***Guest Appearance
Credits to:
https://www.youtube.com/@beyondthebuildpod
“Real Estate Take Episode 34: Jay Conner and Raising Private Money”
https://www.youtube.com/watch?v=24HUY09_YWs&t=59s
If you’ve ever considered diving into real estate investing but have felt overwhelmed by the complexities of funding your deals, you’re not alone. For many, the traditional path involves groveling before banks, wrangling with credit checks, and coughing up hefty down payments. But what if you could bypass all of that? In the latest episode of the Raising Private Money podcast with Jay Conner, the Private Money, you’ll discover how a shift in mindset—and strategy—can propel your investing business to new heights.
From Banker’s Mercy to Financial Freedom
Jay Conner’s story begins in eastern North Carolina, far from the bustling metros most associate with high-ticket real estate. After spending his formative years in his family’s mobile home business, Jay transitioned to single-family home investing in 2003. Like many, he started by relying on the banks, navigating mountains of paperwork and agreeing to terms that left him stressed and feeling “owned by the bank.”
Everything changed in 2009. The financial crisis hit, and his credit line evaporated overnight. Suddenly, Jay had deals under contract but no way to finance them. Rather than throw in the towel, Jay asked himself the powerful question: “Who do you know that can help fix your problem?” This turning point sparked his introduction to the world of private money.
The Secret Sauce: Never Ask for Money
You read that right. According to Jay, the secret to unlocking private capital is never asking for money—and never pitching a deal. Instead, it’s all about teaching and serving. Here’s how he breaks it down:
- Separate the conversation: Educate potential lenders about the opportunity with private lending, before ever pairing them with a deal. This avoids desperation and builds genuine trust.
- Offer, don’t beg: When it’s time to fund a deal, Jay makes what he calls the “good news phone call.” He simply informs the lender that he has a deal matching their criteria and tells them when and where to wire the money—no pleading required.
This methodical, service-driven approach means Jay never comes across as desperate. Instead of hunting for money in a frenzy to lock up deals, he has investors lining up, eagerly waiting to put their funds to work.
The Power of Nurturing Relationships
Jay’s model isn’t based on cold calls to strangers or high-pressure sales at REI clubs. It’s rooted in “the riches are in the niches”—working within his existing sphere of influence, especially in the tight-knit communities of his two-county market in North Carolina. Faith groups, neighbors, and longtime community members have proven to be his best partners. Not only do they see his track record up close, but their word-of-mouth referrals have helped Jay quickly grow his network of private lenders.
At its core, Jay’s system is replicable. He’s raised hundreds of thousands—even millions—of dollars from ordinary people: retired teachers, ex-military, young families, and even minors with inherited funds.
Making Private Lending Simple—and Legal
A major hurdle for many investors is the idea that private lending is complicated or legally risky. Jay demystifies it: private loans for single-family houses are “asset-backed debt,” not syndications, and thus not under SEC scrutiny for one-off deals. Private lenders can use both cash and retirement funds, like self-directed IRAs, which offer powerful tax advantages. Jay encourages investors to partner with reputable self-directed IRA custodians, making the process smooth for lenders.
Why Private Money Wins—For Everyone
Jay’s approach is all about “win-win.” Lenders get above-average returns backed by real estate, complete with security liens and insurance—protection they wouldn’t see in the stock market. Investors avoid the headaches of bank applications, origination fees, and personal guarantees, making every deal faster and more profitable.
Take Action: Learn the System
The episode closes with Jay offering invaluable resources: his best-selling book on private lending strategies, free tickets to his live conference, and access to his long-running “Raising Private Money” podcast.
Whether you’re a new investor or ready to scale, the lesson is clear: You don’t find money when you’re desperate—you build a network of educated, empowered partners before you need it. As Jay’s journey proves, the right process and attitude can turn a local, small-town business into a highly profitable, freedom-creating machine.
Ready to transform your investing business? Start building authentic relationships and teaching others the value of private lending—your “secret sauce” to lasting success.
10 Discussion Questions from this Episode
- Jay Conner emphasizes that he never asks for money or pitches deals to his private lenders. What are the advantages and potential downsides of this approach to raising private capital?
- How did Jay Conner’s experience with losing his bank line of credit during the 2008 financial crisis influence his approach to real estate investing and funding deals?
- The concept of “separating the conversation” when speaking to potential private lenders is presented as the secret sauce. How does this differ from traditional fundraising methods, and why might it be more effective?
- Several times, Jay Conner discusses the importance of building trust and educating potential lenders about self-directed IRAs and private lending. What strategies does he use to foster trust, and how could new investors replicate this?
- What are the specific benefits for lenders to use their self-directed IRA funds to invest in real estate deals rather than keeping their money in more traditional investments?
- Desperation has a smell to it, Jay Conner says. How do desperation and urgency from an investor affect the success rate of raising private capital?
- Jay Conner suggests that being a big fish in a small pond—focusing on a specific, smaller geographic market—can be more profitable than trying to compete in larger cities. Do you agree or disagree, and why?
- The distinction between asset-backed debt and syndication is discussed. Why might an individual investor choose one method over the other, and what are the regulatory implications?
- Jay Conner’s system is described as repeatable and dependable, leveraging automation and systems to reduce his workload. How important are systems for scaling a real estate business, and what elements would be essential to include?
- Based on Jay Conner’s experience, what is the most effective way to attract and secure commitments from private lenders? What can new investors learn from his story about his first $500,000 in private capital?
Fun facts that were revealed in the episode:
- Jay Conner Raised Nearly $1 Million at Lunch
Jay Conner’s first private lender luncheon resulted in $969,000 pledged from just one event, where he invited 20 people—including his realtor, CPA, and attorney—for a simple lunch and a PowerPoint presentation about private money. - He’s Never Pitched a Deal or Asked for Money
Jay credits his “secret sauce” to never directly asking anyone for money or pitching a deal. Instead, he focuses on educating people about the opportunity and letting them come to him, which has led to 47 private lenders funding his real estate investments. - Minor Children as Private Lenders
Some of Jay’s private lenders have been under 18 years old. These minor children became lenders after inheriting money from their grandparents, with their parents seeking a better return on those funds by investing in Jay’s real estate projects.
Timestamps:
00:00 Jay Conner’s real estate journey
04:07 Shifting from mobile homes to houses
09:16 Calling Jeff for financial advice
10:58 Learning About Private Money
15:21 Hypothetical role play for investing
19:16 Conservative investing approach discussion
22:19 Switching to private lenders
25:57 Asking for investment referrals
28:01 Doubling investor funds quickly
31:49 Using private money in real estate
35:54 Using retirement funds for real estate
37:52 Understanding Self-Directed IRAs
42:52 Contact information and final thoughts
43:46 Raising private money basics
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:
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https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Masterclass: Leveraging Self-Directed IRAs and Private Funding with Jay Conner
Jay Conner [00:00:00]:
Here’s the secret sauce. Do you know what? I’ve never asked anybody for money. In addition to that, I’ve never pitched a deal. I’ve never pitched a deal. And people say, Jay, how do you have 47 private lenders funding your deals, and you never ask for money, and you never pitched a deal? Well, here’s the secret sauce.
Narrator [00:00:19]:
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.
Wendell Butler [00:00:46]:
What is up, all you real estate-loving individuals? This is episode number 34 of the Real Estate Tape podcast, and I’m your host,t Wendell Butle.r
Jay Conner [00:00:56]:
Is your go-to
Wendell Butler [00:00:57]:
podcast with tons of information regarding the current real estate market, where we get various real estate professionals’ current take on different areas of real estate. For today’s guest, we have Jay Conner. Jay Conner began investing in real Estate in 2003. At the start of his career, he relied on his local banker and was able to put together a few deals. However, that also meant coming up with large down payments, paying origination fees, and signing personal guarantees on every single deal. After years of feeling owned by the bank and being stressed out, he learned how to buy properties using creative financing, including subject-to and using lease options. After the market crash in 2008, his banker cut him off. Jay had to abandon everything he knew about how to finance his deals.
Wendell Butler [00:01:41]:
Then he heard about the world of private money. He developed his own system for gathering millions of dollars of real estate deals. And over several years, Jay refined his systems until it was repeatable and dependable. When he put it to the test, the first person he approached gave him $250,000 in private money. In a few months, Jay raised $2.15 million in private money. Despite initially cursing his banker, Jay now thanks him. Jay’s unique system allows him to enjoy seven-figure profits year after year. And he also has the freedom to work less than 10 hours per week in his real estate investing business by leveraging the power of automation and systems.
Wendell Butler [00:02:20]:
So let’s bring in Jay. Jay. How are you doing, Wendell?
Jay Conner [00:02:24]:
I’m doing fantastically,c and thank you so much for inviting me to come along and talk about my favorite subject,t that being private money. I’m so passionate about private money because this strategy alone has made more of an impact on our real estate investing business than any other thing I’ve done ever since 2003.
Wendell Butler [00:02:45]:
Absolutely. Yeah. And it’s funny because people get into real estate investing to get away, usually from thei9-to-5 5. They, like, don’t want to have a boss. They want to work for themselves. But if you never get into creative investing or financing or raising capital and things like that, you end up almost being, as you said in the bio, you’re owned by the bank and the bank’s your boss. Right. So you’ve got to figure out different ways.
Wendell Butler [00:03:07]:
And you have a ton of experience with it, and I can’t wait to dive into it. But just to start, I know we read your bio and stuff, but I always like to ask this question upfront. It’s just, who are you? Like, what got you into real estate investing, first off? And other than what we read about in your bio, like, what’s your backstory? Like, who are you and what do you like doing? And you just talk about yourself a little bit.
Jay Conner [00:03:26]:
Sure. Well, I’m probably qualified to talk about who Jay Conner is and why it is I’m qualified to talk about private money. Well, how did I get into real estate? Well, Wendell, I was actually born into the mobile home business. Manufactured homes, people used to call them trailers and wobbly boxes. And my father, Wallace Conner, is 91 1/2 years old right now, and he’s developing and building 350 new homes at 91 1/2 years old. I want to be like him, grow up. But anyway, my dad at one time had the largest mobile home retailing company in the nation. Conner Corporation.
Jay Conner [00:04:07]:
Conner Homes. And so I grew up around my dad, seeing how he and the company helped people own affordable housing. Well, in the early 2000s, all the consumer financing for that product went away. The industry fell out of favor with Wall Street. And if you don’t have financing for that kind of product, then no more. Well, I knew, Wendell, if I ever got out of mobile homes and manufactured housing, I wanted to get into single-family houses and invest in single-family houses. Well, why is that? Well, it goes all the way back to 1993, 10 years before I actually started investing in single-family houses, which, by the way, I do right here in eastern North Carolina. My wife, Carol Joy, and I live in Morehead City, North Carolina, right here at Atlantic Beach.
Jay Conner [00:04:57]:
Small area. Our total target market is only 40,000 people, but we do two to three deals a month. Average profits now are $86,000 per deal. That we do. I don’t share that to brag, I share that to make a point. And that is there’s a big case to be made to be a big fish in a small pond and dominate your market instead of competing in the big cities. Nonetheless, all the way back in 1993, 10 years before I started doing this business, good friends of ours lived in New Ber,n and they wanted to build a new home. Well, they didn’t have the money to do it.
Jay Conner [00:05:33]:
And so their names are Craig and Kim. Good friends of ours. Well, Kim’s dad lived down in Florida at the time,e and he was a full-time real estate investor. And he said, I’ll tell you what, I’ll come up to New Bern. He said, I’ll buy a fixer-upper, and you all can do the sweat equity on the nights and weekends, and we’ll sell it and flip it, and you can keep the profit to be the seed money for your new home. Well, they pocketed $30,000 in 90 on that one house. And I’m going, wait a minute, here I am back in that day, busting my butt trying to make $3,000 on a single-wide mobile home. And they made 30,000 on this one flip.
Jay Conner [00:06:14]:
And I’m going, I like the sound of that better. So the opportunity, Wendell, came along in 2003, and that’s when I started. And from 2003 until January of 2009, my first six years in the business, Wendell, the only thing I knew to do to get my deals funded was go to the local bank or go to the mortgage company, get on my hands and knees, and say, ” Please fund my deal and fill out applications. And the banker made me pull up my skirt and look at my personal assets and pull my credit card, I mean, pull my credit score and all that stuff. Well, that worked okay. That worked okay from 2003 until January of 2009. And then, Wendell, everything changed. I mean, the total trajectory of my business changed in January of 2009.
Jay Conner [00:07:11]:
And here’s what happened. I called up my banker. His name was Steve. I called him up,p and Steve had funded a lot of deals for me those first six years. And I called up Steve in January of 2009. I told him about two houses that I had under contract to purchase here in the local area. I thought I still had a line of credit at the bank prior to me making this phone call. So I called him up, and we had a little chat.
Jay Conner [00:07:39]:
I told Steve about these two deals. And I learned like that over the telephone that my line of credit had been closed with no notice to me. I said, Steve, what in the world are you telling me that I’ve lost my line of credit? I’ve always made my payments on time. I got a great credit score. And Steve said, ” Jay, don’t you know that there’s a global financial crisis going on right now? I said no, but you just gave me a financial crisis. I don’t have a way to fund these two deals that I got under contract. And Steve said, sorry, the bank’s not loaning money out to real estate investors. So I hung up the phone.
Jay Conner [00:08:17]:
Wendell, I want to share with you and your audience a very powerful question that I asked myself sitting right here at this very desk right after I got cut off from the bank. And, you know, the power is in asking questions. And by the way, the answer to this question, this question will help anybody fix any problem they’ve got going on. I don’t care if it’s health, financial, career, or relationships. It doesn’t matter. By the way, Wendell, these people run around saying, ” Every problem’s an opportunity. I want to throw up. I didn’t have an opportunity.
Jay Conner [00:08:52]:
For goodness ‘ sake, let’s face the facts. I had a problem, right? Yeah. Now, that problem, over time, became an opportunity. If it wasn’t for that problem, you and I, I wouldn’t be on your show today. Right. Talking about private money. So anyway, here’s the question I asked myself right after getting cut off from the bank. I sat her,e and I said, ” Jay, who do you know? You know it’s who, not how.
Jay Conner [00:09:16]:
I said, ” Who do you know that can help fix your problem? And when I asked myself that question, I immediately thought of a good friend who was living in Greensboro, North Carolina, at the time. His name is Jeff Blankenship. Now, Jeff and I and my wife Carol Joy, and his wife, we’re all great friends, and we know each other from gospel singing events and acapella singing events. And anyway, at that time, in January of 2009, Jeff was investing in single-family houses in Greensboro, North Carolina. So I called him up, and I told Jeff about my conversation that I just had with my banker,r and getting cut off at the bank. Jeff said, ” Well, welcome to the club. I said, Jeff, I’m not sure I want to be a member of that club, but what club are you talking about? He said, ” Well, that’s the cost of having your line of credit shut down at the bank. He said, ” My bank shut me down last week.
Jay Conner [00:10:09]:
I said, ” Well, how are you going to fund your single-family house deals? He said, well, have you ever heard of private money? I said, ” Nope, never heard of private money. He said, ” Have you ever heard of how individuals, ordinary people, can use their retirement funds and move them over to a self-directed IRA company and then loan it to us real estate investors, and the interest we pay them is either tax deferred or tax free to them? I said, Jeff, I don’t have a clue what in the world you’re talking about. I said, ” What is private money? He said, ” Well, I’m not really sure. He said, ” But there’s this fellow down in Jacksonville, Florida, by the name of Ron LeGrand. And Ron says that he can teach us about private money. I said,” Well, what is it? Jeff says, I don’t know. But Ron says, we can get a lot of it really, really fast. I said, ” Okay.
Jay Conner [00:10:58]:
So that was the first seminar that I went to with Jeff. I went to Ron’s seminar to learn about private. And oh boy, did I learn about private money. One of the first big things that I learned, Wendell, is that private money is the exact opposite way to get funding than getting it from a bank, a mortgage lender, or a hard money lender. By the way, private money is not hard money. Hard money is institutional money that a broker has gone out and raised money to then loan out to us real estate investors. But private money is when you’re doing business with an ordinary individual who’s either loaning you money on your real estate deals from their investment capital, or their retirement funds. So what I learned is that the big difference between using private money and applying for a mortgage is that you’re not applying when you’re using private money.
Jay Conner [00:11:54]:
There are no applications. Your credit score’s got nothing to do with how much money you get. Instead of asking for a mortgage, you’re offering a mortgage. So you see, in this world of private money, we are our own underwriter. We make the rules. We make the rules. We set the terms. So when I came back, here’s what I did, Wendell.
Jay Conner [00:12:15]:
I put together my opportunity. I put together what I was going to offer ordinary people who could use either investment capital or retirement funds to fund my deals. So I decided, what interest rate am I going to pay them? 8%. I’ve been paying my private lenders. I got 47 private lenders today, and I’ve been paying them 8% ever since 2009. And they love it. No origination fees, no points. And so I’m gonna pay them 8%.
Jay Conner [00:12:44]:
And I put together, how am I going to protect them? I’M gonna give them a deed of trust here in North Carolina. Most people call it a mortgage. So I’m not going to borrow unsecured money. So I put together this program that I would teach people. So you know what I did, Wendell? I put on my teacher hat, which says Private Money, teacher. So what did I do? I just went about getting in contact with my own personal contacts, people I go to church with, people in my cell phone, etc. And I just started sharing with them my opportunity as to how they could earn high rates of return safely and securely. Now, here’s the secret sauce.
Jay Conner [00:13:22]:
And then I’m going to turn it back to you, Wendell. Here’s the secret sauce. Do you know what? I’ve never asked anybody for money. In addition to that, I’ve never pitched a deal. I’ve never pitched a deal. And people say, Jay, how do you have 47 private lenders funding your deal? You never asked for money, and you never pitched a deal. Well, here’s the secret sauce. Separate the conversation.
Jay Conner [00:13:44]:
This is a writer downer. Separate the conversation with a new potential private lender as to the opportunity, and then have a deal for them to fund. Here’s a writer downer. Desperation has a smell to it. Desperate. I mean, the worst time in the world, Wendell, to be raising money is when you need it for a deal. Hey, Wendell, I’m going to take a little risk here. I’m going to go out on a limb.
Jay Conner [00:14:10]:
I don’t know if you’re going to agree with me or not, but we’ll find out. Let me ask you a question. Have you ever heard of the guru standing on stage teaching real estate investing, and they say something like this, oh, just get the deal under contract, the money will show up. Oh, yeah, yeah, yeah, yeah. Or they’ll say, money finds good deals, right? Let me tell you something. That’s the most stupid thing I’ve ever heard in my life.
Wendell Butler [00:14:35]:
What’s the.
Jay Conner [00:14:36]:
What’s the money going to do? Like rain out of clouds or something, right? I mean, think about how much more confident, how many offers you will make on deals if you have the money burning a hole in your pocket, ready to go. And so I practice,e and I preach, get the money lined up first. So that’s what I did. I put my opportunity together. I went about just teaching people the opportunity. And then when I’ve got someone who has pledged money to me, they like the program, they want to invest. I’m going to share with you and your audience right now, Wendell, how I get my deals funded without ever asking for money. I’m going to share the exact script right now on how to get your deal funded.
Jay Conner [00:15:21]:
So the best way I can teach this is to do a little hypothetical role play here, Wendell. So let me do the setup. Wendell, let’s say you and I have known each other for a while, and we like each other, we know each other, we trust each other, maybe we could go to church together or whatever. So we already have a relationship. Let’s also assume that I have shared this opportunity with you on how you can earn high rates of return safely and securely as a private lender. And you like the program, you like the 8%, all that kind of stuff. And then let’s also assume that you had $150,000 in a 401 (k) retirement plan at a previous employer that you no longer work with, and you’re sick and tired of the volatility of the stock market. And I’ve introduced you to the self-directed IRA company that I recommend.
Jay Conner [00:16:11]:
And let’s assume that you’ve moved that $150,000 over to the self-directed IRA company that I recommended. And now you’re waiting for me to call you up with what I call the good news phone call. The good news phone call. So here’s the way it goes. This is the exact script. I call you up, you’re one of my new private lenders. We have a little chit chat, and then here’s exactly what I say. I say, Wendell, I’ve got great news for you.
Jay Conner [00:16:39]:
I can put your money to work. I’ve got a house under contract in Newport, North Carolina, with an after-repaired value of $200,000. Now the funding required matches up to what you’ve got in your retirement account. $150,000 is the funding for this deal. Now, closing is going to be next Friday, so I’ll need you to have your funds wired to my real estate attorney’s trust account by next Thursday. I’m going to have my attorney email you the wiring instructions. That’s the end of the conversation. The most stupid thing I could say is do you want to fund the deal? Of course, you want to fund the deal.
Jay Conner [00:17:17]:
And here are three big reasons why Wendell wants to fund my deal. Number one in this example, Wendell trusted me to move his money over to the self-directed IRA company. He loved the program; he’s moved his money over. So that’s the number one reason: he trusted me, he moved his money over. The second reason Wendell is ecstatic to fund my deal is that Wendell knows I’m not going to bring a deal for him to fund unless it matches the criteria of the program. I already told him. Wendell already knows that I’m not going to borrow more than 75% of the after-repaired value. I didn’t say 75% of the purchase price.
Jay Conner [00:17:59]:
Big difference. It’s for that reason I always bring home a big check when I buy using private money without taking any of my own money to the closing table. I mean, who wants to get paid to buy houses, right? So the second reason Wendell wants to fund my deal is that he knows I’m not going to bring a deal for him to fund that doesn’t match the criteria of what I’ve already taught him. And the third big reason Wendell wants to fund my deal is that he’s not making any money. His money. He’s moved over into a self-directed IRA company, which is sitting there not earning any money until I put his money to work. So I’m ethically bound to invest Wendell’s money because he’s sitting over there not earning any money yet. So let’s unpack quickly here what I just shared.
Jay Conner [00:18:46]:
Separating conversations, teaching, and leading with a servant’s heart. You know, here’s what’s interesting, Wendell. Of my 47 private lenders, not one of them ever heard of private money or private lending until I told them about it. And not one of them ever heard of self-directed IRAs until I told them about it. And so we teach, expose them to the opportunity, they tell us how much money they have to work with,h and then we call them up with the good news phone call. No begging, no chasing, no pleading, no selling, Selling. It’s all about serving.
Wendell Butler [00:19:16]:
That’s amazing, basically because a lot of people ask you, as you said, they always talk about what all the gurus say on social media, right? It’s just about getting the deal, and the money will come. But your spin on it is a lot more, I want to say it’s conservative but it’s a lot more practical because your approach is to get the money lined up first, educate people on how they can be flexible with their money and make more like higher returns from the traditional like stock Market or IRA or 401k and then show them a little bit of opportunities that you have have worked with to show that it’s there. And all you got to do is make that money available to then get the good news call, then move that money into that, and all of a sudden you’re making more than you would have left in your 401k. I love that. I love that because everybody talks about getting the deal locked up, get the deal locked up. What happens with that mentality, especially if you’re a new investor, is you get stuff locked up where it doesn’t really work because you’re just trying to get deals locked up and try to get money to come, right? And then you get money to come, and then all of a sudden the deal doesn’t work, and then everybody loses. Because you were so desperate to get a deal and then get money lined up that you put yourself in a bad position, but the opposite way that you kind of approach it. I like it a lot, because that’s kind of how I approach it, you get the opportunities obviously on the contract, using very conservative underwriting as you do, you know, like 75% loan to ARV.
Wendell Butler [00:20:30]:
That’s basically what I use too. And it gives you a huge, wide range to make a lot of profit and not make many mistakes with that project. Especially when you need a lot of track record and experience. And then you can go out to your private investors that you already taught and told about, and then they’re ready to give you money. And you don’t, you don’t smell despicable, desperate, right? Like, I need money, I need money. Posting this everywhere, posting it to everybody, giving people a call like, ” Hey, I need out of this deal, I need money. That smells like desperation. And nobody wants to give money because they’re like, ” Is it even a good deal? Like, what’s going on here? Like, tell me more about the deal.
Wendell Butler [00:20:58]:
And you have to like pitch the deal. You have to over exaggerate how good the deal is, and then it just gets gross. Because then you’re a salesman, right? You want to set it up in the most practical way that it’s not salesy, it’s more just helping each other win. It’s a win-win situation, right? And the way that you approach it might take a little bit longer because you have to get people on the same page. You have to teach them how to use a self-directed IRA. You have to set them up, you have to get them to trust you. But that’s a better way to approach it because you build a better base for your business. Now you have 47 private investors who are just waiting for deals to come.
Wendell Butler [00:21:30]:
And instead of you having a money issue, now you’re like, I have a deal issue. Which is fun because it’s like, hey, I got to get deals, deals, deals, deals, right? And that’s when it gets really fun. So I love their approach to that. And yeah, it’s like a follow-up question I have is before you set up your program that way or the way that you raise private capital, like did you do it the other way before? And like, did you learn the hard way,y or did you immediately start that way? And why did you start that way? Did you? Was that how you learned, from a seminar, or did you learn it from another person? Or did you just do practical thinking, you’re like, this is how I would want to be approached.
Jay Conner [00:21:59]:
It just seems so much like common sense to me. Like, you know, those first six years I had a line of credit at the bank. And by the way, it was an unsecured line of credit. This was before I even knew anything about private money. And so I was already accustomed to my first six years, I knew where the money was coming from.
Wendell Butler [00:22:18]:
Right.
Jay Conner [00:22:19]:
So it just seemed common sense to me when I lost the line of credit at the bank. Well, I need to have another pool of money lined up, ready to go, like I did for six years. But instead of institutional money, it’s going to be private money from individuals. And by the way, all these individuals are just plain old ordinary people. I mean, I’ve got retired school teachers, I’ve got retired law enforcement officers, I’ve got retired from the Marine Corps. And then I’ve got people that are still working that are just using their investment capital. I’ve even had two minor children under the age of 18 years old as private lenders because they inherited money from their grandparents, ts and their parents were looking for a good return on their children’s money. So these are just ordinary people.
Jay Conner [00:23:09]:
But yes, in answer to your question, common sense told me I don’t want to go get a deal under contract if I don’t have a clue where the money’s coming from. I mean, talking about a stressful situation, thank goodness I was never trained to go get deals under contract, the contract, and not know where the funding was going to come from. It just seems sort of stupid to me. And by the way, it doesn’t take long to get it. Like I have my very first $500,000 in private money I got within one week. Within one week. And you know what? I got that $500,000 pledged to me to use without asking for money. The best way I can share that is with a short story, if I may.
Jay Conner [00:23:50]:
Well, yeah, so here’s how I got my first 500 grand. So I came back, I got my program put together, and here’s my first $500,000 private money story. It was on a Wednesday at 7:30 pm Now, Carol Joy, my wife, and I, for years, have been very active members at the Church of Christ on Barber Road in Morehead City. And so we’ve been going to Bible study on Wednesday night for years and years and years. So I’m going to Bible study just like I normally do on a Wednesday night. And I walk in the foyer. Now, I was looking for a gentleman named Wayne. Now, Wayne and I had known each other for some time, and I knew I wanted to visit with Wayne, and I wanted to offer this opportunity to him.
Jay Conner [00:24:32]:
Well, I want to share with you exactly what happened, exactly what I said to Wayn,e and how I got $500,000 pledged to me without asking for any money. So I walked in the foyer, I saw Wayne, I walked over to him, and I said, Wayne, I said, if you’ve got a few min minutes after Bible study tonight, I’d like to visit with you about something confidentially. He said, ” Well, sure, Brother Jay. So we had Bible study, we got together afterwards, we went down to the nursery and shut the door. And Wendell, here’s exactly what I said to Wayne. I said, Wayne, I need your help. There’s a powerful phrase right there. Now, I need your help.
Jay Conner [00:25:12]:
I said, Wayne, you know everybody in this town. And he did. He was the original Zenith Television dealer and salesman in Morehead City, North Carolina. Now, if you don’t know who the Zenith Television dealer was, that means you’re too young to remember life before Walmart came to town. That’s where you got your TVs back in the 1960s and the 1970s. You went to the Zenith dealer, he sold it to you, he financed it, and he’d actually come out to your house and repair it. That’s before you just threw them in the trash when they didn’t work anymore and went to buy a new one. So anyway, Wayne had put a TV practically in everybody’s home here in Morehead City.
Jay Conner [00:25:57]:
So I knew he knew everybody, and I told him that. I said, Wayne, you know everybody in this town. He was very, very well-connected with the Rotary Club. And I said, I need your help. I said, I have now opened up my real estate investing business by referral only, and I’m now paying insane high rates of returns. Wayne, what I need your help with is when you run across somebody who’s complaining about losing money in the stock market, or the volatility of the stock market, or not making much money in the local certificates of deposit in the bank. Would you refer them to me,e and I’ll tell them about my program as to how I’m paying insane high rates of return. Well, Wayne looked at me, and he said, well, now, brother Jay, what you got going on there? There? And I said, ” Well, what do you mean, Wayne? He says, ” Well, what kind of rates of return are you paying? And I said, ” Well, are you saying you might be interested? He said, ” Well, I might be interested.
Jay Conner [00:26:51]:
I said, ” Why is that? He said, ” Well, we’re only making 3% in the local bank and a certificate of deposit. That’s what it was in 2009. He said, ” We’re losing money in the stock market. What kind of rate are you paying, Jay? And I said, well, that sort of depends on the deal. I said, what sounds high to you? He said, well. Well, we’re making 3% in the local bank. He says, I don’t know, maybe 5% or 6%. I said, Wayne, I can’t pay you 5% or 6%, but I can pay you 8%.
Jay Conner [00:27:20]:
He said, Put me down for $250,000. So that next afternoon, on Thursday afternoon, Wendell and I went to his and his wife’s. His wife’s home. And what did I do? I went to their home. I had on my teacher hat, right? And so I went to their home to teach them fully the program, what kind of rate I’ll pay, how they’re protected, how they can get their money back in case of an emergency, the frequency of payments, and the documentation they receive on deals. But bear in mind, I’m not talking about a deal. I’m talking about the program. I’m sharing the opportunity with no deal attached to it.
Jay Conner [00:28:01]:
And so over two cups of coffee, that $250,000 from the night before became $500,000 by the end of that conversation. And so I left that meeting with them, and they just told me what they had to work with investment capital. And I told them, I’ll put your money to work for you just as soon as possible. And so then, within the next week, I called them up with the good news phone call that I had already shared the script. And not only did they become one of our best private lenders. Lenders, but boy, did they spread the word. They told all kinds of people about the program and referred a bunch of people to us. And, you know, you don’t have to run around town to attract and raise a lot of private money very, very quickly.
Jay Conner [00:28:46]:
My very first private lender luncheon, Wendell. I raised $969,000 at that very first Private lender luncheon. What did I do? I invited 20 people to lunch that I go to church with, know about town, you know, and I had my realtor, my cpa, and I had my real estate attorney there as well. At the luncheon, I fed them lunch. I presented my simple PowerPoint presentation that teaches the program, teaches the opportunity, and again, almost a million dollars pledged. From that one luncheon. So you can really leverage your time. It takes the same amount of time to share the opportunity with 20 people as it does with one person.
Wendell Butler [00:29:29]:
Yeah, no, yeah. And I think one thing to hit on here too is like, you mentioned it a few times as you’ve been speaking, is just like kind of the quote, the rich are in the niches. Like, really knowing your circle of influence and, like, where you live and sticking to, like, that area. People think like, you know, you can’t do exceptionally well just focusing on that small. But no, you can do even better because your circle of influence, the people that are closest to you and that really know you the best, is where the most opportunity lies and the best area that you can, like, work with and help out. So I love that you mentioned that you just really. You only invest in, like, Morehead City, right? Like, that’s really where your focus is, in that area.
Jay Conner [00:30:08]:
Well, it’s two counties, so the two counties here in eastern North Carolina. And Morehead City, of course, is in the county where I live. So. Yeah, just in these two counties.
Wendell Butler [00:30:17]:
Yeah. And it’s like, you can. You have such a. One, it gives you such a firm understanding of that market. It’s like you really understand it, and you’re the top specialist and an expert in that market and what you do. Right. Two, it allows people to see your track record. And as you continue doing deals and doing better and just doing stuff, and they see your products, and they see what you’re doing, and they get to meet you, they’re seeing that you are successful and you’re going to continue making money.
Wendell Butler [00:30:41]:
And that makes them trust you more. Right. That they can pledge money to you. And then three, they could see that they could drive. Like, if they’re just raising money from people in the area, they can always drive and just go see the property, too, and be like, hey, that’s the property. I’m like, I’m funding. You know, it’s so cool, right? When you get so big, it can get a little bit more problematic. Yes, there’s more opportunity to, like, raise more capital, but it’s just not as easy.
Wendell Butler [00:31:04]:
There are a lot more questions.
Jay Conner [00:31:05]:
Right.
Wendell Butler [00:31:05]:
So I love that you really niched it down and you’re just really trying to provide great returns to people, like in kind of your circle of influence,e and that allows you just even more flexibility, believe it or not. And that’s where people need to kind of think, right? So the richeareeis in the niches. Like that’s a quote. People say it all the time. They hear it, but it’s very true. Right. And you mainly focus on just single-family, like fix and flip,s too. And can you talk a little bit about how you would have someone set up to fund your deals in the self-directed IRA and the benefits they get from it, tax advantages, and stuff like that as well.
Wendell Butler [00:31:37]:
Can you just talk about that a little bit? Because a lot of people, investors get confused about that, and the reason they don’t raise private capital is that the whole self-directed IRA thing, it confuses them. So yeah, if you could touch on that a little bit, that’d be amazing.
Jay Conner [00:31:49]:
Sure. So your first question was do I focus only on single-family houses? And the answer is yes, primarily. Now that triggers a great question, which is,s can you use private money for any kind of real estate? And the answer is yes. You can use private money for self-storage projects, you can use private money for apartment complexes, you can use private money for commercial buildings, you can use private money for mobile home parks, and you can use private money for land. But here’s where the difference comes in. The difference is whether you are syndicating or borrowing what we call asset behavior back debt. So let me describe what I talk about. When you syndicate, what that means is you’re raising private money from investors to invest in a fund that you have established. You’ll syndicate, you’ll raise private money for a fund when you’re doing a larger project, such as an apartment complex or self-storage facility, etc. In contrast to that, everything that I do with single-family houses is called one-off.
Jay Conner [00:32:53]:
So what in the world is a one-off? A one-off means that you got a single-family house, a single-family house property, and that asset, and now you have a private lender or maybe two or three. You can have multiple private lenders funding the same single-family house, but you have each private lender has their own promissory note and their own deed of trust. In most states, it’s called a mortgage. Here in North Carolina, as you know, Wendell, is a deed of trust. That is the collateralizes that promissory note. So it’s asset-backed debt. We’re not borrowing unsecured funds. We’re back in that note, collateralizing that note with a deed of trust.
Jay Conner [00:33:35]:
As a result, the Security Exchange Commission does not regulate what we do. If you’re raising money for a fund, then you’re going to have an SEC attorney draw up a PPM, which stands for a private placement memorandum, and you’re going to establish a fund, and multiple investors invest in that fund. We’re not doing that. In this world of single-family houses, it’s asset-backed debt. So that answers that question. That’s what I focus on is single family houses. But now, how do the self-directed IRAs work? So the way the self-directed IRAs work, bear in mind it’s just not retirement funds that private lenders use. It can be just liquid investment capital.
Jay Conner [00:34:14]:
Instead of putting it on a CD, they’re loaning it to you. You. But the way the self-directed IRAs work is that if you have a potential private lender and they already have established current retirement funds that they’re not happy with, maybe those retirement funds are in a 401k from a previous employer. Maybe they are with their current employer. I’ve got one private lender. This is funny. He retired from Fannie Mae. Can you believe? And he’s a private lender.
Jay Conner [00:34:41]:
And what’s even funnier than that is he never heard of private money until I told him about it. And he was Fannie Mae for goodness ‘ sake. But anyway, three years before he retired, he wanted to become a private lender. He said,” Butt Jay, I can’t. I’m not going to retire for three years. I said, ” How do you know you can’t? I said, ” Contact your plan administrator. This is so funny. I’m telling Fannie Mae how to do this.
Jay Conner [00:35:07]:
But I said, contact your plan administrator in your retirement fund and ask them, due to you being there for 27 years, can you move part of those funds out without any kind of tax consequences? And he did. He contacted, he said, yeah. I mean, due to his tenure and the length of time he had been with Fannie Mae, they allowed him to move up to 50% of his retirement funds out of that 401k. And so he did. He moved it over to the self-directed IRA company that I recommended and started being a private lender. So, how to self directed IRA companies work? They cannot give any financial advice whatsoever. They are what’s called a third-party custodian. So all they do is house your retirement funds.
Jay Conner [00:35:54]:
There are no Tax consequences. When a private lender or an individual moves money over to the self-directed IRA company, no tax effect. And so then, depending on the type of retirement funds they have, when they invest it or loan it to you, the real estate investor, the interest you pay them is either going to be tax deferred until they take a distribution,s and then it’s taxed at that rate. Or if they have a Roth IRA, then the interest is tax-free because a Roth IRA has after-tax money that’s been invested in that fund. So it’s very simple. Here are the steps for a real estate investor. And by the way, over half of my real estate, over half of my private lenders are using retirement funds, funds to invest, to loan money to me. The takeaway on that is, unless you have a relationship established with a self-directed IRA company that you can refer people to when you’re talking to a potential private lender, you’re going to miss out on at least half of the potential private money to you.
Jay Conner [00:36:55]:
So number one, establish a relationship with a self-directed representative. Self-directed IRA representative. So that when you’re talking with a potential private lender, and you learn they’re not happy with the returns they’re getting, well, you can introduce them to the rep, and the rep can hold their hands on moving that money over to establish their fund. And once their account is funded, you need to put their money to work for them just as soon as possible because they’re not making any money. Right. Until you actually borrow the money. Because we don’t pay any interest on money that we’re not using. And very simple.
Jay Conner [00:37:30]:
I mean, and they have this thing called the direction of investment. And your private lender will fill that out, or you’ll help them fill it out. Very simple. And then they have their self-directed IRA company wire funds from their retirement account to the real estate attorney trust account, or if you’re in a state using title companies, to the title company. And then you get your deals funded that way.
Wendell Butler [00:37:52]:
Yeah, I mean, it’s, when you say it out loud like that, it’s super simple. It’s really just moving money from a 401k, which is, it’s a retirement fund that you don’t have any control over. It’s kind of just sitting there, and it’s accruing whatever the stock market or whatever you have invested in within your 401k, whatever that does, that’s what it’s accruing interest. And then a self-directed IRA is just moving that money into A separate retirement-type account, where you can move that money and invest in whatever you want because it’s self-directed. Like you are the owner, you’re the one that can push it out, you’re the one that can send it to wherever, and that allows you to then invest in these real estate deals. When people invest with a self-directed IRA, and like, can they only invest as interest-accruing lenders, like having like liens on houses,s or can they invest and get equity from deals? Can you speak a little bit on the T, or is it capped in certain ways that you invest based on, like?
Jay Conner [00:38:43]:
Right, so my private lenders do not get any equity in the deals. They don’t own any of the property. My private lenders are the bank and me, meaning it’s my LLC that owns the properties. And the private lender acts in the same capacity as a bank. Right. They’re the lender. I’m gonna give them the same protection I’m on. You know, they get a promissory note, they’re gonna be, they’re gonna get a deed of trust securing that note.
Jay Conner [00:39:08]:
I’m gonna name them on the insurance policy as a mortgagee protects them as well, name them on the title policies, and as additional insured. So I’m gonna give them the same protection that the bank gets, but that’s what they receive. They know exactly they’re gonna receive 8%. And that’s not 8% for the entire year unless I’m using that money for the entire year. So it’s an APR 8% annual percentage rate. But if I’m only using the money for six months, they earn 4% on that particular deal. And of course, they want me to put their money back to work and reinvest their money as soon as possible.
Wendell Butler [00:39:41]:
Yep. So then it turns into you just need to find deals to make that money work. And instead of finding deals and then finding the money, which is awesome, the way that you set that up, and another perk of it, too, oo is that anytime they use a bank or anytime you use a hard money lender, there’s usually, there’s a lot of closing costs, origination fees, there’s all that stuff. And you’re kind of, well, you are. When you use a private money lender, the way that you have it set up, you’re bypassing all those fees. So it’s a lot cheaper. And that adds up like, especially if you do like 50 deals a year. Right.
Wendell Butler [00:40:09]:
And like, usually it’s like, let’s just say 10 grand for like additional fees of origination fees and lender costs and stuff. Like that’s $500,000 that you’re saving. Is that right? Yeah.
Jay Conner [00:40:18]:
Yes.
Wendell Butler [00:40:18]:
Yep. Yeah. $500,000. Right, right. Like so, it’s super beneficial to you. It’s super beneficial to the private money lenders because they’re making a higher return. It’s just a win, win, win situation. And it’s safe because you’re not just getting a promissory note, period.
Wendell Butler [00:40:36]:
Like that’s not backed by anything. You’re giving them a lien on the home that,t if for some God-forbidden reason it doesn’t go well, they can take that property and they’re not left out to dry. Right. It’s asset-backed, it’s safe, and it’s secure, and there are a lot of tax benefits for it too. So it’s beautiful. You just have to be able to explain that to people and get them on board and understand the opportunities. Right. And I think that’s one of the biggest barriers that investors have nowadays because they just don’t know how to explain that to people.
Jay Conner [00:41:06]:
Well, guess what, Wendell, we can fix that. Because you know what? I would love to give your audience a gift, and this gift will fix that problem. As far as them easily explaining to potential private lenders how this works, I’d love to give your audience my best-selling book, which is called ” Where to Get the Money Now, ” subtitle: how and where to get money for real estate deals without relying on hard money lenders or traditional lenders. I’ll autograph the book, and I’ll mail it three-day express through the United States Postal Service. It’s 20 bucks on Amazon. But don’t spend 20 bucks. Let me, let me give you the gift. Just cover shipping and handling.
Jay Conner [00:41:43]:
You can pick up the book at jconnner.com/book. I’m an er, not a or so that’s www.j a y c o n n e r.com forward/book, and I’ll rush it right out to you. I’m also going to include two tickets valued at $3,000. Two tickets to my private money conference that I put on live event three times a year right here in Morehead City, Atlantic Beach. And I’ll include those tickets as well.
Wendell Butler [00:42:11]:
Love that. I might have to come down there and join you because my goal is actually to move closer to the east in the Carolinas as well. So I got to expl explore places down there, see what looks good, see what I like, that’s the goal. So we can make it a business business fun exploration time.
Jay Conner [00:42:28]:
Of course. I’d love to have you down here, Wendell. In addition to that, if your audience has enjoyed listening to what we’ve been talking about with private money, then I invite everybody to come over and check out my podcast. I’m now in my eighth year of the show, and the name of my podcast is. Is Raising Private Money? Imagine that. Raising Private Money with Jay Conner. And it’s on all the popular platforms.
Wendell Butler [00:42:52]:
Love it. And I’m going to put all that in the bio as well for this podcast. So for those listening, you can just scroll on down and click it and check it all out. So I know you’re a busy guy. I want to get this wrapped up, and I always leave with like one last question, and it’s just basically leaving the floor to you, which you already kind of covered with those last two things you said. But is there anything else you’d like to tell the audience about how to get in contact with you, any social media handles you have, or have obviously the business meetups that you run, and just how to find or contact you if you’re open to that? This is.
Jay Conner [00:43:24]:
Yeah, the easiest way to contact me is to go to www.JayConner.com/Book, where my contact information is also available. And so that’s really the easiest way. I have a YouTube channel with thousands and thousands of subscribers. Just search for J. Conner real estate or private money. And that’s easy to find. Find as well. Love that.
Wendell Butler [00:43:46]:
Well, thank you so much, Jay. It’s always great to talk about raising private money, especially in this market where it’s. I think it’s more important than ever nowadays because everything’s so expensive. And it’s just great to have you kind of clarify things and make it sound so simple, which it really is. It’s not that complicated. It’s really just communicating, building trust, and showing people what they can actually do with their money, and making sure that you set your business up correctly to help provide those returns for them. So I love, I love that you came on and. Yeah, yeah.
Wendell Butler [00:44:18]:
Anything you want to say before we head on out?
Jay Conner [00:44:21]:
I’m all good, Wendell. Thank you so much for having me. Come on. God bless you.
Wendell Butler [00:44:24]:
Beautiful. And thank you all for listening.
Narrator [00:44:36]:
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.