people is, you know, you get to be the bank if you’re a private lender. So we tell people just, you know, you get to be the bank. And so the system that you’ve put together, Jay, emulates what a bank does. And when you look at your house, you can have a primary mortgage, and then you could have a secondary mortgage or second mortgage or a Lena line of credit, right? Or HELOC. That’s a different lender. And so, just like banks can have multiple lenders on your property, you could have multiple private lenders on your property. The difference, just like a bank, is that they have different lien positions.
Chaffee-Thanh Nguyen [00:04:25]:
And so they are still, it’s still an asset-based asset, you know, an asset-based deal where you are collateralizing their debt. Only it’s a first-position lien versus a second-position lien. And sometimes, you know, maybe even a third or more depending on the situation. And so we don’t again fall under any SEC regulations because we’re not pooling funds. Right? When you pool funds, you have to worry about the SEC. We don’t do any of that. And so they don’t, they’re not looking at us because we have different lien positions for different lenders. And so you have multiple lenders on a property, just like a bank has multiple lenders on your mortgage, on your house.
Jay Conner [00:05:07]:
Now, when we have more than one private lender that’s funding a property management. Chavy just said you got first position, you got second position. You, you have this thing, this phrase that we talk about a lot called total loan to value. Total loan to value. So what do we mean by that? Crystal, unpack the total loan-to-value and give an example of what that might look like, and what’s the threshold that we recommend for sure?
Crystal Baker [00:05:43]:
So when we talk about total loan to value, what we’re really saying is we’re looking at the after-repaired value of the property as the value. So that’s the after-repaired value. And we can only collateralize or have debt in place up to 75% of the loan-to-value. So now let’s talk about what, so let’s, for easy numbers, let’s talk about a $200,000 house. So if you’re buying a house and the after-repaired value is 200,000, you can have no more than $150,000 collateralized by your private lenders. So what does that look like when we talk about total loan-to-value? Whatever liens are on this property. So if you have two private lenders, they can’t be for any more than 150,000. So you could have 100,000, you could have 50,000, that’s going to meet that 75% loan to value, but you cannot have more than that.
Crystal Baker [00:06:38]:
So you could not add another lender. So you can’t have 170,000, because then you would not meet that 75% loan to value. That’s the cushion that we provide in the safety that we provide for our private lenders. And I think a lot of times, where people start to get confused is when they start looking at these things. They kind of want to push here or there. They don’t really look at it as the whole. And that’s what, that’s what you have to do. Add them all up, whatever the liens are, and it doesn’t matter where those come from, but whatever those are on the property, they have to meet that 75%.
Jay Conner [00:07:09]:
If you’re going to bid on a foreclosure at the courthouse, ensure that you have a title search done first before bidding. So, Chaffee, why in the world would it matter whether or not you’ve got a title search done before you go bid at a courthouse?
Chaffee-Thanh Nguyen [00:07:31]:
Well, you know, all these things in the world can come up and bite you behind the back. And when you’re bidding at the courthouse, these things tend to pop up sometimes, you know, when you’re betting on the courthouse, you’re bidding actually on the bank that foreclosed on you. And so it could be a first mortgage, or it could be a second mortgage. You know, if it’s, for example, a second mortgage that’s foreclosing on the property, you still have to pay off, or you’re still liable for that first mortgage. So you might think that, hey, I’m buying this property for 30,000, not realizing there’s a $100,000 first mortgage on it that you still have to pay for if you win the auction. In addition to that, there could be mechanics, liens, there could be tax liens, there could be all sorts of liens that are attached to the property that you’re not aware of unless you do a title search. And so you have to make sure that you are protecting yourself and looking out to make sure. That there’s nothing hidden and that what you’re bidding for is what you’re actually going to get the property for.
Jay Conner [00:08:37]:
Yes. I actually know a real estate investor. He’s very seasoned now, but before he was seasoned and before he got the education, he and his dad were all excited. They went to the courthouse, and they bid on a property, and they thought they had stolen that property. They won the bid for $30,000 on a house. $30,000? Well, about 90 days go by, and guess what? Their entity owns the house. They bought it for 30,000. But now here comes a foreclosure notice on them in the mail.
Jay Conner [00:09:23]:
And of course, what had happened is they didn’t get the title search done. They didn’t know they had won the bid on a second-position mortgage, and the first-position mortgage lender was still in place, and they hadn’t been receiving any payments. So now here comes the foreclosure letter. That foreclosure was a little over $100,000. So they lost that deal. But lesson learned, don’t ever bid at the courthouse until you’ve had your title search done. Well, you know, here in North Carolina, my real estate attorney does her own title searches. So very, very.
Chaffee-Thanh Nguyen [00:10:06]:
You know what’s funny, Jay, is that those, that exact situations that you described with the person you know are the exact numbers that I pulled out of the air.
Jay Conner [00:10:17]:
You heard the nut. You heard the numbers coming.
Chaffee-Thanh Nguyen [00:10:20]:
That’s right.
Jay Conner [00:10:21]:
The moment Jeff submitted, he said, “I get to get paid. I can get paid to buy houses. Well, Jeff, since you submitted the aha moment, we should let you explain. How in the world do you get paid to buy houses?
Jeffrey Jackson [00:10:42]:
All right, Jay. Well, thank you very much. Whenever we go to the closing, we have already built into the amount of money that’s been sent to the closing attorney, not only the cost for the property, but the cost for the rehab and any additional monies that may be there. So in the Crystal’s example, there’s a $200,000 house, and it needs $50,000 worth of rehab, or so, and the housecosts $100,0000, then if there’s any money left over from that, we get paid that additional funds. So we’ll take home that $50,000. We will use it to be able to go ahead and renovate the home to get it ready for sale. And then, of course, after that, when it goes to market, we will also get paid whenever it’s sold for the market value. So we get paid multiple times.
Jay Conner [00:11:37]:
And in that example, you didn’t have to bring any of your own money to the closing table, did you?
Jeffrey Jackson [00:11:43]:
No, sir, not a bit. Yay, team.
Jay Conner [00:11:46]:
I love it. Well, now, Jeff, another, another aha. The moment you had right behind that one was that there are no construction draws, as in when you are. If you were using institutional money, there are no construction draws when you’re doing a renovation. If you used private money. Well, how in the world can that be, Jeff? How is it that you don’t have? When we say draws, we’re talking about pulling down draws from the lender. You may have draws you’re paying to your general contractor, of course, but as far as pulling down draw requests from your lender, why are there no draw requests to your lender when using private money?
Jeffrey Jackson [00:12:33]:
Again, Jay, whenever we’re at the closing and the HUD one is set up, and we’re going to be getting back, once the house, the property, is actually paid for,r and any remaining money is going to be sent to us as excess funds, and that’s where we get that money. And then, because of hard money, they retain those construction costs in their account and only set them out and provide them to us to pay the contractors after it’s been verified. And there’s normally a cost associated with those draws as well. So when you’re a private money investor, and you’re working with those folks, we have the best of everything where we can use those funds and not have to worry about going and having all of the certifications done and making sure that the hard money lender is satisfied,d and we have the money to be able to pay them without draws.
Jay Conner [00:13:30]:
Thank you, Jeff. Perfect. When using private money or private lenders, your credit is not pulled, nor is your credit checked, as with institutional money or hard money. Crystal, have you ever had any of your private lenders want to see your credit score?
Crystal Baker [00:13:50]:
Not any that have been my private lender. I had one person who actually asked me for that in the beginning. She said she was. It wasn’t a warm connection. And so I just explained that’s not how our program works.
Jay Conner [00:14:03]:
Right. But why, why do private lenders typically, 99% of the time, not even bring into account your credit score before they lend you money on deals?
Crystal Baker [00:14:18]:
Yeah. So it’s really multifaceted. It’s. It’s not just one thing. But if I were to just say, okay, well, we’ll look at it as like, what’s the most important piece of that? And that’s just because they have the collateral from the property. So they literally have a promissory note and a deed of trust or mortgage, depending on where they are. They’re additionally insured on title insurance. They’re the mortgage, they’re the mortgage, or on the property, the homeowner’s insurance.
Crystal Baker [00:14:45]:
So they have a lot of securities and you’ve already, and, and you’ve already provided them with the information. So they know that they have that 25 equity cushion. So that’s the biggest piece is they’re, they’re not investing in with the same thought process because they don’t have to run your credit. After all, the property is what’s securing them. That’s where their protection is. So they know that they’re safe because they’ve got that that 25% equity cushion and the fact that the property is something that they have collateral against. So that being said, the other pieces, we’re working with our market more predominantly. So now we’ve got trust. And so these people know us, they trust us, they know that we’re going to take care of them.
Crystal Baker [00:15:25]:
So they’re not interacting with us as an institution where they’re saying, well, I need to run your credit, and I need to know all these things about you. These people are like, well, I know, like, and trust you. I love your program. It’s amazing. And with all that being said, I’m going to be taken care of because of the way that you buy the property. And so, yeah, they’re not going to be asking to look at my credit. And really, we’re distinguishing the difference between while we understand we are the operator, but it’s a business, it’s in our LLC. So they’re not really looking at us as an individual coming to ask for credit from them.
Crystal Baker [00:16:00]:
We’re not crawling up to them and begging for it. We’re just offering an opportunity that they, they can either, you know, opt in or opt out of. And so, you know, they’re just taking advantage of this beautiful opportunity, and we’re just there to provide it.
Jay Conner [00:16:14]:
Institutional lenders require personal guarantees. Private lenders do not require personal guarantees. A two-part question chaffee, just to make sure everybody understands what a personal guarantee is. And secondly, why don’t private lenders require a personal guarantee?
Chaffee-Thanh Nguyen [00:16:36]:
So personal guarantee is just, again, just somebody, me or whoever, is the investor or not, the, yeah, the investor saying, I will guarantee this money. I will guarantee to pay you back. And so what that does is that allows that institution to go after you and your assets for their money. And so, you know, whether it’s like many credit Cards, for example, you know, you get a credit card, you charge up $50,000, you don’t pay that credit card. Well, most, if not all,l credit cards, unless they’re business credit cards, if they’re personal credit cards, have a personal guarantee, meaning that the credit card company can take away your car, take away your house, or go after you for that $50,000 that you charge. So that’s what a personal guarantee is. And the reason private lenders don’t ask for personal guarantees is that they’re collateralized, so they don’t need to go after you. They’re already protected by the property.
Chaffee-Thanh Nguyen [00:17:34]:
And in the way that we do it with the loan to values and the equity in the property, many times if for some reason something happens and you’re not able to fulfill your side of things and they, you know, foreclose or go after the property, they’re going to make more money than if they would have just gotten paid by you because of all the equity in the property. And so they feel safe knowing that they are not only protected by the property for their money, but they’re more than protected by the property for their money. So there’s an even greater amount there for them because of the equity cushion there.
Jay Conner [00:18:10]:
Always prepare for Murphy. So a two-part question, Crystal. Who is Murphy, and how do you prepare for Murphy?
Crystal Baker [00:18:21]:
Absolutely. So Murphy is the trouble that always shows up, the bad luck. And so invariably there’s going to be something. And so if you don’t plan for the potential downside of things, the potential problems that could occur, then you are going to find yourself in a difficult situation. So you have to prepare for Murphy. You have to have some built-in protections to ensure that you aren’t going to be in a bad position in the end of it all. So the way we prepare for Murphy is multiple ways to be completely honest. So Jay teaches by right, and there is, if you learn nothing else in your career, that is the one thing you should always remember.
Crystal Baker [00:19:05]:
Because if you don’t buy right, then you don’t have the same opportunities throughout this process,s and you might not have a disposition option that makes sense. So buying right is critical. And so when we do this, we want to make sure that one, we get a good contractor estimate. If we don’t have it outlined, we don’t have it nailed down. We don’t even know what we’re working with. So I often have people who are like, well, I think it’s about this. I’m like, before you finalize, you better figure that out. Because if it’s.
Crystal Baker [00:19:31]:
If I had a contract, my contractor saved me one time, because you looked at this house, and it looked like it was in great condition. Everything looked fine. And he’s in and out of looking at things that most people aren’t looking at. And he sees that there was structural damage from a fire at some point that was not disclosed. Without him having looked at that, I would have stepped into it and not had the right numbers. So that’s really important. We have to have it.
Jay Conner [00:19:57]:
I think you said it right, Crystal. You would have stepped into it.
Crystal Baker [00:20:02]:
Exactly. So. So that’s huge. And that’s definitely one way to help to protect yourself by getting an inspection. Those are things where you’re going to find those. Those problems that you aren’t going to see with the naked eye, making sure that you have a proper, after-repair value. And then ultimately, when we look at all of that, we still take off an additional 10,000. So we can assure we are prepared for Murphy.
Crystal Baker [00:20:26]:
And that’s when we make our, like, our maximum allowable offer. We take 10,000 off of that, subtract it. That’s our offer. That’s what we’re offering to the, to the client. So that way, if there’s a little bit that happens we weren’t expecting or a little bit a lot, then we’re taken care of.
Jay Conner [00:20:42]:
Down network to serve. So, coming on that phrase, network to serve, how is that different from what most people do when it comes to networking? And how do you network to serve?
Chaffee-Thanh Nguyen [00:21:03]:
So you know that’s a writer downer. I mean, if there is a writer downer, that’s one of them, right? If you’re taking notes, write that down. Network to serve. And how’s that different? And as many of you know, I have been to literally thousands of networking events. I’ve run my own networking events and have done so for almost two decades now. And I see people come into my networking events, and I see people at network events all the time who are there for themselves. That’s all they want, they want to go to a networking event, meet people, pass out their business cards, and say, send me referrals. It’s all about me, me, me, me, give to me because I’m awesome.
Chaffee-Thanh Nguyen [00:21:41]:
And in the meantime, I’m going, I don’t know who you are, I don’t know what you do. I don’t know, like, anything about you, whether I should trust you or not. And so why should I do anything for you? Right? And so, you know, networking to serve is so much different than just going to network and meet people. Networking to serve is going to, as we say, lead with a servant’s heart. And you go, and you see how you can help people,e and you meet people, and when you engage in a conversation with them, you get to know them, to see what their needs are, and see if you can help them and serve them. And so that’s the whole purpose of networking, to serve. And by doing that, it takes off this pressure of you, of, oh, I got to meet these people so that I can raise all this money,y and I could ask for this or ask for that. All that goes away.
Chaffee-Thanh Nguyen [00:22:30]:
Because your primary purpose for going is to go meet people and see how you can help them. And when you have that kind of philosophy, when you have that kind of mentality,y and you go and talk to people, and you’re just getting to know them, that’s when true relationships are built. That’s when you’re helping other people. And in return, you’ll find out that eventually all that comes back to you in waves. Like, they start getting to know you, they start serving you because you serve them, and giving you referrals and building those relationships. And so, again, don’t go to a networking event with a mindset of, I need to meet people to raise money or I need to meet people to do deals. Go with the mindset of I need to meet people to get to know them and see how it can help them, and the rest will follow.
Jay Conner [00:23:16]:
Crystal, wh?. Why did we even talk about networking at all? And in the detail that we did at the live event at the private money conference? What’s the connection there?
Crystal Baker [00:23:31]:
Yeah, so I’m the poster child for, like, the wrong thought process to start and totally get it now. So I think most people have that thought, like Chaffee was talking about,t that you just go, like, to meet people or to get something. And we really understand that your business is built on relationships. That’s. That’s it. Bottom line doesn’t. You can look at it any way you want, but when you come down to it, it’s built on a relationship. And where do we build those relationships? Through networking.
Crystal Baker [00:24:01]:
That’s where you meet more people. You can’t just count on, you know, oh, well, just my immediate family or a few friends I’ve had here and there. You have to. You have to be able to serve as many people as possible. And the only way to do that is to get out and to network and spread the word and to share with people. So that’s the reason we teach it, is that you first told me, like, Krista, you need to get out of your network 10 years ago. And I was like, I don’t want to. Seems like.
Crystal Baker [00:24:26]:
And just recognizing the value of it, it’s. It’s critical. And I would not have the business that I have today if I hadn’t incorporated networking, if that wasn’t an aspect of my life, and one that I continue today. I continue to build those relationships, continue to share with people, and continue to give people the opportunity to build a life that they want. Because maybe we help them to sell a house, maybe we help them to become a private lender, maybe we help them to become a tenant buyer, but we’re out there to serve those people and find ways that we can do that. And so we teach it at the conference because we want other people to have the same skills and understanding so they can do it well. We don’t want a bunch of people out there shoving business cards at people. We want to teach them so that they really understand the value and so that there’s a community of people that are taking to heart the same service mentality that you’ve taught all of your members and us.
Jay Conner [00:25:16]:
Yes. And, and, and I have personally experienced it. Chaffee, Crystal, both of you, and any. Anybody else who has taken heed of our coaching and our advice on networking. Of course, this allows you to scale your business and allows you to raise more private money. But when taking on the attitude of how can I serve the person that I’m meeting? And getting to know them is by asking them questions about themselves and what they do, and, you know, digging deep, having the curiosity of a child as to how you might uncover some ways to help them. And when you take on that attitude and that mindset, it takes all the pressure off. You’re not asking anybody for anything.
Jay Conner [00:26:08]:
You’re not trying to sell them. You’re not sticking your business card in their nose, right? If somebody asks for my business card, of course, I’m going to give it. But if I’ve got the mindset there of what can I do to serve people that I’m meeting, then, you know, when. Here’s what happens when the attention is. When you take your attention off yourself and focus it on the other person. Wow, talk about a total shift. As I said, it takes all the stress off. And I guarantee you, you’re going to be different than most other people at the networking event, whether it’s a chamber of commerce or whether it’s rotary or, you know, any event that you’re at.
Chaffee-Thanh Nguyen [00:26:54]:
Hey, Jay, let me, let me add one thing, that sometimes, sometimes people get it in their head that they have nothing to give, they have no value. Like what, what am I going to help this other person with? Right? And, I want everyone to realize that you always have something to give, and it’s okay if you don’t have something to give to a particular person at a particular time. Just keep in mind, take notes, mental notes, or written notes of what their wants and needs are,e and maybe you can help them down the road. So it’s okay to meet somebody and not be able to help them right there and then, you know, you’re not a miracle worker, right? You don’t, you don’t have every single resource. And what you’ll find is that the more you network, the more people you meet, the easier it becomes. And focus on this thing that we call becoming a connector, right? And when you can become a connector and connect people and say, you know what, I can’t help you, only I know somebody that might be able to help you. Now people are going to come to you because they know that you’re a connector. They’ll start bringing other people to you as well to see if you can help.
Chaffee-Thanh Nguyen [00:28:02]:
And so that all comes with time. So don’t be afraid to go up to people and introduce yourself, and think in the back of your mind, I have nothing to offer, I can’t do anything. Why am I here networkin’ when, in reality, that is a skill that you pick up along the way to become a connector? And when you are known as a connector, that’s when the magic happens.
Jay Conner [00:28:24]:
There are lots of ways you can serve at networking events. Two that come to mind are if you are already in a group, you know, let’s say you’re in the Rotary Club or whatever, chamber, etc. And you’re a member of that group. When you see someone come in that you don’t recognize, go over there and welcome them, introduce yourself. Be the first one to do that and ask them, you know, have you been here before? Is this your first, you know, time visit and then offer your experience and your knowledge about the group and the membership and tell them, look, if you have any questions about how this works, I’m glad to help you because, you know, I’ve been a member here for a while. That’s one way. Another big way you can serve is to volunteer to help out at the event. You know, go to the organizers, the leaders of the, of the group.
Jay Conner [00:29:18]:
I mean, like your shoot your local real estate Investing Association. Go to the leader of the RHEA and tell them you’d like to serve and like to be a volunteer, and what you could do to help out. And when you do that, you start hanging around the leadership of that group because now you’re volunteering. The cream rises to the top. He said, ” Never rely on national foreclosure reporting services. So the two-part question, Crystal. Why not rely on national foreclosure reporting services that are, you know, giving out information on people who are facing foreclosure? And if you don’t rely on that, where do you get the information to serve those people who are facing foreclosure?
Crystal Baker [00:30:09]:
Yeah, so the reason you don’t rely on national data is that you just don’t know when they’ve pulled that data. So you don’t know how old it is. And then in addition to that, you don’t, you don’t know who else has access to it. Lots and lots of people will have access to something that you can get easily. So, you know, just be cautious. You’re, you’re probably getting it behind the timeline when someone else could get it. So how do you get it? Well, Jay, you and Carol Joy built the foreclosure system that tells people exactly how to find those foreclosures. And so whether it be going directly to the courthouse or using the courthouse system, you are getting those core, those records when they’re coming into their system.
Crystal Baker [00:30:50]:
So as soon as they’re available, you have access. Now you’re in front of the line. Now you’re getting that data in real time. And you have an opportunity to work directly with the seller before every other investor in the universe has seen it through those national databases. So that’s why you want to do that. That way, you can see that your data is super accurate and you know exactly how long they’ve been in the system. And you can get those letters out because you created the eight-letter sequence to work towards getting into communication with these people and help them out of their problem and into a position where you can purchase the home and help them avoid foreclosure.
Jay Conner [00:31:26]:
Never accept money or a loan directly from your private lender. Always have the private lender wire the funds to your closing agent, title company, real estate attorney, whoever’s doing the closing. Why is that important?
Chaffee-Thanh Nguyen [00:31:44]:
Well, you know, it sounds really good to have somebody just cut you a check for 50 or 100,000. Right. I mean, cut me a check for 100,000. Right. And, you know, I’ve actually, I know people, and I have no investors or private lenders that have done that exact thing. What sets us apart? What sets you apart, Jay, with the system you put together, is that we do everything above board. Right. That, that act of you receiving money from them personally is a.
Chaffee-Thanh Nguyen [00:32:13]:
How do you say it? Is a red flag, shall we say? If you run across an investor asking for a check, that’s a red flag, which allows them to take your check and use your money. There’s no protection whatsoever, however they want. And it’s. Now, obviously, we have a trust relationship. At the same time, they can just cash your check and go to Europe, and you never see them again. Right. So there’s no protection for that private lender.
Chaffee-Thanh Nguyen [00:32:39]:
And so the system that you’ve put together, Jay, everything is above board, everything’s professional. They cut a check to a title company or attorney escrow, who is a professional. And so again, it’s a system with many layers of protection put in place for that private lender and for you, so that if anything happens, if anything comes up, you say, hey, you know, you didn’t cut me a check. It went to my attorney. You, you now have a layer of protection. And they have a layer of protection as well. And so again, it’s just another piece in the whole, you know, in the whole picture, in the whole pie that you put together to make sure that we have a system that works for everybody and protects them as well as protects you.
Jay Conner [00:33:21]:
Says, does it matter if your private lenders are in a different state than the state you are investing in?
Crystal Baker [00:33:32]:
The very short answer is no, it doesn’t matter. And actually, I really appreciate this because Chris brought this question to my attention, and we had a little bit more of a conversation about it to help him understand it. And I think one of the places where he was confused was thinking that you need to have an attorney in the state where the private lender is. And the reality is you don’t. You just have to make sure that you have an attorney where you’re investing that can close all of your transactions. But the private lender, you’re the ones that are signing the guarantee. They don’t have to. They’re not signing a guarantee on this.
Crystal Baker [00:34:12]:
And so they just have to have the ability to notarize any updates. Like when we do modifications, they have to do that. But. And their payoffs, et cetera. But no, you don’t. They. They can live anywhere, and you can. They can invest as a private lender, though.
Jay Conner [00:34:27]:
Yeah. And I think, I think another reason that the question comes up. There’s some kind of confusion about being able to borrow and lend across state lines.
Crystal Baker [00:34:40]:
Right.
Jay Conner [00:34:41]:
And I believe that question gets triggered because they’re thinking about institutional money banks, mortgage companies, hard money lenders, where there’s a broker involved. Well, when that’s involved, they are regulated by the commissioner of banks of that particular state. Well, as we all know, private money, private lending is just a one-on-one transaction with no originator, no broker involved in the transaction. It’s not like there’s a broker that’s lending money out from someone else to the borrower. And so the commissioner of banks has got no regulation whatsoever for private lenders, for borrowers of private money. But speaking of the laws of the land, there’s a new law that just went into place this past Monday, a week ago, and this is part of the Big Beautiful Bill Act. And the reason this law is in place is, you know, to make sure there’s no money laundering going on. So, private money, any private money loan has got to be reported to the government as to who’s the lender, who’s the borrower, the principal loan amount, et cetera.
Jay Conner [00:36:09]:
And so Julie Wickyser, my attorney, filled me in on what’s going on. The good news is that nothing changes on our end. We don’t report it. It’s your closing agent, it’s your real estate attorney, it’s your title company that’s doing all that reporting. And if you’re not laundering money, you don’t have anything to worry about. So anyway, there was some talk of this new law at our live event a couple of weeks ago. And at that time, even Julie, our attorney, didn’t even know how all this was going to shake out. And who’s got to do what, and what exactly has got to be reported? Because you know, it was, it’s brand new.
Jay Conner [00:36:52]:
But anyway, so no worries, no problems, your closing agent or your attorney will take care of all that reporting that needs to take place. Thank you, Chaffee. Thank you, Crystal. Everybody. Have a great rest of your day,y and we’ll be seeing you soon. Bye for now.
Narrator [00:37:12]:
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. 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.